Budget changes

In the budget (several months ago now) there was one that has not apparently attracted much attention. It is the proposal to remove tax relief from Buy-to-Let (BTL) mortgages. I am sure that some people consider that these greedy rich, landlord should have tax reliefs stripped from them and serve them right.

Except, that is not what will happen. I speak as a landlord with a BTL mortgage (but I hope not a particularly Dickensian landlord).

Let me be clear, I have one property, currently let out. I operate it on a business, balancing income and expenditure, actually charging rent at a level based on what I need to cover my expenses (and so, for your information, less than I could be charging).

So what will the impact of these changes actually be? Well, for most landlords in this situation, they will have to balance their books still, and so will increase their rents. The first effect of this change will be to increase rents (slowly, as the change is being phased in, so it will probably not be noticed as a direct result). Of course, that hits tenants, not landlords. So many are already priced out of certain areas, and this will just get worse.

I should point out that this is not what I am planning to do.

The other impact is that people like me will not find it financially viable to be landlords. It means that I could consider getting out of the market, selling my property and removing one more place available for rental. The people who will be able to stay in the landlord market are those who do not need so much of a mortgage on the properties - that is, those who have some ready cash. It will play into the hands of the wealthy, who are not necessarily interested in being landlords for the benefit of the tenants, but for the money.

That is also not what I am intending to do.

I am intending to reorganise my finances to pay off my mortgages early. I am attempting to take myself out of this particular market (something that I was expecting to do eventually, but I might try to do this early). I am getting out of the BTL market but without selling the property. I am fortunate to be able to do this, but 10 years ago, and I would not have entered the market at all. That is the problem.

So yes, this proposal will hit some greedy landlords. But mostly, it will hit smaller landlords, and tenants. To those who need rental properties, this is bad news. As usual, the wealthy will just handle it, and the less well off will suffer and pay

So maybe you shouldn't be celebrating.