A survey by The Deposit Protection Service has revealed that 68% of landlords believe that changes in landlord tax will lead to increased rents.
In July, Chancellor George Osborne announced that the government would reduce the amount of tax relief available for interest on buy-to-let mortgages.
More than a third of landlords surveyed said that they are now considering leaving the rental market or selling their property as a result of the buy-to-let mortgage relief changes.
Julian Foster, Managing Director at The DPS, commented on landlords financial challenges: “Many landlords are currently facing a double-whammy of tax changes that could lead to increased rents for tenants – forcing them to sell of leave the rental market.”
“Many landlords are small businessmen and women or ‘accidental’ landlords, and taxation increases can affect their livelihoods and financial wellbeing,” she added.
Landlords also revealed that a third intend to pass on the costs of any interest rate rise to tenants.
Not only will the interest rise affect landlords, but almost two thirds of respondents also said they would be worse off over changes to wear and tear tax relief.
In April 2016, an automatic 10% tax break for wear and tear will be replaced with tax deductions covering the actual cost of replacing and repairing its contents.
Over a quarter of landlords have therefore claimed they will redecorate or replace furnishings less as a result, which we reported on last week.