Posts with tag: tax alterations

Tax changes are not having desired impact, says peer

Published On: February 3, 2017 at 10:46 am

Tags: Buy-to-Let,landlords,private rental sector,tax,tax alterations

The head of one of the country’s biggest franchise agency groups has stated that the Government’s tax assault on buy-to-let will not impact the drivers that will ultimately lead to rental sector expansion.

Ian Wilson, head of MartinCo said in a trading statement to the City, that the fundamental drivers for the expansion of the private rental sector remain in place:

High migration
Low supply of new housing stock
Deposit issues for first-time buyers
Pension reforms for over 55’s

Performance

MartinCo suggest that total returns from buy-to-let investment during the past ten months have outperformed all other asset classes. The prospect of owning a rental property to obtain income in retirement, alongside benefitting from rising capital values, remains an attractive one.

Tax changes are not having desired impact, says peer

Mr Wilson said: ‘We do not envisage the Government’s recent interventions in the buy-to-let sector significantly impacting our business. Buy-to-let investors have generally reduced gearing in their portfolios over the years since 2008 and are believed to be able to absorb rising interest rates.’[1]

‘We are well positioned to sell investment properties if investors decide to exit and our research suggests that larger buy-to-let investors would purchase this stock. Early indications from the mortgage industry show that investors are beginning to incorporate their activities into trading companies to avoid the stamp duty surcharge and to retain the benefit of interest tax relief on buy-to-let loans,’ Wilson added.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/2/tax-changes-not-hitting-buy-to-let-significantly-says-agency-chief

RLA calls for Government to stop tax changes

Published On: July 13, 2016 at 10:40 am

Author: Em Morley

Categories: Landlord News

Tags: buy-to-let landlords,mortgage interest tax relief,Residential Landlords Association,tax,tax alterations

Rent increases in Britain are unavoidable unless MP’s move to stop what landlords are calling unfair tax changes, according to a new claim.

The Residential Landlords’ Association observes that plans to cut mortgage interest tax relief for buy-to-let landlords will see rents driven up.

Legislation

At present, legislation is moving through Parliament, which the RLA believes will see tax bills rise substantially and in some cases, cut profits altogether. Should supply of rental property continue to fall, landlords could face higher overheads, meaning they will raise rents to cover costs.

In a recent survey of RLA members, some 84% observed that they are more likely to consider raising rents following the Chancellor’s tax alterations.

The firm is now calling for amendments to the Finance Bill, in order to protect both landlords and tenants. It has called for the Government to stop the changes and to remove the additional Stamp Duty levy on buy-to-let purchases. It warns that the tax hike will have a detrimental impact on landlords and the sector when it is needed most.

RLA calls for Government to stop tax changes

Concerns

A number of MP’s have moved to express their concerns. Former Welsh Secretary, David Jones, has called for the Government to stop heaping more pressure on landlords.

Alan Ward, RLA chairman, stated, ‘landlords do not want to increase rents unnecessarily but many will have to if they stay in business as a result of these wholly unreasonable tax increases. It is unfortunately tenants who will end up paying the price either through higher rent bills of finding it more difficult to find somewhere suitable to live.’[1]

‘We welcome the concern of many MPs and hope that they will be able to persuade the Government to change its mind,’ Ward added.[1]

[1] http://www.propertywire.com/news/europe/uk-landlords-tax-change-2016071312136.html

Landlord confidence in the sector still sluggish

Published On: June 3, 2016 at 10:09 am

Author: Em Morley

Categories: Landlord News

Tags: buy-to-let landlords,landlord confidence,private rental sector,Stamp Duty,tax alterations

Confidence amongst UK landlords remains relatively low, on the back of alterations to tax alterations in the buy-to-let market.

However, the survey by BDRC continental also reveals that buy-to-let landlords are slowly starting to return to the market.

Subdued landlord confidence

In addition, the report shows that landlords’ buying intentions are growing, as is tenant demand. Yields have also remained stable, but confidence is still sluggish.

An increase in the rate of stamp duty land tax, coupled with reductions to income tax available on rental incomes from next year, has kept landlords confidence low.

When asked about business expectations in the next three months, 41% of landlords said that their prospects were either good or very good. This is down from 65% at the same period in 2015. However, this figure is only 2% less than in the final quarter of last year.

Purchasing prospects

In addition, the survey shows that landlords’ property purchasing intentions are above selling intentions. 19% said that they were looking to purchase a property in the coming year, with 16% stating that they intended to sell.

An increase in tenant demand has driven this trend, with 39% of landlords reporting an increase. This was up from 34% in the final quarter of 2015.

Rental yields also grew during the opening quarter of 2016, averaging 5.7% during this three-month period.

Landlord confidence in the sector still sluggish

Best investment option

Despite the perceived negativity around the sector, rental property as an asset class is still seen as extremely favourable by landlords. 38% of those questioned said that they believed investing in the private rental sector to be a much better option than other investment options, such as the stock market.

John Heron, director of mortgages at Paragon, said: ‘increased stamp duty, as well as reduced levels of income tax relief for landlords due to come into force next April, have undoubtedly impacted landlord sentiment. Confidence by some measures is down by around a third when compared to the same period last year. That said, this data does suggest that confidence is stabilising.’[1]

‘In the previous quarter we saw more landlords respond very negatively to the announcements on stamp duty and tax on rental income with more intending to sell rather than buy property, this trend is now reversed and purchase intentions have risen. Likewise, although confidence remains low, the significant falls we have seen in previous quarters have abated,’ Heron continued.[1]

Concluding, Mr Heron noted, ‘the main driver of this recovery remains, as ever, tenant demand, which has risen in the first quarter of 2016 along with yields. Landlords are clearly taking the view that buy-to-let remains an attractive long term, demand driven investment, which continues to outperform other asset classes.’[1]

[1] http://www.propertywire.com/news/europe/uk-landlord-sentiment-survey-2016060311991.html