Landlords will no doubt have been concerned when George Osborne announced, in his summer budget, that there would be changes for buy-to-let mortgages. But what do these changes actually mean?

In the plans, which will be phased in from 2017, landlords will be restricted to basic-rate tax relief on mortgage interest. This will see landlords lose a quarter of their higher-rate relief (currently around 40 per cent) each year until 2020, when it will be restricted to 20 per cent on all mortgage interest.

Osborne said the change has come because landlords have a “huge advantage” over homebuyers because they can offset mortgage interest payments against their income. It is predicted that the removal of tax relief will bring the Treasury £225m in 2018/19, rising to £665m in 2020/21.

So, what does that mean for landlords? According to the National Landlords Association, the typical yield from renting a property will fall from 4.9 per cent to 4.3 per cent for taxpayers on the 40 per cent level.

If you are not entitled to 40 per cent tax relief, then you will experience less of a reduction.

One of the key questions, now, is how to continue to maintain margins in the face of lower relief? One way, which will concern tenants is to offset the loss of relief by increasing rent.

Another way is to look at how you purchase property. The changes will only affect individuals and partnerships. If you transact as a limited company, then the changes will not affect you. For individuals, you can look into transferring your properties to a limited company, but there may be capital gains tax and LBTT to pay on this, which, depending on the property value, may prove uneconomic.

A third way to reduce the cost may be to remortgage. By remortgaging at a lower rate of interest then a landlord may improve net return on investment.

Landlords will also lose the right to automatically claim back 10 per cent of the rent against wear-and-tear costs, instead only being able to claim tax relief when they actually have to replace furnishings or otherwise handle damage.

 Keep an inventory, therefore, of any damage to make sure that you do claim back on anything that does need replaced or fixed.

If you are not an official landlord, but instead rent a room to a lodger, you could be better off under the budget changes. From April 2016, homeowners will be able to receive up to £7,500 in rent from lodgers without having to pay tax, compared with the current limit of £4,250. 

Ultimately, if you are a landlord, renting will still provide a long term investment, but it does mean that you may need to look at the figures a bit more closely.