From April 1 2016 Buy-to-let landlords will be taxed based on rental income rather than pre-tax profit.
Boulger reckoned this will have a more dramatic impact for highly geared investors than the new one off 3% surcharge on new buy-to-let purchases. Being pushed into a higher tax bracket could be costly, as from April 2017 to 2020 the amount of mortgage tax relief higher rate taxpayers can claim back will be gradually cut from 45% in 2017 to 20% in 2020.
Boulger explained: "In the past you added your pre-tax profit on buy-to-let to your other income and if you were highly geared your annual profit would have been quite small in most cases.
"As well as pushing basic rate taxpayers into one of the higher rate brackets, the marginal rate for some 40% tax payers will go up to 45%. At £60,000 taxable income any child benefit will be lost and above £115,000 the personal allowance is impacted. This will happen from 6 April next year and will become a significant cost for some people, especially those with several children and with more than one buy-to-let.
"I suspect a lot of landlords haven't thought through all the implications yet. You don't need many properties in the London area to push you above £60,000 taxable income or even into the 45% bracket."
He reckoned higher loan-to-value mortgage holders will feel the biggest squeeze, meaning some landlords will opt to sell their properties.
Stamp Duty
Last week Chancellor George Osborne announced that stamp duty will be raised by 3% for landlords and people buying second homes from April next year – a change Boulger said will result in some homeowners deciding to extend rather than move home.
With the government consulting on the changes taking place in April next year, Boulger called for an exemption for people who want to move to a new home but invested in property before the Chancellor's Autumn Statement announcement.
He said: "For anybody that has one or more buy-to-lets, or a second home, which they bought before the changes were announced, if and when they want to move home it will not be their first property and hence it would appear they will be caught by the 3% surcharge.
"That seems grossly unfair on people who have already purchased a buy-to-let property, not expecting to have to pay extra stamp duty tax when they move home.
"There's a simple solution and that's for the government to say any buy-to-lets you already owned or exchanged to buy before 25 November will be ignored in assessing whether you've got existing properties."
