Paragon rejects IOD’s call to end mortgage interest tax relief on buy-to-let

In response to the Institute of Director's report on the tax status of buy-to-let investors, Nigel Terrington, chief executive of the Paragon Group, said: “The IOD misses the point that buy-to-let is a business activity in exactly the same the way as investment in commercial property. Businesses making investments are entitled to offset their interest expenses against tax. Buy-to-let should be no different – the interest on any borrowings is a straightforward business expense, not a tax relief.

“The IOD’s contention that buy-to-let receives favourable tax treatment compared to other financial assets also misses the point that landlords must pay hefty stamp duty when they buy property, far more than the levies on buying shares, for example. And of course, they pay capital gains tax on any profits when they come to sell.

“The private rented sector provides just under 3 million homes for tenants in the UK and has made a major contribution to housing supply at a time when the provision of social housing has dried up. Adopting the IOD’s proposals on buy-to-let mortgages would have a destabilising effect on the property market, removing one of the incentives for landlords to invest in buy-to-let property and making renting more expensive for those not yet ready to step on the housing ladder.”