Buy-to-let landlords have yet to wake up to the danger posed by Chancellor George Osborne's forthcoming tax crackdown.
Investment experts have warned that landlords don't realise the danger they are facing and could be in for a shock.
Less than one in five landlords are worried about changes to tax relief on buy-to-let investments, according to new research from discretionary wealth manager Brewin Dolphin.
The vast majority retain faith in buy-to-let with 91% seeing it as a good investment while four out of five expect property prices to increase
And 82% said that Osborne’s restrictions on tax relief did not ‘concern or worry’ them.
Rob Burgeman, divisional director at Brewin Dolphin, said the worst-affected landlords could potentially seeing their tax bills double.
“As property values have increased over the years, we have been lulled into a false sense of security.
“With the Chancellor’s tax relief changes, the harsh new reality hasn’t yet sunk in for investors: the buy-to-let market is a disaster waiting to happen."
Burgeman said that landlords are finding it hard to get to grips with the fact that they will be prevented from deducting mortgage interest from their profits, and will instead be given a 20% tax credit on their eventual tax bill.
“For higher-rate taxpayers this means effectively paying tax on mortgage interest, in addition to the interest itself.”
He said the balance has certainly tipped in favour of wealthier investors who do not need a mortgage.
“With so many buying a buy-to-let property to supplement their retirement incomes, many may see their plans shattered with the tax change taking effect.”