The government is driving landlords into the short let sector according to a trade body.
The Residential Landlords Association, responding to recent reports highlighting the proliferation of Airbnb-style short lets, says tax changes brought in by the current and recent governments have forced landlords to consider ways of recovering their income.
The full impact of the restriction of mortgage interest relief to the basic rate of income tax applies from April, says the RLA, making many landlords significantly worse off or even unable to make a profit on their lettings.
This change does not apply to landlords with short-term lets so encouraging long-term landlords to move into that market.
According to the association there is mounting evidence that this, along with the three per cent stamp duty levy on the purchase of extra housing and other measures affecting landlords’ confidence, is causing a drop in the supply of long term rented homes when demand continues to increase.
Some reports claim as many as 25 per cent of homes in some areas are now listed on Airbnb.
David Smith, policy director for the Residential Landlords Association, says: “Government policy is actively encouraging the growth of holiday homes at the expense of long-term homes to rent which many families need.
“This is completely counterproductive, making renting more expensive and undermining efforts to help tenants save for a house of their own.
“The Chancellor must use his Budget to give tenants a better deal by supporting good landlords to provide the homes to rent that they want to live in.”
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If you sell your rental property you pay Capital Gains Tax at 28%.
If you rent your property as a Furnished Holiday Let for two years and it meets the HMRC rules regarding days available and actual days let then the Capital Gains Tax is 10%.
As far as I am aware S24 still applies even if a LL changes from AST letting to short-term letting which will incidentally be a breach of BTL mortgage conditions.
If a lender finds out they could call in the loan.
I doubt HMRC could detect the income achieved from short-term letting but of course S24 tax will still be applied on any mortgage interest unless the LL has managed to change mortgage product to one that allows short-term letting.
Can't see that occurring unless the LL is able to verify that permissions have been granted to engage in short-term lettings by
Freeholders
Insurers
Local councils
Council planners
Without such permissions how could a LL legally engage in short-term lettings!?
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