Norfolk landlords hit by buy-to-let tax change
- Credit: PA
Landlords in Norfolk's buoyant buy-to-let market have expressed disappointment at the chancellor's decision to curb an important tax break – and warned of possible impacts on the housing market.
Currently, landlords can claim tax relief on monthly interest repayments at the top level of tax they pay – up to 45pc – but in a move described by George Osborne as 'levelling the playing field for homebuyers and investors' during his budget speech, the amount they will be able to claim as relief in the future will gradually be reduced to the basic rate of tax, currently 20pc.
The change will be phased in over a four-year period from April 2017.
Some experts believe the move might force landlords to hike rents to compensate for the blow, which would spell bad news for tenants.
However, others have reacted by saying it could be good news for first-time buyers who are competing with landlords on the property market which is currently seeing demand outstripping supply.
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The scale of the impact which will be felt in Norfolk, and particularly in Norwich where the buy-to-let market is buoyed by the student population and hospital staff, was underlined by Peter Davis, chief executive of the Eastern Landlords' Association.
He said: 'Our membership amounts to around 1,400 landlords across East Anglia who are responsible for an estimated 20,000 rented properties in the region.
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'We are disappointed that the tax relief will be reduced and we will be endeavouring to support and guide our members through these trying times.'
He said it would inevitably slow the pace of people entering buy-to-let, including those looking to invest freed up pension funds, and that could slow down the housing market.
'The proportion of new build properties being bought by buy-to-let landlords has been increasing,' he added.
Stuart Cunningham, chief executive of Norwich-based commercial mortgage broker Commercial Trust, said: 'This will inevitably make things more difficult for landlords on higher-rate tax bands who are hoping to invest for their retirement.
'Many landlords in this position still find themselves operating on narrow margins.
'Buy-to-let is a business, one which people enter at great personal risk, and which supports the housing market, contributes directly to the economy in the form of the tax that landlords already pay, and provides housing for millions of people.'