There’s been a lot of information in the press about what’s going to happen if you are a buy to let landlord but what effect are the budget tax reforms really having on you buy to let moguls?
For starters, 700,000 individual buy to let landlords are predicted to be affected by the budget tax reforms outlined in George Osborne’s emergency budget, declared earlier this month.
In his budget tax reforms the chancellor said the relief would be cut to 20 percent from 40-45 percent to “even the playing field” between buy to let landlords and ordinary home buyers.
Although the reforms caused quite the ripple initially, new research by estate agents reveals there are no signs of a rush to sell up buy to let properties. Indeed, mortgage lending is up by 29 percent in June – the month that heralded the end of political uncertainty.
That’s because every wise buy to let investor is probably aware the factors surrounding buy to let remain highly positive. Demand for rented accommodation is growing and is predicted to increase, furthermore, 18 percent of households now live in rented homes, contrasting to just 11 percent a decade ago.
And what’s also been revealed this morning is that rents are now rising faster than house prices. On top of that, house prices are rising faster than wages – meaning your money is sitting pretty if it’s wrapped up in rent-generating property.
With these factors in mind it’s no surprise British expats are still extremely keen to invest in the UK. Skipton International supports this, saying there has been no decrease in applications from expatriates. Their motivations to have a foothold back home are unlikely to be affected by the budget as the overriding advantages to owning a buy to let property still stand.
Yet, despite these changes being unlikely to make buy to let landlords shy away from making a stable investment, there are going to have to be certain changes for a new style of tax planning. The consequences of the budget changes are due to come into place in 2017 and landlords will have their profits reduced because the tax relief on mortgage interest is to be reduced to the basic rate.
If you are thinking of investing in the sector then it is imperative you seek the best possible advice and weigh the decision from each and every angle. If you are considering using the proceeds of a pension pot to fund this purchase then it is even more important that you speak to the correct mortgage broker.
It’s also not all bad news for buy to let investors with predictions in some quarters that landlords will simply recoup their lost profits by raising rents.
We predict that there may be some alterations to the way in which buy to let mortgages are generated. To learn more about this why not download our guide today.
France is one of the most popular property markets for foreign nationals: we are all aware of the chic appeal of Paris, the enduring allure of the Riviera in the summer or the freshness of the mountains in winter.
Covering everything from search and negotiation to making an offer and the legal processes, the guide will help you fulfil your dream of property ownership in France.