Politicians are allegedly running scared of tax reforms in the buy to let sector because so many landlords are voters in marginal seats.
Investigative news site Exaro claims one anonymous adviser for a senior politician claims the main political parties are wary of attacking buy to let tax breaks because voter research shows that the UK has between one and two million residential landlords disproportionately located in marginal constituencies.
The site quotes a spokesman Labour’s Jack Dromey, the shadow housing minister, who said: “This is not something we want to comment on.”
Labour is working on a major policy initiative aimed at improving housing standards for buy to let tenants, but the review is expected to ignore landlord tax breaks.
The revelations come in a story about landlords setting off mortgage interest against buy to let rental profits.
Exaro calculates this is worth around £2 billion a year to property investors and is expected to rise as mortgage interest rates increase in future years.
The latest figures from the Council of Mortgage Lenders disclose property investors have around 1.4 million mortgaged properties.
Tax laws say that any mortgage interest paid by the property business, providing the expense is ‘wholly and exclusively’ for the business can be set off against rental income.
Exaro claims landlords are switching home loans to buy to let loans to reduce their tax bills, but the tax rules specifically bid setting off mortgage interest against loans for personal use.
A Treasury spokesman said: “Tax reliefs are kept under review, but those available to landlords were not specifically designed to encourage or incentivise buy to let. Mortgage interest is a business cost for a landlord.”
The spokesman also confirmed no figures were available for tax relief on buy to let mortgages claimed by landlords.
