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BTL landlords still set to benefit from tax relief despite changes

Analysis by London estate agent ludlowthompson has revealed that UK buy-to-let landlords will still benefit from £16.7 billion worth of tax relief even after the government’s recent changes to the system are fully phased in by 2020.

In April 2017, the phasing out of mortgage interest tax relief – a move designed to help make buy-to-let less attractive to landlords and investors – was introduced by the government.  

But ludlowthompson’s research suggests that buy-to-let landlords can still take advantage of a number of other tax reliefs, which they can offset against their rental income expenses such as mortgage interest and other financial costs. The other costs include property repairs, maintenance and renewals, legal, management and professional fees, and rates, insurance and ground rents.


The Treasury anticipates the amount of taxes it collects from landlords will rise by £840 million a year by 2020-21. This follows its cuts in tax reliefs on mortgage interest payments and its cuts to tax relief on property maintenance in the form of the scrapped wear and tear allowance.

Government data provided to ludlowthompson showed that landlords claimed £17.5 billion in property expenses in the last 12 months, while £7 billion in tax relief was claimed on mortgage interest and other financial costs and £3.7 billion was claimed for property repairs and maintenance.

Once the planned changes to tax relief are fully implemented by 2020, landlords will still be able to claim around £6.4 billion on interest rate costs alone, the analysis revealed.

“Despite tightening, buy-to-let tax breaks are still very valuable, highlighting that rental property remains a highly attractive investment vehicle,” Stephen Ludlow, chairman at ludlowthompson, commented.

“Those tax breaks are essential to ensure that landlords continue to invest in maintaining their properties. If the tax breaks are reduced further then landlords will cut their investment in the properties they own – reducing the standard of UK rental accommodation.”

With this in mind, ludlowthompson has called on policymakers to make the continued investment of landlords into the private rented sector a main priority, especially in areas such as London where the supply/demand imbalance is especially stark. The fear is that too many landlords will be forced out of the market, leaving a shortage of good-quality rental accommodation as demand soars higher than ever.

“Labour mobility continues to be central to economic strength,” Ludlow added. “However, if cities like London are to remain a magnet for home-grown and international talent, sustaining a vibrant, high quality rental market is essential. To do that, the system has to work well for both tenants and landlords.”


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