UK Landlords Warn of Rent Hikes After Budget Tax Increase
A two percent income tax rise in the UK's Budget is expected to force landlords to increase rents and sell properties, according to industry warnings.
Landlords in the United Kingdom have voiced strong criticism regarding a recent tax increase announced in the Budget, warning that the government's policy is detrimental to the buy-to-let sector. They anticipate being compelled to raise rents and sell off properties following Chancellor John Healey's introduction of a 2 percent income tax hike.
This latest increase follows a similar 2 percent rise implemented by former chancellor Rachel Reeves in the previous year. The cumulative effect means that basic rate taxpayers will see their income tax on rental income rise from 20 percent to 24 percent starting in April next year. Higher rate taxpayers will face a tax rate of 44 percent, up from 40 percent, while additional rate taxpayers will see their rate climb from 45 percent to 49 percent.
Harry Johnston, a buy-to-let landlord who owns 40 flats in Manchester, stated that he intends to increase rents, asserting that the government is actively "killing the rental sector." He described landlords as being "in the firing line" and a "cash cow," predicting that the outcome will be higher rents for tenants.
For a basic rate taxpayer earning £12,000 annually from rent after expenses, the annual income tax payment will increase from £2,400 to £2,880. A higher rate taxpayer's bill will rise from £4,800 to £5,280 under the new regulations.
Mark Imray, who manages a portfolio of houses and flats in the East Midlands and East of England, characterized Chancellor Healey's tax measure as "another nail in the coffin" for buy-to-let investments. He indicated plans to sell at least half of his properties in the coming years.
Landlords have recently faced a series of tax increases and regulatory changes. These include a 5 percent stamp duty surcharge on property purchases and the Renters' Rights Act, which has made tenant evictions more difficult and placed restrictions on rent increases.
Mr. Imray further commented that the government appears to be "discriminating against smaller landlords," many of whom he described as ordinary individuals who acquired a few properties to supplement their retirement income.