Losing mortgage interest tax relief – landlord tax changes – has prompted one in three landlords to think about selling up and one in four have raised rents.

New research from The Landlord Works for Nationwide reveals that 37% of landlords have considered selling rental properties as a result of the tax changes.

If found 77% feel the changes unfairly punish them, with the same percentage saying there should be more support for landlords especially post-pandemic.

More than a quarter (26%) of landlords with more than 20 properties have reduced their portfolios to reduce the tax impact, compared to 13% of those with between two and five properties. 

Less generous

Landlords could previously deduct mortgage interest costs from their rental income to help reduce their tax bills. However, this ended in 2020 and landlords now receive a tax credit, based on 20% of their mortgage interest payments, which is less generous for higher-rate taxpayers, who previously received 40% tax relief on mortgage payments.

The changes may also be forcing up costs for tenants, according to the research, with 25% of landlords having raised rents to cover the increased tax burden, jumping to 58% for those with 20 or more properties on their books.

Half of landlords are also struggling to keep up with the pace of regulation, while 38% find the new tax rules difficult and overly complex to understand.

Nationwide recently launched The Landlord Works, a free-to-use platform that helps landlords manage their properties in one place and navigates them through rules and regulations.

The Landlord Works director, Paul Wootton, says: “In recent years there have been numerous changes for landlords to get their heads around. Now with the loss of the mortgage interest tax-relief many are questioning whether to leave the sector all together by selling some or even all of their properties in order to help reduce their tax burden.”

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