44% of landlords look to adjust their buy-to-let portfolio due to tax changes!
A recent report from mydeposits.co.uk has revealed that 44% of landlords are looking to make changes to their buy to let investments as a direct result of the tax changes imposed on the buy-to-let market in the last 18 months.
Since April 2016 we have seen three large tax changes impact buy-to-let investors, who have faced an additional 3% Stamp Duty surcharge while the 10% tax break for ‘wear and tear’ has been abolished.
The third significant change is of course the alteration to mortgage interest tax relief which means that by 2020 when the scheme is fully rolled out landlords will only be able to claim a basic rate of tax back from their tax charges rather than up to the 100% they were allowed to claim back currently.
Worryingly for the sector, 26% of respondents to the survey said that they were unaware of the changes to the mortgage interest tax relief and 23% said they were unaware of the alterations to Stamp Duty.
86% of respondents to the survey said they owned between one and four rental properties with a further 8% having between five to ten properties. 21% replied that the tax changes would not affect their buy-to-let business but 25% said they will need to raise rents.
10% said they are looking to sell-up for good with 9% switching from a managed service through a letting agent to self-managing their properties.
50% said they have no intention of leaving the sector but nearly 25% plan to sell up during the next 5 years.
Tony Gimple, Founding Director of Less Tax for Landlords, noted: “Landlords should be running their buy-to-let portfolio as a business regardless of tax changes, and those forced out of the market will be the ones who are too highly geared with too little yield. Many landlords are trying to do everything themselves and often following unreliable or out of context information, whereas once they are professionally educated on what their options are, many choose to remain landlords and go on to prosper.”