Simple Landlords Insurance

Get a quote Retrieve quote call us 0808 172 5600

More single property landlords realising tax change implications

Monday 22 May 2017

Single property landlords are now realising they could be pushed in to a higher tax bracket after tough new taxation rules for buy to let were introduced.

The proportion of single property landlords who expect to shift up a tax bracket because of the changes has almost doubled since the end of 2016 to 16 per cent, research from the National Landlords Association (NLA) shows.

And by the time the changes take full effect in 2021 landlords’ mortgage finance costs will count towards their taxable profit.

Richard Lambert, chief executive officer at the NLA, said: “Single property landlords are responsible for providing a huge proportion of the UK’s private rented homes, and these findings show that, slowly, more and more are waking up to the fact their tax bills could be significantly higher in the coming years.

“21 per cent of landlords with just one property do not make a profit, and over the next few years those bumped up a tax bracket will find that their ability to continue to provide good quality housing will be seriously affected.

“More and more families and young couples are making their home in the private rented sector because they cannot either access social housing or afford to buy their own home.

“Affected landlords will have the choice of either increasing rents or selling up – so either way it’s the people they currently home who look likely to suffer the most as a result of this damaging tax change.”

At the moment the average annual mortgage finance costs for a single property landlord are £5,600.

Those earning just below the upper limit of the basic income tax threshold of £43,500 could be pushed into the higher bracket of 40 per cent, and therefore be made liable to significantly higher taxes.

Single property landlords account for 62 per cent of the UK’s landlord population – approximately 1.5 of the estimated 2.3 million – with the tax changes set to affect approximately 368,000 homes.

The NLA says that any landlords forced up a tax bracket would need to raise the rent by more than 11 per cent in order to continue to ensure a steady yield from the property, which equates to as much as £116 per calendar month more for the average rental property.

  • The emerging landlord

    It is a time of tremendous change for landlords in the UK.

    Visit microsite
  • Cover from as little as £112.68*

    Get a quote

Call 0808 172 5600

open weekdays 9am-8pm, Saturdays 9am-5pm, and Sundays 10am-4pm.

Get a quote

We want to add value to landlords with interesting news and views! Our Hub includes information and opinions on the housing market from a variety of expert sources – please just be aware it doesn’t always reflect Simple’s opinion, or the products and services we provide.