'Landlord tax' means UK is now among the worst EU countries for landlords

Stamp duty hikes have made the UK among the worst countries in Europe for buy-to-let investment, new analysis shows. 

Over the past year Britain has plunged down the league table of the best EU countries in which to be a landlord, falling by ten places from 15th to 25th. 

Average yields for landlords fell to 4pc from 4.91 per cent over 12 months, meaning landlord's income is likely to have fallen over the period.

The slump comes a year after stamp duty changes were imposed on UK landlords, significantly increasing the cost of property investment and reducing landlords' potential for profits.

On top of regular stamp duty, landlords and second home owners must now pay an extra 3 per cent "landlord tax", which must be settled upfront.

This newspaper is campaigning for the Government to reduce the amount of stamp duty owed on property purchases. Last month Conservative MP Jacob Rees-Mogg said stamp duty needed to be cut "as a matter of urgency" amid reports it is stifling the economy. 

British landlords have been hit by a series of Government reforms - including the introduction last year of the 3pc stamp duty surcharge for second properties and the cuts to tax relief which began phasing in from April.

These have combined to cause the UK’s rental market to stagnate, while tightening regulations over lending to portfolio landlords coming into play at the end of the month will only worsen the situation.

The league table was produced by WorldFirst, the international payments experts, and is based on a mix of Government statistics and surveys.

It shows that the UK now ranks behind the likes of Finland, Greece and Italy, making it one of the worst places in Europe to invest in buy-to-let property.

Ireland retains top spot with an average rental yield of 7.08 per cent, while Malta, Portugal and the Netherlands are also high scorers. 

Britain is now in the bottom five countries in Europe for landlords, with only Austria, France, Croatia and Sweden performing worse.

Although the UK landlords' rental yields have fallen to 4 per cent, this is still 10 times higher than the interest on the average easy access savings account which pays just 0.4 per cent.

Under further tax changes by 2020 landlords will be unable to offset mortgage interest from their taxable profits. Experts warn this, combined with other changes in the industry, will impact landlords' profits to such a degree that rent rises are inevitable.