The Government has responded to the petition EMPO signed in response to the tax relief restriction outlined in the recent Budget. – “Reverse the planned tax relief restriction on ‘individual’ landlords”. You can still sign the petition which currently has just over 30,000 signatures. At 100,000 signatures, this petition will be considered for debate in Parliament. Click HERE to sign the petition.
Read one landlords story
The Government is committed to a fair tax system so is restricting relief on landlord property finance costs to the basic rate of tax, reducing the generosity for wealthier landlords.
The Government is committed to a fair tax system so is restricting tax relief landlords can claim on property finance costs to the basic rate of income tax.
Landlords are currently able to offset their mortgage interest and other finance costs against their property income, reducing their tax liability. This relief is not available for ordinary homebuyers and not available to those investing in other assets such as shares. Currently the landlords with the largest incomes benefit the most, receiving relief at their marginal tax rates of 40% or 45%.
By restricting finance cost relief available to the basic rate of income tax (20%) all finance costs incurred by individual landlords will be treated the same by the tax system. This recognises the benefits to the economy that investment in property can bring but ensures the landlords with the largest incomes will no longer benefit from higher rates of tax relief.
By unifying the treatment of finance costs for all individual landlords, the Government is reducing the distortion between property investment and investment in other assets, and reducing the advantage landlords may have in the property market over ordinary homebuyers.
Less than 1 in 5 (18%) of individual landlords are expected to pay more tax as a result of this measure. Taking account of the other measures from the Summer Budget, the Office of Budget Responsibility (OBR) have not adjusted their forecast for house prices. The OBR expect the impact on the housing market will be small. Furthermore, this change is being introduced gradually from April 2017 over 4 years. This will give landlords time to plan for and adjust to these changes.
Landlord Tax Changes
Energy improvements in rented homes: Where tenants will foot the bill
On the 1st April 2016, tenants will be able to ask their landlords if they (the tenants) can carry out energy efficiency improvements.
The landlord will not be able to unreasonably withhold consent.
It will be the responsibility of the tenants to ensure that the works are funded, and the intention is that there are no upfront costs for the landlord, unless the landlord agrees to contribute.
The more important deadline as far as energy improvements are concerned is April 2018, when it will become illegal to let a property on a new contract if it has an EPC rating of F or G.
1st of October Landlords BEWARE!!
Important changes affecting letting agents and landlords are coming into force on 1st October 2015 as a result of The Deregulation Act.
Click HERE for more information
Landlords have 28 days to evict illegal immigrants
The Immigration Bill which makes it a criminal offence for landlords and agents to ignore the Right to Rent rules (Carry out checks on the immigration status of tenants)
The 2015 Bill, which is due to get a second reading on October 13, will prevent illegal migrants in the UK from accessing rented housing under a residential tenancy agreement, driving licences and bank accounts.
Furthermore, an offence will be committed if the landlord ignores notification that the tenant has no Right to Rent – for example, because the Secretary of State has served a notice on the landlord or agent saying that the property is occupied by someone with no right to be there.
The new Bill also introduces important new rules on eviction.
If the Secretary of State serves a notice, the landlord or agent can then serve notice on the tenant giving them 28 day’s notice to quit. That notice has the enforceable status of one issued by the High Court.
It is not clear what would happen if an illegal tenant given 28 day’s notice to quit simply vanishes without notifying the landlord.