Mortgage Interest Rate Relief has a sliver lining!

Date Published 04 March 2016

With Buy-to-Let mortgages representing nearly 15.6% of overall lending and the risk of the loss of the Mortgage Interest Rate relief, there has been to no surprise, a number of clients popping in, or telephoning us for advice on what to do about their property investments.

By 2020, landlords will no longer be able to deduct mortgage interest before calculating tax, thus pushing many into higher income tax brackets.

The relief will be at a flat rate of 20 per cent, effectively halving the break for higher-rate taxpayers.

When you bear in mind Billericay being the affluent town it is, this will obviously affect a large number of landlords, I'd guess probably well over 60%.

Throw in the loss too of the automatic ten per cent maintenance deduction and also having to prove expenses for which they are claiming, you could be forgiven for thinking it is all doom and gloom.

However, for those who can afford to keep the property on, we at Hentons see a strong light at the end of the tunnel; If some do leave the market and sell up, this will reduce supply further resulting in increased rents which will help offset.

Plus of course there is still the capital growth. With reports saying there are 1 million homes needed by 2021 then we cant see a backward step in the market coming any time soon. Especially with Crossrail coming to Shenfield.

Tim Kirkman