Residential landlords report higher tax bills
Buy-to-let landlords saw increases to their tax bills in the 2017/18 tax year, suggesting many felt the bite in the first year after changes to mortgage interest relief were introduced.
In a survey by Paragon, 58% of landlords said their tax bill for 2017/18 was higher than a year before, with an average annual increase of £3,039.
The report said this was a result of changes to mortgage interest tax relief, which is being phased out over a four-year period and replaced with a basic-rate tax credit.
A third of landlords said the tax they owed was either a little or a lot more than they expected.
Nearly half (49%) of landlords who reported a higher than expected increase said they would make changes to their portfolio as a result.
The most popular measures included selling property (24%), increasing rent (20%) and reducing borrowing (19%).
John Heron, director of mortgages at Paragon, said:
"The January tax [returns] deadline was the first real data point for measuring change and it's clear that landlords are continuing to adapt their approach as the transition progresses.
"The fact that almost one quarter of landlords intend to sell property is bad news for tenants, impacting supply to the sector and driving rental inflation."
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