The National Landlords Association has calculated that the buy-to-let changes to tax that will come into operation in April 2017 will affect one in five landlords, meaning that around 440,000 could, depending on their personal financial circumstances, find themselves paying tax at a higher rate as a result of the profits they make from their rental properties.


Currently, those with buy-to-let mortgages can deduct all finance costs (such as mortgage interest, interest on loans taken out to furnish the property, and fees) in arriving at their rental income.

From April this will no longer apply. Instead they will receive a basic rate reduction from their income tax liability for their finance costs.

However, the new rules won’t be fully implemented until 2020 as the relief will be gradually tapered down.

For example, in tax year 2017-18 the deduction from property income will be restricted to 75% of finance costs, with the remainder being available as a basic-rate reduction.

In addition, the 10% wear-and-tear allowance will go from April, and landlords will only be able to deduct costs they have actually incurred.


According to the UK-wide Buy-to-Let Market Index produced by the Bank of Ireland, some landlords remain undeterred by the impending changes, with 46% of current landlords, with two or more properties reported as thinking of buying more over the next few years.

Over half of respondents (55%) admitted they will consider raising rents, and more than a third (38%) are likely to switch mortgages in order to reduce the impact of the reduction in tax relief on their mortgage interest payments.

Many landlords will no doubt find themselves with a dilemma. Some will think about putting their rent up at the earliest opportunity, while others may consider whether they want to remain landlords and could leave the market altogether.

In another hit on landlords, in the Autumn Statement the Chancellor announced a ban on letting agent fees charged to tenants, passing the entire fee burden on to landlords. The ban will be introduced “as soon as possible” following consultation.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up the mortgage repayments.

1 National Landlords Association, Oct 2016

2 Bank of Ireland, Buy-to-Let Market Index, 2016

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