Buy-to-let landlords troubled by April tax changes

Almost two-thirds (60%) of buy-to-let landlords fear a negative effect of changes to income tax relief and tighter mortgage affordability tests, according to the latest Property Investor Survey by Mortgages for Business.

In addition, a 10th of landlords surveyed admitted they weren’t even aware of the planned tax changes in April.

However, despite the impending tax changes only nine per cent of respondents indicated a desire to minimise their property portfolios within the next six months and almost half (45%) planned to invest in even more properties.

The tax changes due to come into effect in April are least likely to impact upon basic rate taxpayers and those landlords who operate their property portfolios via limited companies and subsequently pay corporation tax.

David Whittaker, CEO, Mortgages for Business, said: “The percentages feel about right for the market in general and it has certainly been a tough 18 months or so for landlords.

“We are still encouraging landlords who haven’t already taken professional advice on the matter to do so ASAP, as some may find that the new formula will tip them into the next tax bracket leaving them worse off.”

The results of the Property Investor Survey are very much in line with the latest Prudential Regulation Authority (PRA) rules on buy-to-let lending, which will put a ceiling on loan to value rates. Around 60 per cent of respondents stated they were clear on the impact of the rule changes on how much they can now borrow.

Since 1st January 2017, buy-to-let lenders have been forced to use more stringent affordability calculations.

However, with almost half of landlords still looking to continue to expand their property portfolios many are content to take on the increased costs and adapt their strategies given that property investment still provides a greater return on investment than many other assets.

At TaxAssist Accountants we work closely with landlords to offer property tax advice that ensures they claim all of the expenses and reliefs they are entitled to. If you own a second property or a portfolio of properties and you’d like professional advice on your financial affairs please don’t hesitate to arrange a meeting with your local TaxAssist Accountant by calling us on 020 3941 2011 or dropping us a line using our online enquiry form.

Last updated: 5th January 2017