Thursday, 30 July 2015

Bashing Buy-To-Let Landlords Will Push up Rents

“Buy-to-let landlords have a huge advantage in the market as they can offset their mortgage interest payments against their income, whereas homebuyers cannot.” That’s how the chancellor explained his decision in the Budget to require that landlords effectively pay tax on their borrowings – their buy-to-let mortgage. But the chancellor has made a significant blunder: his ill-advised move will push up rents and hit the economy. The problem is that the chancellor’s comparison with homeowners is not correct. The day after the Budget, the IFS correctly said that “rental property is taxed more heavily than owner occupied property.” Even the Tories’ favoured think tank Policy Exchange has concluded that the tax system “massively favours home ownership.”  Unlike homeowners, landlords are taxed on rental income and capital gains. And the VAT system works against building new homes to rent by preferring home owner properties over rented housing. Read more on the City AM website.

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