A new study from the National Landlords Association (NLA) shows that 22% of UK landlords - equivalent to 440,000 - will be pushed into a higher tax bracket from April 2017 when changes to landlord taxation come in to force.
The changes are being rolled out over four years to 2021 and mean that landlords will be effectively pay tax on turnover - not profit.
Landlords will be limited to a 20% basic rate reduction from their income tax liability for their finance costs.
The move is expected to hit higher and additional rate taxpayers hard, with a spokesman from the NLA also saying that “Landlords will face an impossible decision of whether to increase rents and cause misery for their tenants, or to sell-up, and force their tenants to find a new home”.
In 2009, Ireland adopted a similar policy, but have had a U-turn. In his Budget statement last month, Michael Noonan, the Minister for Finance, said landlords would be able to claim 80% tax relief from next year, up from an existing level of 75%, with yearly increments of 5% until it reaches 100% again.
Despite the changes to tax relief for UK landlords – which could cost them anything from an extra £3,600 a year to £38,000 – another news story says that landlords are not fazed by the changes, with 70% not planning to change their investment strategy.
The announcement of a reduction in mortgage tax relief is the latest in a long line of misery-inducing changes for landlords this year including an increase of an extra 3% stamp duty tax for property investors on top of the standard stamp duty rates, and changes to the Wear and Tear allowance.