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Budget 2017 predictions: what does Philip Hammond have in store for landlords?



New incentives for landlords are expected in the 2017 Budget announcement. These could include tax perks for landlords offering longer-term tenancies.

Sajid Javid hints at incentives for landlords

Secretary of State for Communities and Local Government Sajid Javid suggested in his speech to the Conservative party conference that further details would be revealed in the Autumn Budget on November 22.

His speech outlined how he wanted all landlords to offer tenancies of at least 12 months to those who want them - and how he would offer landlords incentives for ‘doing the right thing’.

David Cox, chief executive of ARLA Propertymark - the trade body for the lettings industry - suggested that one such incentive could be tax relief for landlords who comply.

The tax relief on mortgage interest is being reduced across a four-year period and replaced with a 20 per cent tax credit by 2020. It follows the introduction of a three per cent Stamp Duty surcharge on all buy-to-let properties.

Current tax situation is taking a toll on landlords

Latest figures suggest that the new tax measures are already beginning to take their toll on landlords.

Buy-to-let remortgaging was five per cent lower than in July, while borrowing for house purchase increased 11 per cent, according to UK Finance.

However, borrowing for house purchase by buy-to-let landlords remains at a lower level than before the introduction of the higher stamp duty rate in the spring of 2016.

Housing court and tax relief will ease restrictions on buy-to-let

Mr Cox called for the ‘punitive’ restrictions on mortgage interest relief to be repealed, a boost that could mean buy-to-let continues to be a viable option for landlords.

He suggested that this should be combined with the introduction of a new housing court, which would speed up the time it takes for a landlord to evict a tenant.

He said: “Tax incentives and easier access to justice are the two key things which will give landlords the confidence to offer longer-term tenancies.

“Therefore, a specialist housing court with judges who are housing law experts will both speed up the process and provide much greater consistency in judgments.

“Combining the housing court with tax incentives such as repealing the punitive restrictions on mortgage interest relief should provide landlords with both confidence in the legal system and financial incentives to offer longer-term tenancies.”

First time buyers to be offered tax break

However, as well as potentially offering new incentives to buy-to-let landlords, it’s been reported that the Chancellor is considering tax breaks for first time buyers.

It’s predicted that the Government will offer a one per cent Stamp Duty cut for those looking to get onto the property ladder.

While the move may sting for landlords, considering the three per cent Stamp Duty surcharge for buy-to-let properties, it could well also reduce the pool of potential tenants.

Could LESA be reinstated?

Mr Cox also called for LESA – the landlord’s energy savings allowance that allowed energy efficient improvements to be offset against tax – to be reinstated, along with landlords being able to roll over capital gains tax if they reinvest in another rental property.

Landlords will need to wait until November 22 to see what the Government has planned and what impact it might have.

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