Landlords took advantage of an astonishing £14 billion in tax breaks in 2013 - an enormous financial boost for wealthy buy-to-let investors.
The figures have been released by the charity Shelter, which issued a Freedom of Information request to the taxman. It discovered that the number of landlords has shot up by a third in the past six years alone, and that in 2013 some 2.1 million people declared an income from property.
Landlords can deduct a number of expenses from their rental income before they have to pay tax - basically any expense related to the property. One of the largest areas is mortgage interest (available to those who invest in property as a business). The figures show that buy-to-let investors claimed £6.3 billion in tax relief against the cost of mortgage interest in 2013.
Is this fair?
Shelter argues that this is an incredible amount of support to be giving to a group that by definition has enough money to get by on. At a time when there have been cuts to housing support for the poorest groups, and a major housing shortage, it's shocking that so much is being spent to enable wealthy people to buy a second, third or fourth property.
Just a business
However, the rules have been established this way because the government views investing in and running properties as a business that's no different to any other. In any other business you get tax relief on your running costs, so they say removing tax relief for people running a buy-to-let business would be to unfairly discriminate against them.
The National Landlord Association has found that around a fifth of landlords who let out between two and four properties either just about break even, or make a loss. A change to the tax relief rules could therefore sink them. Scrapping these tax beliefs would immediately make buy-to-let unprofitable for many. It would put some people out of business, destroy a retirement income for many others, and flood the property market.
But what do you think? Are these tax reliefs fair? Let us known in the comments.
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