Landlords 'need tax relief on interest payments'

News Category: Industry News

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A leading lender for landlords has rejected suggestions that the government should scrap mortgage interest tax relief on buy-to-let properties.

The Institute of Directors (IOD) produced a report which claimed that the government should consider removing tax breaks for landlords in order to deal with the current shortage of housing.

Nigel Terrington, chief executive of the Paragon Group, responded to the report, saying: "The IOD misses the point that buy-to-let is a business activity in exactly the same the way as investment in commercial property. Businesses making investments are entitled to offset their interest expenses against tax.

"Buy-to-let should be no different – the interest on any borrowings is a straightforward business expense, not a tax relief.

"The IOD's contention that buy-to-let receives favourable taxtreatment compared to other financial assets also misses the point that landlords must pay hefty stamp duty when they buy property, far more than the levies on buying shares, for example."

Mr Terrington added that the private rented sector provides just under three million homes for tenants in the UK and has been important in dealing with the current lack of supply in the economy.

Earlier this summer, Arla reported that demand for rental properties had outstripped supply in much of the UK.

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