Students on the verge of 'rental crisis' due to B2L mortgage changes

Sweeping changes to tax regulation on buy-to-let mortgages will see a huge fall could see a huge fall in mortgage applications and a significant rise in the cost of student accommodation, according to the managing director of StudentTenant.com.

Former chancellor George Osborne announced the alterations to the way landlords pay tax on their rented properties in 2015, and they will be phased in this year as part of current chancellor Philip Hammond's budget plans.

The adjustments include the gradual reduction and disappearance of the ability to deduct mortgage interest against rental income, with taxes now being calculated on turnover rather than profit.

The Bank of England will introduce the first stage of the new legislation from 6 April, and will also require landlords to prove they can cover mortgage payments by 145% if their mortgage rate went up 5.5%.

"These changes risk students in the UK being put on the verge of a severe rental crisis," said Danielle Cullen, MD at StudentTenant.com. "Not only are we going to see a hike in rental costs for students to offset the change in buy-to-let mortgage rates, we're also going to see a huge fall in mortgage applications as it’s just not a worthwhile investment anymore.

Cullen added that students have already been feeling the pinch in recent years following the increase in tuition fees and lower maintenance loans being afforded to them.

"There's already huge pressure on students to cover the costs of bills, pay rent and enjoy their university experience whilst studying, and another increase in rental costs is adding more pressure," she added.

"With the hike in university fees, lower maintenance loans and now the impact of the buy-to-let mortgage changes, it's no wonder students are questioning whether all the debt and stress is really worth paying for higher education."