Landlords across the UK have already started to increase
rents for current tenants as a consequence of George Osborne’s attack on the
private rental sector (contained in Clause 24 of the Finance Bill). When a
similar policy was adopted in Ireland in 1998, rents increased by almost 50%
over the subsequent three years. Top
economist, Professor Philip Booth said that Clause 24 ‘didn’t make sense.’ The reason for this is that landlords will
pay tax on interest payments they have paid to the mortgage lender as well as
tax based on actual profit; landlords will in effect be taxed on an amount of
fictitious profit, and the Government will tax the same money twice, as the
lender already pays tax on it. ‘Private’ landlords’ businesses will also face
the unique situation in the business world of not being able to offset the main
cost of creating a taxable profit. Read more on Property 118.
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