Rent rises are 'inevitable' if landlords are going to stay in business

Rent rises are 'inevitable' if landlords are going to stay in business following the tax clampdown on buy-to-let, experts have warned.

The Residential Landlords Association said the tax changes being applied on investing in property will see landlords' profits 'wiped out' in some cases.

It means landlords will have no option but to recoup their losses through higher rents, with tenants ultimately paying the price of the Government's 'unfair tax-grab', the association said.

A recent survey of the association's members found that 84 per cent are likely to consider increasing rents following the Chancellor's withdrawal of the tax relief that landlords can claim.

The relief will be hacked back from next April until it is removed altogether and replaced with a 20 per cent tax credit against mortgage interest.

Campaigners argue that the changes are unfair as the current system of being able to deduct finance costs is in-line with general business taxation principles, where tax is paid on profits.

Under the new tax system, landlords will end up part paying tax on revenue.