Buy-to-let landlords trapped by tax system, expert claims

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George Bull, a senior tax partner at accountancy firm RSM said that landlords are trapped by the tax system. His comments came in response to the conservative think-tank Onward ‘s suggestions on how to reform the UK’s housing supply.

Bull believes that the government should encourage landlords to sell their properties to increases the number of homes for sale. He said that current tax laws penalise landlords. They pay extra stamp duty to purchase property and have seen the tax relief on commercial mortgages reduced. When they sell a property, they pay 18% or 28% capital gains tax depending on their income. This compares to 10% or 20% for private homeowners selling their property.

The Onward think-tank wants to abolish mortgage interest tax relief to drive landlords out of the market, and claims that landlords deprive 2.2 million households from purchasing their own home. Bull, however, does not think that scrapping mortgage interest tax relief will work without also lowering capital gains tax.

There is a perception among some quarters that the government wants to deter buy-to-let investors. The percentage of mortgages that are buy-to-let loans has fallen from 21% to 13% in 2017, but the number of buy-to-let mortgages available for first time landlords is at a record high of 1,268.

The figures appear to indicate that regardless of the government attitude to buy-to-let landlords, lenders are encouraging more people to start investing in property in order to make it available for rent.

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