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Autumn Statement Opportunities for Buy-to-Let Landlords

This week sees the release of the Autumn Statement, providing Chancellor Phillip Hammond with the opportunity to strengthen activity in the buy-to-let market. Activity has been seen to slow in recent months following tax changes’ put in place by the previous Chancellor.

Ahead of Wednesday’s announcement, a wide range of topics have been discussed but it is mortgage interest relief that has been identified as the top area of concern for buy-to-let landlords.

The existing rules permit landlords to offset all of their mortgage interest against tax but as of April 2017 we will see this begin to be phased out; restricting the amount of mortgage interest landlords can offset against tax on their property investments. But more than half of buy-to-let landlords would like the chancellor to remove penal changes in mortgage interest tax relief.

Mortgage interest relief will be withdrawn altogether by April 2020, at which point the consequences of Section 24 will mean it is likely that higher-rate tax payers will receive only 50% of the relief they currently collect. Various experts have already warned this will leave landlords with little alternative but to pass higher costs on to their tenants.

It is estimated by The National Landlord Association that around 440,000 basic-rate tax payers will be forced into a higher tax bracket from April 2017 once planned changes to landlord taxation comes in to force from the Government.

Many buy-to-let landlords are hoping the Autumn Statement includes a reverse to the stamp duty changes brought in earlier this year. Through the beginning of 2016 we saw a charge of buy-to-let activity with multiple investors adding to their property portfolios, but following the introduction of the 3% stamp duty surcharge on additional homes in April (including buy-to-let properties) this activity has somewhat slowed.

Figures compiled by the Council of Mortgage Lenders in September show the amount borrowed by buy-to-let landlords fell on an annual basis, dropping 22% year on year with the number of loans falling 6% from the previous month.

The Autumn Statement will be released by Phillip Hammond on the 23rd November at 12.30.

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