Start increasing rents now

To make sure you are not caught out by the reduction in mortgage interest relief from 2017, look at your properties now and try to increase rents as soon as you can, if you are a higher rate tax payer (or will be). Doing so will mean any increases will be lower year on year rather than waiting until after the changes start to take effect. It should also make discussions with tenants that little bit easier too.

My own personal strategy is to increase rents by 3.5% per year on average for the next 6 years to help offset the reduction in profits due to the tax changes. Clearly each property will be different but having a % goal will help focus the mind over the next tax year. I also know there will be the view (I also held this view until July 2015) that we have good tenants in place and don’t want to lose them. Again be pragmatic, if you feel strongly about this then try and balance an increase without the risk of losing them, but still increase.

To determine what your % annual goal should be I would recommend you speak to a tax adviser/accountant, if you haven’t already, who can help you establish what the exact impact will be on you and how much you should try and increase your rents to offset the difference.