The recent budget from the Chancellor, George Osborne, has shown that the campaign on the Buy-to-Let industry from the government continues. Where many had expected a suspension in the campaign, the reality was far less ideal. Instead, the government resumed increased the surcharges for all members of the Buy-to-Let sector.
As I am sure many of you already know, there have been some important (and slightly alarming) developments in the sector. Firstly, Osborne has clarified that the exemption to large property investors purchasing over 15 properties in one go has been scrapped. Although this has called some ire to the large corporates, this does seem fair. This exemption had angered many smaller property landlords at what appeared to be corporate preference; instead, there is now a level playing field, as all investors are hit by the 3% stamp duty surcharge.
In another development, the stamp duty for commercial property has been dramatically reformed. Now it works progressively, with a rate that applies to its particular bracket, just like income tax. Taxes have been raised at the top-end and cut at the lower-end.
For those investors that use offshore tax havens, they will now be targeted in the Finance Bill 2016. Some powerful institutions and individuals will be forced to pay UK tax on their profits, with HMRC being tasked to enforce this. Undoubtedly, however, there will be a multitude of legal and financial difficulties to force taxes on these groups.
The final development has arguably been the most inflammatory to property investors and landlords. Capital Gains Tax has been cut in both the higher rate and the basic rate, but this has not been applied to sales of residential property. That means that profits will be penalised at an 8% surcharge for selling when compared to other asset-types, such as stocks & shares. Notably, those who have invested in property funds will not be hit since their particular asset is not the property but rather than fund itself.
With all these additional charges and taxes to soon be implemented, landlords and investors are undoubtedly going to find expansion in the future more difficult. Yet, where one may have to think twice before expanding, it means that one can look at the current portfolio to a greater degree. One of the main costs for landlords, as well as one of the most time-consuming, are service costs. These can be a headache, with miscommunications between landlord and tenants being one of the most frequent problems we encounter. By using Arthur’s Property Management Software, it makes the process exponentially simpler for both parties. Firstly, any miscommunications can be avoided since clarity on responsibilities for either party can be provided within the app. Moreover, communications between tenants, contractors, and landlords can all be handled via the app rather than with a barrage of phone-calls.
Another issue that can be immensely costly, in both time and monetary terms, is vacant properties. During the current climate of additional costs for landlords, the last thing you want is reduced rental revenues. Often, vacancies can be related to issues such as rental arrears, bad tenants, and unhappy tenants. All of these problems can be reduced via communication within Arthur. The messaging system enables both parties to interact and negotiate any terms or respective issues. By reducing miscommunication and its consequences, landlords can avoid vacancies.
Indeed, expanding a portfolio in the long-term means treating it like a business. This means reducing costs, increasing revenues, and optimising processes. Property Management Systems such as Arthur can provide all of these. Instead of having letting agents (with high fees that do not always provide satisfactory results), Arthur can allow you to manage all of your portfolio within the app itself, whether you want to interact with tenants, to using contractors, to sorting rental payments. By cutting out letting agents, a property manager can save between 10-20% of the rent, as well as the set-up fee. The cost of a property management software system compared to these fees is fractional. Furthermore, it makes you far more independent while cutting out significant chunks of earache from property management.
The key to expansion is efficiency. The key to efficiency is Arthur.
Article Courtesy of: http://www.arthuronline.co.uk/