Posts with tag: tax changes

Buy-to-let tax alterations could lead to ‘price correction’

Published On: October 11, 2016 at 10:13 am

Tags: Buy-to-Let,mortgage interest tax relief,Stamp Duty,tax changes

UK residential property prices could be set to fall sharply as a result of the Government’s buy-to-let tax changes, according to the head of Landlord Mortgages.

Alterations to stamp duty, mortgage interest tax relief and mortgage application rules could make it trickier to make a profit from property investment. This in turn could put off landlords from choosing to purchase property and drive prices down as a result.

Bubble burst

Landlords are facing changes in how much they can claim in mortgage interest tax relief from early next year. This figure will be limited to 20%, eating into many landlords’ rental yields. Higher and additional rate taxpayers could well be deterred, making buy-to-let a less attractive proposition.

Lee Grandin of Landlord Mortgages believes that no one is able to foresee when the buy-to-let bubble will burst. However, he feels that the buy-to-let changes could well be a catalyst for, ‘major price correction.’

Buy-to-let tax alterations could lead to ‘price correction’

Addressing the press, Grandin said: ‘If commentators are stating the property market is overvalued then the sudden supply of property post buy-to-let tax changes could well be the catalyst for a major price correction’[1]

‘It was never going to be politically acceptable or sustainable to have Tom, Dick and Harry own a buy-to-let portfolio. Take note: A price correction where the losers are Tom, Dick and Harry with a buy-to-let portfolio and the banks who supported them is a vote winner,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/10/buy-to-let-tax-changes-could-be-catalyst-for-a-major-price-correction

Buy-to-let landlords to increase rents to offset charges

Published On: October 3, 2016 at 9:19 am

Author: Em Morley

Categories: Landlord News

Tags: buy-to-let landlords,landlords,private rental sector,rents,tax changes

New research has revealed that many tenants are likely to be hit with rental price hikes, following recent alterations to tax regimes.

A survey of nearly 3,000 private landlords from the Residential Landlords Association showed that 56% of buy-to-let investors plan to increase taxes in the short-term. This follows the changes to stamp duty and caps on tax relief, scheduled for next year.

Portfolios

In addition, the study found that nearly two-thirds of landlords do not plan on buying any more properties to add to their portfolio. Nearly one-third of landlords are thinking about leaving the market for good.

Following last year’s general election, then Chancellor George Osborne announced plans to cut the rate at which higher rate taxpayers can claim relief on their mortgage payments. These changes are to be phased on from next April and by 2021, all buy-to-let landlords will only receive relief of up to 20%.

54% of landlords said that they did not have full confidence in the future of the sector. 70% feel that the Government will outline new policies affecting landlords in the near future.

More pleasingly, 86% of landlords said they had a good relationship with their tenants. 82% of landlords questioned said that their tenants pay their rent on time.

Buy-to-let landlords to increase rents to offset charges

Review

The Residential Landlords Association is now calling on the Chancellor Philip Hammond to review changes made by Mr Osborne. The firm believes that he should get behind the country’s landlords and encourage more homes to be developed for rent, to meet growing demand.

David Smith, policy director at the Residential Landlord Association, said: ‘these results show how perverse recent tax changes have been. By implementing policy that will increase rents and choke off the supply of homes to rent, the Government is making it more difficult for tenants to save for a home of their own.’[1]

‘We are calling on the Chancellor to use the Autumn Statement to hit the reset button,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/10/buy-to-let-landlords-likely-to-increase-rents-to-offset-higher-costs

Buy-to-let market sees sharp rise in post-Brexit activity

Published On: September 9, 2016 at 10:46 am

Author: Em Morley

Categories: Landlord News

Tags: Brexit,Buy-to-Let,buy-to-let activity,landlords,rental market,tax changes

New research from Connells Survey and Valuation has discovered that during August, buy-to-let activity surged by 12.7%.

This data suggests that alterations to stamp duty, taxes and the Brexit vote caused only short-term blips for the sector.

Sharp increases

John Bagshaw, corporate services director of Connells Survey and Valuation, noted, ‘now the effects of the Government’s legislation have been digested by lenders and investors alike, buy-to-let activity has increased sharply. The market’s fears over the impact of Brexit are calming too and the Bank of England’s decision to cut the base rate last month for the first time in seven years may also have a psychological impact on property investors.’[1]

‘Encouraging economic data, high levels of employment and fading fears of a recession have also injected life into the sector. While we can see the impact of last Government’s damaging set of changes to legislation in the year-on-year numbers. August’s surge in activity highlights the resilience of the buy-to-let sector,’ he continued.[1]

First-time buyers also saw a strong increase in valuations during the last month, with increases of 6.8% on July and 19.6% on an annual basis.

Remortgaging has also seen an increase in valuations, both monthly and annually, rising by 4.2% and 1.5% respectively.

Buy-to-let market sees sharp rise in activity post-Brexit

Thriving

Mr Bagshaw continued by saying, ‘first-time buyers have enjoyed a month of growth and the sector is continuing to thrive following a strong July-given first-time buyers are the engine of the property market, this is very significant. August has also seen a surge in activity in the remortgaging sector, partially fueled by in the interest rate.’[1]

‘Overall market activity remains steady and fears of a post-Brexit slump has failed to emerge. In the first full month after the Bank of England’s decision to cut interest rates, the buy-to-let market has seen a surge in activity. Powered by low interest rates, landlords have taken the opportunity to remortgage,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/btl-market-sees-flurry-of-post-brexit-activity.html

Tax changes will not be detrimental to landlords-NLA

Published On: September 1, 2016 at 11:11 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,Finance Bill,national landlords association,tax changes

The National Landlords Association has moved to issue a report in an attempt to calm fears relating to late tax additions to the Finance Bill at Committee Stage.

There is growing concern that these amendments regarding land and capital tax will have yet another negative impact on buy-to-let landlords.

Impact

Earlier this week, The Law Society suggested that profits generated from the sale of buy-to-let property could be subject to income tax instead of capital gains tax as a result of the changes.

However, the National Landlords Association believes that the planned alterations to the Bill will not have a detrimental effect. The Association points to the fact that these measures, ‘were part of the anti-avoidance measures promised in the Budget.’[1]

New clauses to be added to the Finance Bill will involve legislation announced in the 2016 Budget. This will include a specific alteration to income or corporation tax on profits generated from the disposal of land in the UK.

These clauses will make sure that offshore structures cannot be utilised to avoid UK tax on profits made from dealing in or developing land in Britain.

Tax changes will not be detrimental to landlords-NLA

Ambiguous

Despite the rather ambiguous wording, the National Landlords Association said it is, ‘reassured by the then Chief Secretary to the Treasury’s explanation of the new clauses in July.’ This includes a comment which reads: ‘this measure is targeted at those who have a property building trade; it does not impact the tax profile for investors in UK property.’[1]

With the Report Stage for the Bill coming up next week, the National Landlords Association has confirmed with HMRC officials responsible that these changes are not intended to alter existing tax arrangements between buy-to-let landlords and HMRC.

The NLA said in a statement, ‘HMRC considers that generally property investors that buy properties to let out to generate property income and some years later sell the properties will be subject to capital gains on their disposals rather than being charged to income on the disposal.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/8/tax-amendments-will-not-adversely-affect-landlords

Concern growing over new buy-to-let tax changes

Published On: August 31, 2016 at 11:23 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,landlords,Parliamentary Bill,Residential Landlords Association,tax changes

There are growing fears in the property industry that the Government could be about to introduce a new buy-to-let tax assault on landlords.

Over the long weekend, the Law Society accused the Government of avoiding any property consultation in the way it introduces proposals. This, it warns, could mean profits from the sale of buy-to-let property could be subjected to income tax rather than capital gains tax.

Concerns

In the words of the Law Society, the measures were, ‘slipped in at the committee stage of a Parliamentary Bill, by the Government. This was instead of the formal legislation subject to a mandatory consultation period.

The Residential Landlords Association has now expressed its concern, calling on the Government to clarify amendments made to the Finance Bill 2016.

Concern growing over new buy-to-let tax changes

Writing in a letter to Chancellor Phillip Hammond, the Residential Landlords Association said that the amendments have blurred the distinction between trading profits from the purchase and resale of property and investment in property to let.

A statement from the RLA said, ‘at a time when the Government are attacking residential landlords through changes to Mortgage Interest Relief and Stamp Duty Land Tax, we have significant concerns of the potential devastating impact on the sector of further tax changes.’[1]

What’s more, the Association has moved to ask its members and others wanting to slacken the burden on the private rental sector to contact their local MP.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/8/growing-industry-concern-over-new-buy-to-let-stealth-tax

Rise in limited company buy-to-let mortgage applications

Published On: August 24, 2016 at 10:24 am

Author: Em Morley

Categories: Finance News

Tags: Buy-to-Let,buy-to-let landlords,limited companies,tax changes

A rising number of buy-to-let landlords are beginning to apply for mortgages via limited companies, according to new data.

The Buy to Let Club has recorded a rise in limited company applications during June, with the trend continuing during July.

Trends

This increase backs up other data that shows similar patterns in the market. A number of landlords are incorporating as a result of the increase in stamp duty and changes in mortgage interest tax relief, coming into force in 2017.

Mortgages for Business have stated that both applications and completions for limited company lenders has stabilised at one-third of the total of buy-to-let business.

Ying Tan, managing director of Buy to Let Club said, ‘we saw an unusually high number of limited company applications in June this year totalling 22% of our packaged cases and July has proved to be another strong month. We are seeing limited company rates falling as competition in the market heats up in preparation for the tax changes in 2017 and landlords are clearly taking advantage of this.’[1]

Rise in limited company buy-to-let mortgage applications

Exclusive product

As a result of the rise, Precise Mortgages has launched an exclusive limited company buy-to-let three-year fixed rate mortgage product through the Buy to Let Club.

This product is fixed at 3.54% until 31 October 2019 up to 75% LTV. It comes with an arrangement fee of 1.5%, while early repayment fees are 3% until 31^st October 2017, followed by 2% for the next two years.

Alan Cleary, managing director at Precise Mortgages, observed, ‘we work closely with Buy to Let Club in mortgage product design and this type of product is growing in popularity and I expect it to be a popular choice amongst brokers and landlords.’[2]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/8/sharp-rise-in-limited-company-applications-from-buy-to-let-landlords