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Landlords facing higher interest rates, increased stamp duty and the phased loss of their buy-to-let tax breaks are beginning to pass on these increases to their tenants in the form of rent rises.


The tax changes were announced in 2015 by the then Chancellor, George Osborne, who saw them as a way to ‘level the playing field’, deterring buy to- let landlords from acquiring those properties that could instead be bought by first-time buyers anxious to enter the housing market.

The new tax rules mean that landlords who were able to claim mortgage tax relief worth 40% or 45% will find their relief restricted to the basic rate of 20% once the changes are fully implemented in 2020.

For the 2017–18 tax year, landlords are only able to offset 75% of their mortgage interest payments for tax purposes. This figure decreases by 25 percentage points each year until none can be accounted for in 2020–21, although a 20% tax credit will help. In addition, from April 2016, anyone purchasing an additional residential property for £40,000 or more pays a stamp duty surcharge of 3%.


Data from the Association of Residential Lettings Agents suggests that these changes are already filtering through to the lettings market. In November 2016, only 16% of agents saw landlords increasing rents, but that figure had risen to 35% by November 2017, and is widely expected to rise further over the coming months. Following the recent rise in interest rates, it’s likely that more landlords will be considering offsetting their rising costs by raising rents.

In addition, lenders have introduced more stringent vetting procedures for those landlords who own four or more mortgaged properties, and this may give rise to further changes in the dynamics of the buy-to-let market.

A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

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