Landlord News

6 in 10 landlords think they will be impacted by tax changes

Ryan - January 3, 2017

The most recent Property Investor Survey from Mortgages for Business shows that 60% of landlords believe upcoming changes to tax relief and mortgage affordability checks will impact them.

This survey was conducted during a two-week period in November and a total of 283 landlords responded.

Tax impact

60% of respondents felt they would be affected by the changes, while 29% felt that they would not. It is predicted that these landlords are likely to be a mixture of basic rate income tax payers and those that have incorporated their portfolios and are subject to corporation tax.

David Whittaker, CEO at Mortgages for Business, said: ‘The percentages feel about right for the market in general and it’s certainly been a tough 18 months or so for landlords, so it’s encouraging to learn that the majority are getting to grips with changes that will dramatically alter the way they operate.’[1]

Somewhat alarmingly, 11% of landlords said that they were unsure if the changes would impact them directly.

These results marry closely with those from the Prudential Regulation Authority on buy-to-let lending. 60% of respondents to its survey said they understand the impact on borrowing, with 25% saying they partially understand.

6 in 10 landlords think they will be impacted by tax changes

6 in 10 landlords think they will be impacted by tax changes

Affordability

From 1st January, buy-to-let lenders have been permitted to tighten affordability constraints in recognition of the larger tax burden on landlords. 9% of respondents to the PRA survey said that they were unsure how the affordability calculations would impact on their borrowing, while 6% said they were totally unaware of the new guidelines.

In addition, this survey revealed that many landlords are moving towards incorporation. 32% of those questioned said they owned at least a single property in a limited company. 54% said they would look to purchase through a limited company moving forwards.

[1] http://www.propertyreporter.co.uk/landlords/60-of-landlords-believe-new-tax-changes-will-affect-them.html