£14 billion tax breaks for landlords: is it fair?

Government supports landlords - while cutting housing for those who need the most help

House for rent

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.

It's an argument that think-tank, the Intergenerational Foundation, has also made. It added that making buy-to-let more profitable for landlords means more people invest in property, which makes life even harder for those who are struggling to get onto the property ladder. The report insisted that tax relief caused "unfair competition" between buy-to let investors and first time buyers.

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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