Concerns have been raised that the next property crash could be triggered by rent controls and tax relief changes.
Gary Heynes, partner at tax and business advice firm RSM, has stated that landlords could be paying more tax than the net rental income received if tax relief changes are brought in.
He also highlighted the potential impact on property supply, stating that if landlords are unable to increase rents to cover the difference, properties will come back onto the market.
This may be further influenced by the tax relief cuts available to landlords on residential property.
Elaborating on the difficulties that landlords may face as a result of the changes, Heynes stated: “Margins are getting tighter for landlords. Add to this a possible increase in interest rates and the issue is exacerbated.”
“Higher interest rates coupled with rent controls would not be a great environment for personal landlords and could instigate ‘the great sell-off’ as landlords look to reinvest elsewhere.
“This response could cause the next property crash as the property market becomes over-supplied with assets to sell, pulling house prices down, impacting equity levels and mortgage agreements.”
