Cutting the amount of tax relief landlords can claim on their mortgage interest payments will reduce after-tax rental yields. We expect that to take the wind out of the BTL market’s sails, as landlords holdback from entering the market or expanding their portfolios. And it adds to the case for thinking that price gains after this year will be muted. The inheritance tax cut is unlikely to provide much off setting support, so overall the Summer Budget will act as an additional headwind for the housing market.
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