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Tax Hikes Are Forcing Landlords To Abandon Buy-To-Let

Tax Hikes Are Forcing More Landlords To Abandon Buy-To-Let Sector

| Overview

More and more landlords are abandoning the buy-to-let sector due to tax changes. According to the trade body ARLA Propertymark, an average of four landlords per branch of letting agents sold up in March, an increase of three from the previous month.

ARLA said the last time investors selling buy-to-let properties had reached this level was in November, when the Government announced plans to ban letting agents’ fees.

It warned higher costs landlords faced were likely to be passed on to tenants.

David Cox, chief executive of ARLA Propertymark, said: “The market is becoming less and less attractive to investors and it appears some landlords are choosing to exit the market rather than pay the higher taxes. Following the announcement of the ban on letting agent fees, we expect the situation to only get worse for tenants when, inevitably, the costs are passed onto them through higher rents.”

So What Is The Reason?

There have been a few tax changes in the last few months.

3% stamp duty for people buying a second property was introduced in April last year.
Mortgage tax relief for landlords was reduced.
Wear and tear allowance for people letting our furnished properties have been tightened.

On top of that, the announced plans to ban letting agents from charging fees to tenants has led to fears the cost will be passed on to landlords instead.

These changes have squeezed the profitability of buy-to-let investments, causing many landlords to exit the market.

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