Tax changes could lead to rent hikes

News at Eden Harper | 20/02/2017

Rents could increase by as much as 30% as a result of tax changes to the buy-to-let sector, according to a leading economist. 

Professor of Financial Economics at Imperial College London, David Miles, calls out the government on its wave of measures imposed on landlords in a bid to slow buy-to-let activity and free up housing stock for first-time buyers.  

A former member of the Monetary Policy Committee, Miles says that rents would need to rise between 20-30% in order for landlords to offset the extra costs brought by tax changes and stamp duty increases.  

The buy-to-let sector has been hit by many changes in recent years, including an extra 3% stamp duty surcharge introduced in April last year, and the planned changes to mortgage interest tax relief, due to be phased in from April this year.  

Miles is calling on the government to scrap both the additional surcharge and the plans to make changes to mortgage interest tax relief.  

He argues that 'aspiring first-time buyers are hardly helped by squeezing the supply of rental property and driving rents up.'

With more tenants unable to afford to buy a property, many are choosing to rent in the long-term.  

Rental demand is strong in London and elsewhere in the UK, and landlords and potential investors can capitalise on this demand by continuing to invest in the market.  

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