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Tenants are set to be the ones who suffer under government changes to tax allowances for buy-to-let landlords. In a survey by Property118, 54 per cent of respondents said they will be forced to evict existing tenants because of the tax changes and will either sell their properties or re-let to people who can afford to pay more. This is in direct response to the tax relief changes, which will push many landlords into higher rate tax bands. Under the proposal, finance costs and borrowing costs will no longer be allowed as a business expense. These reforms are being phased in from the start of the next tax year. So from April 2017, landlords will pay tax on turnover rather than on the difference between their rental income and mortgage interest. As an example of how much the HMRC will gain, if you have a buy-to-let at the moment, which earns £20,000 a year with an interest-only mortgage costing £13,000, your tax bill is £2,800. Once the tax relief is totally phased out in 2020, you will pay £5,400 in tax – an increase of 93 per cent.

For some landlords, the change will mean they pay more in tax than they receive in profit, which means they may be forced to evict tenants and sell their properties if they are no longer viable. However, this could incur early repayment fees on their mortgages and capital gains tax. Other landlords will need to increase their rents to offset these additional expenses, while some may be forced into bankruptcy if they cannot sell up, according to the Property118 report.

This is not the only problem that landlords are facing because of government changes. The new universal credit, which replaces six existing benefits and is being rolled out across the UK, is also causing hardship. Great Yarmouth Borough Council, which is piloting the UC rollout, has said private landlords are being forced to evict tenants because of delays in receiving the payments. The authority has written to the Department for Work and Pensions, asking for the housing benefit element of the new system to be suspended because of the impact it is having on residents. Some claims are taking more than eight weeks to process, so private landlords have the choice of starting eviction proceedings or reject taking on UC tenants. Great Yarmouth council said that its own social housing rent arrears have gone up since the scheme was introduced.

This seems to be another poorly worked out plan, which is having an adverse effect on tenants and the private rental sector in general.