The Chancellor announced in his budget that mortgage interest tax relief would be limited to basic rate taxation. Is this fair or right?
It sounds fair, with higher rate tax payers paying more tax. However, calculations have now shown that basic rate tax payers could be affected too.
The argument has been to "create a level playing field" between homeowners and landlords. Homeowners don't get tax relief so why should landlords? However, even this argument fails as homeowners don't pay capital gains tax but landlords do. Therefore to have a level playing field perhaps landlords should be exempt capital gains tax?
What always seems to get lost in the corridors of power is that landlord don't have to be landlords and will only remain in the market as long as it is attractive. People blame landlords for pushing up the price of property, but is this really true? After all, about 20% of all properties are now in the private rented sector. If all those landlords decide to evict their tenants and sell, what would be the effect. Lots of people turning up homeless at the councils, no available private rented property and, with one in five properties on the market, a slide in the value of properties. Yes, landlords leaving the market en mass would devalue the homes of the very home owners who were supposed to be helped. This would doubtless cause a crisis in lending, negative equity and repossessions. Maybe that is not somewhere we want to go.
Of course the real solution lies in curbing demand and increasing supply, but that is still on the "too difficult" pile.