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Buy to let tax changes will start to impact on the smaller landlord

Chestertons estate Agents

Buy-to-let tax changes will start to impact on the smaller landlord

Landlords who are just single property owners are now beginning to realise that they may soon be in a higher rate tax bracket with the new taxation rules being introduced on the buy-to-let market. 

Research by the NLA indicates that single property landlords who think they will be in a higher tax bracket because of these changes has increased since the end of 2016, with 16% now saying the changes will mean a higher tax bracket for them compared to 9% at the end of last year.

By 2021 landlords’ mortgage finance costs will count towards their taxable profit. So, assuming the average annual mortgage finance costs for a single property landlord of £5,600, this may mean landlords earning just below the upper limit of the basic income tax threshold could be pushed into the higher bracket of 40%.

Single property landlords represent around  62% of the UK’s landlords – about 1.5 million individuals, with up to 368,000 properties affected.

Clearly if landlords are forced to sell, then this could create challenges for many tenants.

According to the NLA a single property landlord moving up a tax bracket would need to increase the rent by more than 11% to achieve a worthwhile yield, which equates to as much as £116 per calendar month more for the average rental property.



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Nick has more than 20 years’ experience within the property research arena.

Nick Barnes

Nick Barnes

St Magnus House

020 3040 8406