Call for end to tax break for buy-to-let owners
In order to avoid what it calls a “crisis” in affordable housing in the UK, the Chartered Institute of Housing has called for changes in the tax laws that will mean less of an incentive for buying property to rent out to others. The Institute says that at least part of the reason why housing is less affordable is that buy-to-let landlords get a tax break on the interest they pay on their mortgages. While rental income is taxable at normal rates, landlords get a break to offset not only mortgage interest but also to compensate for costs of maintaining rental properties such as letting agent fees and having to make repairs and replace furniture.
In a speech at the opening of CIH’s Annual Conference and Exhibition, he president of the Institute called on the government to eliminate that tax break, saying that it gives buy-to-let owners an advantage over people attempting to buy their first home. According to figures supplied by the CIH, 11 percent of all new mortgage lending in 2006 went to buy-to-let investments, a 57 percent increase over 2005. CIH president Paul Diggory argues that the tax break on mortgage interest given to these buy-to-let buyers takes affordable homes out of the hands of those struggling to buy a first home. Mr. Diggory also blamed the tendency of some buy-to-let owners to buy and then not rent out their properties, even though such empty properties are not eligible for tax breaks, for helping to drive up the cost of housing.