Mortgage tax relief changes won't deter majority of landlords

The majority of  UK landlords plan to continue business as usual despite the recent raft of political changes, including net year’s cut on mortgage payment tax relief, the annual Landlord Voice survey from Simple Landlords has found.

Four in five landlords have no intention of changing their plans to invest in buy to let properties, despite fears that Brexit would create a property slow down.

Only 9% said the Brexit vote meant they would postpone expanding their portfolio, while 3% said they were likely to invest even more, the same proportion who said they planned to sell a property.

The survey also found that the majority of landlords will not change their investment strategy in the wake of the government’s plans to cut tax relief on buy to let mortgage payments from next April.

It means that by 2020, landlords will no longer be allowed to deduct the cost of their mortgage interest from their rental income when calculating rent, meaning tax is paid on turnover rather than profit, but 70% of those polled said the reduction of tax relief on buy to let mortgage payments would not affect their plans.

Some 4% said they were planning to invest more as a result of the changes and 12% said the changes meant they planned to wait before adding new properties to their portfolio, while 8% said they would now sell one or more properties.

However 20% of landlords said they expect to increase their rents in next year, which could indicate that some plan to pass on the costs of buy to let tax relief to tenants. Only 1% of landlords said they would reduce rent, with the remaining 79% planning to keep rent at the same level in the next 12 months.

In general, government legislation weighs heavily on the minds of landlords. Asked what they were worried about, 48% chose government legislation, tied with periods of unoccupancy, followed by 39% who are worried about tax changes.

Jenny Mayes from Simple Landlords Insurance, said: "While some landlords are adopting a cautious wait and see approach and slowing down their investment, others see opportunity in the changes and the vast majority want to keep or grow their property investment.

"Landlords are reacting in different ways to political changes, but one thing they have in common is that most are refusing to let negativity deter them. With many, re-evaluating their objectives, changing their strategy, moving to limited company ownership or focusing on capital appreciation they are ultimately continuing to invest."

The survey also shows that most landlords feel confident in their investment, with nearly 90% intending to still being a landlord in two years. Some 33% plan to increase the number of properties they let in that time.

The majority in the buy to let market made a conscious choice to become a landlord, while 19% fell into it by chance, mostly due to moving out of a property to live with a partner, or inheriting.

The survey showed that most landlords now have more than one property which they manage themselves without help from letting agencies.