Osborne announced in his July Budget that landlords would soon only be able to claim for actual wear and tear. At present they are able to claim a set amount, regardless of the level of wear.
Research by the National Landlords Association found that this rule will affect 47% of all landlords.
The rules will apply only to furnished properties and the trade body said 24% of all landlords operated exclusively in this sector.
Some 22% rent out a mixture of furnished and unfurnished properties while more than half (53%) operative only on an unfurnished basis.
There is a consultation on the new system which will run until 9 October 2015. The new rules will take effect on from 6 April 2016 for Income Tax purposes and 1 April 2016 for Corporation Tax.
They will cover the cost of replacement furniture, furnishings, appliances and kitchenware provided for tenants including:
- Movable furniture and furnishings
- Televisions
- Fridges/freezers
- Carpets and flooring
- Curtains
- Linen
- Crockery or cutlery
Chris Norris, head of policy at the National Landlords Association said: “We fully understand the frustration of those landlords who let exclusively on a furnished basis as the removal of this allowance will very likely represent a reduction in the relief they can claim.
“However, it will come as a welcome revision for those letting a mixed portfolio, unfurnished, or part-furnished property as the replacement system will allow them to deduct legitimate revenue expenses in the future.
“The NLA has broadly welcomed these proposals as it should lead to a fairer system for more landlords. However, as we transition from one system to another, we will push to make sure that any landlords who’ve made recent investments with the expectation of offsetting the cost over a number of years using the current allowance, will not be disadvantaged.”
