Petition against buy to let tax change gets 20,000 signatures

The petition against the proposed tax changes outlined by Chancellor George Osborne in last month’s Budget has now achieved 20,000 signatures.

This is a fifth of the total required by the end of 100,000 to oblige the government to consider debating the subject in Parliament.

Osborne’s proposal is that mortgage interest tax relief for buy-to-let homebuyers should be restricted to the basic rate of income tax, currently 20 per cent, even if they themselves pay the higher 40 or 45 per cent tax rates.

Osborne says the relief, which will address "unfairnesses in property taxation", will be phased out from 2017. 

"Buy-to-let landlords have a huge advantage in the market as they can offset their mortgage interest payments against their income, whereas homebuyers cannot. And the better-off the landlord, the more tax relief they get. For the wealthiest, every pound of mortgage interest costs they incur, they get 45p back from the taxpayer” Osborne told MPs at the time. 

"All this has contributed to the rapid growth in buy-to-let properties, which now account for over 15 per cent of new mortgages, something the Bank of England warned us .... could pose a risk to our financial stability. So we will act – but we will act in a proportionate and gradual way, because I know that many hardworking people who’ve saved and invested in property depend on the rental income they get" he said.

The proposal has triggered a furious response from many parts of the industry.

A ‘SayNoToGeorge’ website has been set up, outlining how the measure - which has not yet been formally agreed by the Commons and the Lords - will hit not just landlords but also letting and estate agents, pension investors, tenants and suppliers.

Letting agency Carter Jonas says that an amateur BTL owner paying 40 per cent income tax with a £500,000 mortgage at 4.5 per cent interest would be claiming £9,000 interest relief now on the £22,500 annual interest bill if the property was let. 

When the Osborne changes come fully into effect, the shortfall will be £4,500 when the allowable amount falls to 20 per cent rather than 40 per cent. This does not allow, of course, for the likely rise in interest rates by 2020, says the agency.

The online petition is here.