New Tax Changes

Landlords struggling to get grips with new tax changes


Recent news has been released from the Nottingham Building Society, claiming that landlords are now seeking extra advice ahead of the new buy-to-let tax changes. The new changes have found mortgage advisers, and brokers become increasingly busy as landlords are now looking to grow portfolios and look over existing mortgage deals.

Investing into property means there is already a whole host of different things to consider and with the new buy-to-let tax rules, meaning that it could become increasingly difficult for those to get on the a hold onto the property ladder. In summer 2015, the Chancellor implemented several changes that would affect those who are currently landlords, or those who are looking to become a landlord within the UK. This meant that from April 1st 2016, an additional 3% would be placed on SDLT, or Stamp Duty Land Tax on any additional properties landlords may want to invest in. According to Barclays, “a property bought now for £500,000 would attract tiered SDLT rates of 0% on the first £125,000, 2% on the next £125,000 and 5% on the remaining £250,000, or £15,000 in total.” Now the SDLT rate would look more like 3%, 5% and finally 8%, if those looking to buy already own a residential property, or properties.

Stamp Duty changes aren’t the only changes, as landlords, as of 2017 will be unable to balance their buy-to-let mortgage interest payments against tax. This has caused a rumble for landlords, forcing certain property owners to sell up immediately. Regardless of these changes only “19% of existing landlords plan to sell to some or all of their portfolios in response to the tax changes.” Showing the reluctance for landlords to sell their properties even during the new tax changes.

Whether landlords are looking to set up through letting agents or looking to go privately, it not has seen landlords back down from the current tax changes. Governments have even claimed that property “is still a very attractive investment opportunity” regardless of all the changes.

It is not all doom and gloom with the new changes, as new furnishings will “no longer be depreciated at a flat rate of 10% per annum”. Ultimately, furniture charges can now be deducted against the overall investment for the year. These changes may seem daunting, however with slight positives, it means that landlords are able to see decreases in taxes such as mortgage interest tax, between the years of 2017 to 2020.

The current changes can seem as though they are going to hinder the chances for landlords to strengthen their portfolio, however understanding the current changes will help landlords understand that all is not lost with the increases.