Private Letting Relief Will be Axed

For those that don’t know, here is how politics works….

Private Letting Relief Will be Axed

The government puts out in a series of “half leaks” that it is looking at eliminating or cutting the amount of buy to let mortgage and other loan interest and fees that a landlord can offset against rent.

This is what they are doing now – and the story is being gobbled up in the press.

Everyone panics – especially landlords.

Then what they actually do is axe the little known about but very complex (and therefore much abused) Private Letting Relief exemptions from Capital Gains Tax instead. (Or, instead or additionally, they remove completely the additional 18 months exemption if and where you lived in the house as your main principal residence at some point.)

This is my prediction of what will happen – you read it here first, folks!

It would be a smart move. It plays out well in the press:

“Tories help hard working young families, people struggling to get on housing ladder etc. by cutting nasty landlords’ tax break”.

Of course, it raises bugger all money in new taxes, so achieves very little (other than good press from a party that is often accused of spending too much time looking after the “haves” in society).

Landlords will breathe a sigh of relief that they did not stop or reduce the ability to lop off interest from rent for tax purposes.

But when the dust settles it puts all landlords on notice that the government, even a Tory one, are coming after landlords for more tax.

For at least ten years at LettingFocus.com I have been predicting that the biggest danger of the continued growth of the private rented sector is that it would encourage three things to happen – and all three are threats to the “Mom and Pop” landlords.

All three have happened and will continue to happen…….

1. New competitor entrants would come in and want “a bit of the action”. Tick.

 

We have already seen a queue of big institutional investors from overseas property funds to UK pensions funds wanting “in”.

 

“Oh, and could the government give them a load of nice loan guarantees too and whilst they are at it, please can they not include them in any changes to Private Letting Relief?” (This is so they have half a chance of competing with the more efficient Mom and Pops).

 

 

2. There would be loads more regulation.

 

Tick.

 

And at least half of this regulation would be pointless, miss the target and would not improve the lot of either tenants or landlords.

 

Tick again.

 

 

3.

Taxes on landlords would rise.

 

Tick.

I could be the next Nostradamus.

8/7/15  1640hrs… or maybe not, as we now know he has restricted the tax break on deduction viagra india of interest on buy to let loans to the standard rate.

Well, I did not see that coming, so maybe I’m no Nostradamus, after all!  Naturally,  the big pension funds wanting a piece of the action will be affected by this, so roll on the Tesco-isation of buy to let. There must be much clapping and cheering among the “kindly” pension funds and the other big boys wanting “in” on the private rented sector, as their small “nasty” landlord competitors have just got clobbered whilst they are unaffected.

 

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