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Landlords marginally affected by UK tax changes, say London letting agents

London, rental market, tax
 

LONDON (Aug 18): The imminent cut in landlords’ tax relief will have minimal impact on their earnings, says London’s largest independent letting agents Benham & Reeves Residential Lettings.

Currently, landlords can offset interest on mortgage repayments against income from rent payments, and deduct mortgage interest payments from profits before paying tax.

However, from April 2017 onwards, this tax relief will be restricted to 20% by 2020.

Finance director of Benham & Reeves Residential Lettings Vidhur Mehra explained that overseas landlords who have a long history of investing in London will still pay a basic rate of tax on their UK earnings.

“As many of our clients are professional landlords, most will simply use the rent to service the mortgage and see their profit as the capital appreciation. We’ve certainly not had any indication that our landlords wish to exit the rental market because of the planned tax change,” Mehra said.

As housing supply in London constricts, Mehra believes property values will increase over the medium to long term, as will rents.

 

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