A business and landlord insurer’s survey of over 600 UK landlords found that a third said their properties were no way near as profitable since the government’s reduction in BTL mortgage tax relief.

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From 2017 the mortgage tax relief for landlords was steadily reduced by 25 per cent  a year and scrapped in April 2020  -  only to be replaced with a 20 per cent tax credit. Last year’s tax year (2021-22) was only the second year that landlords had to deal with the reduced credit.

The highly contentious tax changes obviously had a negative impact on landlord profits which prior to the government’s tax grab BTL investors were allowed to claim tax relief on all of their mortgage interest from rental income, and only had to pay tax on profits.

Just under a third of landlords who took part in the survey – 32 per cent – said the continual onslaught of rising taxes has been a major issue with 11 per cent saying they had no other option but to raise their rents to compensate for their losses.

Disturbingly 16 per cent of landlords admitted that because of the BTL mortgage interest tax relief change they decided to sell a property or are seriously considering in doing so.

It is almost a given that the government will kill off Section 21 evictions as well as introducing a national landlord register, and  around half of landlords voicing their concerns of further forthcoming legislation of the private rental sector. 58 per cent said that the forever changing government regulations is by far the biggest problem they are having to contend with.

45 per cent of respondents said that the continual rising costs is no doubt going to be the biggest threat to the private rental market, with just under a fifth – 18 per cent – saying they are extremely concerned about the impact will have on being able to continue maintaining their properties.

However in spite of the significant BTL tax changes, 22 per cent of landlords claimed that if the government provided much more information on legislation affecting the sector then they would re-evaluate whether to sell their properties and leave the sector.

Less than a fifth – 18 per cent – are still very positive on being able to generate the necessary income/profit as virtually a third are confident in their rental yield increasing by 5 per cent over the year.

All is not gloom and doom as 23 per cent of landlords claimed they will be buying another property this year.

Alan Thomas, UK CEO of the insurer, said: “Contributing over £16 billion annually, if a wave of residential landlords were to sell up then it would have a huge impact on the UK economy.

“What’s more, with landlords offering much-needed accommodation to over 4.4 million households, the hit to our communities could be devastating.