Research by property agents ludlowthompson has estimated that landlords received £16.7bn in tax relief in 2017, reported LettingAgentToday.co.uk in January 2018.

Tax relief on interest payments for commercial mortgages for buy-to-let landlords has been reduced, but landlords can offset other expenses against tax, including maintenance, property repairs, legal fees, insurance, management fees and professional fees.

The Treasury has forecast that it will collect an extra £840m a year in tax from landlords by the tax year 2020/21. This is a result of abolishing the tax relief on mortgage interest payments and cuts to property maintenance tax allowances.

Stephen Ludlow of ludlowthhompson said:

“Buy-to-let tax breaks are still very valuable, highlighting that rental property remains a highly attractive investment vehicle. Those tax breaks are essential to ensure that landlords continue to invest in maintaining their properties. If the tax breaks are reduced further, then landlords will cut their investment in the properties they own – reducing the standard of UK rental accommodation.”

Cuts to tax relief have not put off landlords, and many first-time landlords entered the market in 2017. Mortgage brokers have reported that over 10% of applications for commercial mortgages for buy-to-let property came from first-time landlords at the end of 2017.

Portfolio landlords with four or more mortgaged properties accounted for around a third of new mortgage applications.

Times may be challenging for landlords, and costs higher, but those in the sector are resilient and will hope that this will continue in 2018.