Buy to let property investors are still eligible to receive up to £16.7bn in tax relief before the new rules are phased in, according to ludlowthompson.
Despite recent changes to the system by the government, landlords are still eligible to receive significant sums of money during the two years as the new rules are phased in.
Tax relief enabled buy to let landlords to offset expenses such as mortgage interest and other financial costs against their rental income. Property repairs, maintenance and renewals; legal, management and professional fees; and rates, insurance and ground rents could also be offset.
Following the cuts in tax relief, the Treasury expects that the amount of tax it will collect from landlords will will by up to £840 million a year by 2021.
Data provided by the Government to ludlowthompson revealed that landlords claimed a sizeable £17.5bn in property expenses over the last year. Landlords claimed over £7bn in tax relief on mortgage interest and various other financial costs, whilst an addition £3.7bn was claimed for property repairs and maintenance.
However, news for landlords is not all bad. ludlowthompson is of the option that landlords will still be able to claim approximately £6.4bn on interest rate costs alone.
Chairman at ludlowthompson, Stephen Ludlow, 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.’