The introduction of tax rises for landlords today is expected to impact renters by as much as 30 per cent, according to the Residential Landlords’ Association (RLA).
The RLA conducted a survey which found two-thirds of member landlords think they are going to have to increase their rent in order to cope with the new tax. Meanwhile, 58 per cent intend to reduce their investment in property, as experts predict landlords will have to decide whether to abandon ship or increase prices.
New government measures designed to cut down on landlords’ mortgage interest relief, and make the buy-to-let sector less appealing, will see letting out property become more expensive. While landlords previously paid tax on their profit, they will now have to pay it on their turnover.
According to the RLA, independent experts believe that in order to cope with the extra costs brought about by the tax rises, landlords will need to increase rents between 20 per cent and 30 per cent.
Alan Ward, chairman of the RLA, said: “Today’s tax increases contradict everything the government has said about needing a larger rented sector to give tenants more choice and more affordable housing.
“It is tenants who will be hit hardest by these punitive tax increases. Aside from likely paying more in rent, in many places they will face a growing shortage of affordable places to rent.”
“We call on ministers to undertake a major review of the impact of this policy and if all the predictions about its impact are right, to abolish the changes in the Autumn Budget.”