Rent rises are 'inevitable' as landlords try to stay in business after tax clampdown on buy-to-let, experts warn
- Tax clampdown on buy-to-let could see landlords' profits wiped out, says the Residential Landlords Association
- 84% of landlords are likely to consider increasing rents following the Chancellor's withdrawal of tax relief that they can claim
- The relief will be hacked back from next April until it is removed altogether and replaced with a 20% tax credit
By Myra Butterworth For MailOnline
Rent rises are 'inevitable' if landlords are going to stay in business following the tax clampdown on buy-to-let, experts have warned.
The Residential Landlords Association said the tax changes being applied on investing in property will see landlords' profits 'wiped out' in some cases.
It means landlords will have no option but to recoup their losses through higher rents, with tenants ultimately paying the price of the Government's 'unfair tax-grab', the association said.
Landlords will have no option but to recoup their losses through higher rents, experts warned
A recent survey of the association's members found that 84 per cent are likely to consider increasing rents following the Chancellor's withdrawal of the tax relief that landlords can claim.
“Tenants will end up paying the price through higher rent bills ”
The relief will be hacked back from next April until it is removed altogether and replaced with a 20 per cent tax credit against mortgage interest.
Campaigners argue that the changes are unfair as the current system of being able to deduct finance costs is in-line with general business taxation principles, where tax is paid on profits.
Under the new tax system, landlords will end up part paying tax on revenue.
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The RLA is calling for reasonable changes to the Finance Bill to protect landlords and tenants.
It is urging the Government to scrap the changes to mortgage interest relief and to also remove the 3 per cent stamp duty surcharge on buy-to-let properties.
Alan Ward, chairman of the Residential Landlords Association, said: 'Landlords do not want to increase rents unnecessarily but many will have to if they are stay in business as a result of these wholly unreasonable tax increases.
'It is unfortunately tenants who will end up paying the price either through higher rent bills or finding it more difficult to find somewhere suitable to live.
'We welcome the concern of many MPs and hope that they will be able to persuade the Government to change its mind.'
The tax changes are just one of the challenges currently facing landlords.
The Bank of England's Prudential Regulation Authority is considering tighter lending criteria for those buying investment properties.
It wants lenders to introduce strict new measures to ensure landlords do not overstretch themselves and can afford their property investments in the future, even if rates start to rise.
It comes as separate research by Citizens Advice suggests that 50 per cent more people were facing illegal eviction in the past year.
The charity said 2,087 people asked for help after being threatened with illegal eviction in the 12 months up to March 2016, an increase of 47 per cent - up from 1,415 the previous year.
Citizens Advice said landlords had been trying to evict tenants for missing a single rent payment, had changed the locks without warning, and in some cases seized their belongings.
Gillian Guy, chief executive of Citizens Advice, said: 'It's a crime to throw people out of their homes without a court order, but more and more people are coming to Citizens Advice with this problem.'