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| Budget 2015: Buy-to-let tax break to be cut | Budget 2015: Buy-to-let tax break to be cut |
| (about 1 hour later) | |
| Buy-to-let landlords face cuts in the amount of tax relief they can claim on mortgage interest payments, the government has said. | Buy-to-let landlords face cuts in the amount of tax relief they can claim on mortgage interest payments, the government has said. |
| The amount that landlords will be able to claim will be set at the basic rate of tax, which is currently 20%. | The amount that landlords will be able to claim will be set at the basic rate of tax, which is currently 20%. |
| The move is aimed at creating a "level playing field" between homeowners and investors, chancellor George Osborne said. | The move is aimed at creating a "level playing field" between homeowners and investors, chancellor George Osborne said. |
| The change will be introduced over four years from April 2017. | The change will be introduced over four years from April 2017. |
| Currently property investors can claim tax relief on their monthly interest repayments at the top level of tax they pay, meaning the wealthiest can claim as much as 45%. | Currently property investors can claim tax relief on their monthly interest repayments at the top level of tax they pay, meaning the wealthiest can claim as much as 45%. |
| Mr Osborne said the current system gave buy-to-let landlords "a huge advantage in the market", compared with home buyers. | Mr Osborne said the current system gave buy-to-let landlords "a huge advantage in the market", compared with home buyers. |
| "The better-off the landlord, the more tax relief they get," he said. | "The better-off the landlord, the more tax relief they get," he said. |
| Buy-to-let properties now account for over 15% of new mortgages, something the Bank of England warned last week could pose a risk to the UK's financial stability. | Buy-to-let properties now account for over 15% of new mortgages, something the Bank of England warned last week could pose a risk to the UK's financial stability. |
| Separately, Mr Osborne said tax relief for people who rent out a room in their home would be increased from its current level of £4,250 - where it has been frozen for 18 years - to £7,500 from next year. | Separately, Mr Osborne said tax relief for people who rent out a room in their home would be increased from its current level of £4,250 - where it has been frozen for 18 years - to £7,500 from next year. |
| 'Major blow' | 'Major blow' |
| Nicholas Leeming, chairman of national estate agents Jackson-Stops & Staff, said the changes to tax relief would hit many small and older private investors. | Nicholas Leeming, chairman of national estate agents Jackson-Stops & Staff, said the changes to tax relief would hit many small and older private investors. |
| "This is a major blow to a sector that is heavily reliant on private investors and who provide a crucial supply of property to the private rental sector," he added. | "This is a major blow to a sector that is heavily reliant on private investors and who provide a crucial supply of property to the private rental sector," he added. |
| He also warned the move could hit the supply of rental properties making it harder for people who wanted the flexibility of being able to rent rather than buy. | He also warned the move could hit the supply of rental properties making it harder for people who wanted the flexibility of being able to rent rather than buy. |
| Graham Davidson, the managing director of Sequre Property Investment, a firm which specialises solely in buy-to-let investments, said about half of its customers were cash buyers, meaning they would not be affected by the move. | |
| But he said those that were affected were likely to increase their rental fee to compensate for the higher tax bill. | |
| "The single biggest impact will be to tenants rather than landlords," he warned. | |
| But the director general of the Council of Mortgage Lenders, Paul Smee, said the fact that the change was being introduced slowly would soften the blow. | |
| "The phasing is important. We will need to understand whether this will have a behavioural impact on higher-rate buy-to-let landlords, but a four-year timetable does at least reduce the risk of sudden market shocks," he said. | "The phasing is important. We will need to understand whether this will have a behavioural impact on higher-rate buy-to-let landlords, but a four-year timetable does at least reduce the risk of sudden market shocks," he said. |
| Shares in house building firms fell, with Barratt Developments down 5.7% and Redrow down 5.2%. | |
| Budget in depth | Budget in depth |
| July 2015 Budget full BBC online coverage | July 2015 Budget full BBC online coverage |
| BBC Budget Live | BBC Budget Live |
| HM Treasury link to Budget documents | HM Treasury link to Budget documents |
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