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Investment in buy-to-let will be discouraged by tax changes, research warns

Research carried out by Orchard & Shipman Group has revealed that a significant proportion of landlords (86%) believe that the government’s tax changes will deter investment in the buy-to-let sector. This will ultimately lead, they say, to a dearth of available rental homes.

Landlords think that that the government’s tax hikes on buy-to-let investments and second homes will simply mean higher rents and investors selling their properties. The research found that a quarter of landlords will be selling some or all of their properties, although only 18% of landlords said they would withdraw from the market completely.

Orchard & Shipman’s survey also found that more than 90% of landlords believe they should be permitted to deduct legitimate costs, just as any other business would. Over half of the landlords polled said they would be increasing rents in 2016 to cover the growing financial costs of letting out property. 

“The Government’s changes to the way buy-to-let investors are taxed will inevitably impact revenue,” Shane Spiers, CEO of Orchard & Shipman. “The shortage of housing, a growing rental market and rising property prices is driving increased demand for rental properties. With these market conditions at play, it’s no surprise that landlords will be putting up rents to supplement their income. Unfortunately, it is tenants that will feel the brunt of the tax changes.” 

He added: “The Government’s ambition to make buy-to-let look less appealing may yet be thwarted. Many landlords and property investors are committed and passionate and will do whatever it takes to protect their interests.” 

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