Section 24 petition gathers momentum
The UK Association of Letting Agents trade group is urging the industry to support a parliamentary petition that is calling to scrap the Section 24 changes to buy-to-let landlord taxation. These changes remove the right of landlords to deduct finance costs from their rental income before calculating their tax liability, which means they must now pay tax on their gross rental income.
This petition has gained over 37,000 signatures so far, and if it reaches 100,000 signatures by the 10th of May, it is likely that a Parliamentary debate on the subject would take place. While this does not guarantee any changes to the law, it is an important step in raising awareness of the issue and puts pressure on the government to consider its impact on landlords and the wider property market.
The changes to Section 24 were introduced in 2015 and have been gradually phased in over the past few years. They were designed to level the playing field between owner-occupiers and buy-to-let landlords, as the latter had previously been able to offset their mortgage interest payments against their rental income, reducing their tax liability.
However, the changes have had a significant impact on landlords, particularly those with highly leveraged properties, as they are now required to pay more tax on their rental income, even if they are not making a profit. This has led to some landlords being forced to sell their properties or increase their rents, which in turn has put pressure on the rental market.
Andrew Gunner, Regional Lettings Director for Michael Jones and Brand Vaughan, adds: ‘It’s understandable why so many landlords are against this tax policy and feel the scales aren’t fairly balanced, given the current system effectively taxes landlords on turnover, rather than profit. With demand for rental properties continuing to exceed supply, it’s important that landlords are encouraged into the market rather than pushed out, and a review of the current approach would of course be welcome, so it’s worth signing the petition in the hope we can collectively trigger a debate on this important issue’.
The petition argues that the changes to Section 24 are unfair and have had a negative impact on landlords, the rental market, and tenants. It also suggests that the changes could lead to a reduction in the supply of rental properties, which could ultimately make it more difficult for tenants to find suitable accommodation.
If you are a landlord, tenant, or anyone with an interest in the rental market, you may wish to consider signing the petition and adding your voice to the debate.
Get in touch with our lettings team to find out how.