Since the beginning of the month, tax relief rules have changed. Because of this, landlords will now only be able to claim tax relief for up to 20% of their interest payments. Before April landlords were able to claim on up to 45% of their interest payments. It is thought that the costs that will come from this reduction in tax relief could be passed on to tenants.
In research carried out by Vital Research and Statistics on behalf of Experience Invest it has been found that 85% of British adults were unaware of the changes before they were made. The data has been based on the responses of 2,000 UK adults and the research took place in February this year, before the changes came in to effect.
Around 45% of those that took part in the research said that they would rather invest in property as opposed to the Individual Savings Accounts, gold or stocks and shares. The research also showed that 51% of those asked say housing is already unaffordable, but the changes in tax relief could see the price increase further. It is thought that a third of British people live in rented properties, therefore there could be a lot of people affected by the taxation changes, should landlords pass the cost on.
It has been suggested by experts that those most likely to be hit by the changes will be high-rate tax payers. It’s not all bad news though, as 93% of prospective investors still look to put their money in to UK property as opposed to investing abroad. So, even though the regulations that came in this month could damage landlord profit, there is still a great deal of interest for investment in this area.
It is thought that more information in these areas would help current and future landlords when looking in to new property options. More education could help those looking at property investment do so more efficiently and could also lead to a less drastic impact on housing prices.
