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2015 Landlord Budget


  • Tax Relief on Buy to Let mortgage to be reduced to 20% by 2020
  • Wear and Tear Allowance to be replace APRIL 2017
  • Housing Benefit allowance reducing to £20,000 (£23,000 in London).
  • Rent-a-room scheme allowance increases to £7,500 from £4,250
  • Welfare Reforms and Minimum wage  – Negative impact on Landlords
  • Renting to young people - New restriction under 21
  • Support through Child Tax Credit will be limited to 2 children for children born from April 2017.
  • From April 2016, Housing Benefit claims will be backdated for a maximum of 4 weeks.


  • Buy to let landlords will no longer be able to deduct their costs – including mortgage interest – from their profits before they pay tax and will have their tax relief reduced to 20% from 40% or 45% from 2020.
  • This change will be phased in over a four-year period from April 2017. Currently, landlords can claim tax relief on monthly interest repayments at the top level of tax they pay of 45 per cent. Mortgage interest relief is estimated to cost £6.3billion a year, a Freedom for Information request revealed recently.
  • In addition, from April 2016, the 'wear and tear allowance', which allows landlords to reduce the tax they pay (regardless of whether they replace furnishings in their property) will also be replaced by a new system that only allows them to get tax relief when they replace furnishings.


The Chancellor also announced an increase in the amount of money homeowners can earn in rent from lodgers before tax. It comes after many campaigned for a higher earning level in the rent-a-room scheme. The level has been set at £4,250 of income for the past 18 years, but will rise to £7,500 from April 2016.

  • If rents are to increase [to offset the loss of tax benefit from Tax relief] then Tenants maybe to increase their income by subletting rooms.


Welfare reforms will have a negative impact on affordability and disposable income – more likely resulting in an increase in non payment of top up

  • People on welfare: Osborne took an axe to welfare as expected, freezing working age benefits, housing allowance and tax credits for four years and reducing the household benefit cap to £20,000 (£23,000 in London). The greater the pressure on the benefits will only increase with Tenants having to pay rent; when budget are tight Landlords more likely to suffer short falls
  • People on minimum wage: A controversial one. Osborne sensationally introduced a living wage at £7.20 from April 2016 for people over 25, a huge increase from the current level of £6.50, which will rise to £9 to 2020. Labour claims tax cuts will make life harder for working people. The minimum tax threshold will also rise to £11,000 in April 2016 from £10,600 in 2015-16.


  • Restricting Housing Benefit entitlement for young people – From April 2017, those out of work aged 18 to 21 making new claims to Universal Credit will no longer be automatically entitled to the housing element. Parents whose children live with them, vulnerable groups, and those who were living independently and working continuously for the preceding 6 months will be exempt from this measure.
  • Long term investment consideration for LHA segment  • Support through Child Tax Credit will be limited to 2 children for children born from April 2017. A possible future consideration even though a tenant may have 4 children eligibility for Universal Tax Credits / Housing Allowance will be capped at two so less income to afford top ups for 3 or more bed properties [longer term]
  • Removing the Family Element in tax credits, the first child premium in Universal Credit and the Family Premium in Housing Benefit – From April 2017, the Family Element in tax credits and the equivalent in Universal Credit will no longer be awarded when a first child is born. This will also apply for families with children making their first claim to Universal Credit. Households who have been in receipt of tax credits or Universal Credit with an interruption of less than 6 months will be protected. Furthermore, children with disabilities will continue to receive the Disabled Child Element or Severely Disabled Child Element in tax credits and the equivalent in Universal Credit. In Housing Benefit, the family premium will be removed for new claims and new births from April 2016.

In the small print

  • Limiting backdating in Housing Benefit – From April 2016, Housing Benefit claims will be backdated for a maximum of 4 weeks.
  • Changes to tax credits income thresholds and Universal Credit work allowances – From April 2016 the income threshold in tax credits will be reduced from £6,420 to £3,850 per year. Work allowances in Universal Credit will be abolished for non-disabled childless claimants, and reduced to £192 per month for those with housing costs and £397 per month for those without housing costs. Claimants earning below these amounts will retain their maximum award.




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