Please Note: This Article is 5 years old. This increases the likelihood that some or all of it's content is now outdated.

What a time it’s been for landlords. It feels as if the ground is shifting from under our feet.

The withdrawal of mortgage interest relief in the Summer Budget along with other expense allowances sent shock waves through the landlord community.

Just last month we had the changes to the section 21 notice procedures; the prevention from eviction measures; the smoke and carbon monoxide regulations started; we’ve had the announcement that Right to Rent checks are to start in February next; and now in the autumn statement the Chancellor announces the imposition of a 3% stamp duty land tax (SDLT) levy on every buy-to-let purchase.

In the Autumn Statement George Osborne has made it clear that small-scale private landlords have been on to a good thing and will not have it so good in the future. There is no doubt that he intends to cool buy-to-let and support a boost to home ownership through fiscal measures.

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The 3% levy is to be applied, on top of existing SDLP rates, to every buy-to-let and second home purchase. This will hardly affect those that have bought long ago, or those who invest through companies, but it will affect those aspiring landlords looking to buy-to-let investing as a solid and safe haven for their pension pot, and to provide a steady and reliable income in retirement. It will also affect anyone planning to expand their property portfolio.

The Government is now focusing on reversing the declining home ownership trend through policies such as “Right to Buy” and new Starter Homes, and other mentioned in the Autumn Statement, plus these measures to cool buy-to-let through tax changes and mortgage restrictions. It’s a cocktail of measures enough to dampen the enthusiasm of the most optimistic landlord.

All this is likely to have a considerable effect on the profitability of buy-to-let in the future for many investors, and could affect property prices if landlords decide to sell in large numbers.

But given the sheer size of the industry and the demand for renting in Britain, it is thought unlikely any major sell-off is about to happen. According to a recent Jones Lang Lasalle (JLL) report, 65% of small-scale landlords own their properties outright, with a large percentage of the rest on low gearing ratios, so the mortgage interest relief measures, perhaps the biggest worry in all this, will likely have little or no effect on them.

There’s a lot to take in, and no doubt many will be re-thinking their strategies on buy-to-let. The regulations are going to create more work for landlords and agents, but with a professional approach and using the right documentation – see our renting checklists – all of this can be handled relatively easily.

The financial measures are of greater concern. We look to the tax experts to come up with the right strategies to deal with this, especially in the case of those high rate taxpayers with highly geared portfolios; they are the ones to be hit hardest with this.

Tax Café publish a range of unique and comprehensive UK property tax guides showing how to pay significantly less tax on your property investments and dealings. Written by Carl Bayley BSc ACA one of the UK’s leading property tax experts, they are in plain English and contain dozens of examples and a huge amount of invaluable tax saving advice that you simply cannot find elsewhere. How to Save Property Tax 2015 – just published – contains detailed guidance on all the major tax changes announced in the 2015 summer budget, including the restriction to landlord interest costs. The 2015/16 Guide is available here

Tax Insider – Each month Tax Insider tax experts reveal tax strategies to help minimise property taxes for landlords, property managers and tax professionals. Mailed out monthly, the guides provide concise summaries and comments on all important tax issues and cases each month and subscription provides free access to a tax case directory here

Joining a landlord association such as the RLA or NLA – see competition sponsors below – not only helps with their lobbying of Parliament efforts on regulations affecting landlords, they will keep you right up-to-date with the latest information you need to run your properties legally and profitably.

It’s that time of year again and as Christmas approaches we launch our usual seasonal competition sponsored this year by 12 leading suppliers to the rental property industry. With their support we have raised £1200 for UK Cancer Research, so we urge you in turn to support them. The competition takes just a couple of minutes of your time to enter and gives every entry an equal chance to win a fabulous new 40” slim line HD TV.

Tom Entwistle, Editor

Please Note: This Article is 5 years old. This increases the likelihood that some or all of it's content is now outdated.
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3 COMMENTS

  1. This government\’s meddling with the housing market has now achieved farcical status.
    First, just when the housing market (which has led the country out of recession on every occasion since the mid 1960\’s) is recovering nicely, it introduces so-called Community infrastructure Levy, simply a retitled version of Gordon Brown\’s Planning Gain Supplement (i.e. tax!), which was itself a copy of Harold Wilson\’s disastrous Development Land Tax grabs of the 1960\’s and 1970\’s. CIL increased house prices by over 10% at a stroke. It is said that the epitome of stupidity is introducing something that has failed on every previous attempt, but expecting a different result this time. It now has to introduce subsidies for first time buyers to give them access to the housing ownership ladder – access it took away itself with its CIL tax ! Now its stamp duty measures will reduce the availability of properties to let – especially HMOs – so that the younger generation can neither buy nor rent ! On top of all that, councils are given additional government authority to grab \”Affordable Housing Contributions\” of anything up to 45% or more from builders and developers via Section 106 Agreements to grant planning permission. (What happened to the longstanding principle that planning permission may not be bought and sold ?)
    This government hasn\’t a clue about the consequences of its meddling in the financial aspects of a housing market it doesn\’t even begin to understand. (And this is a life-long Conservative talking !)

  2. The government addting 3% to the purchase of second homes is indeed ridiculous.
    Under the guise of targetting landlords, the chancellor has also included all people who invest in a second home as a pension.
    The interest rates on ISAs have been pititful for years. and the chancellor has made it impossible to now invest in property as an alternative.
    It should be pointed out how ministers over the years have been flipping second homes and avoiding taxes, while the common hard-working man has

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