According to the research, the tax reliefs allow buy-to-let property landlords to offset against their rental income expenses such as mortgage interest and other financial costs; property repairs, maintenance and renewals; legal, management and professional fees; and rates, insurance and ground rents.
The Treasury says that it expects the amount of taxes it collects from landlords to increase by £840 million a year by 2020-21 after its cuts in tax reliefs.
Data provided by the Government to ludlowthompson shows landlords claimed £17.5 billion in property expenses in the last year. Landlords claimed over £7 billion in tax relief on mortgage interest and other financial costs, while £3.7 billion was claimed for property repairs and maintenance.
However after planned changes to tax relief are fully implemented, ludlowthompson believes landlords will still be able to claim approximately £6.4 billion on interest rate costs alone.
Stephen Ludlow, Chairman at ludlowthompson, commented: “Despite tightening, 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.
Labour mobility continues to be central to economic strength. However, if cities like London are to remain a magnet for home-grown and international talent, sustaining a vibrant, high quality rental market is essential. To do that, the system has to work well for both tenants and landlords.”
