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  • Mortgages & Finance

    Buy-to-let stamp duty

    The recent news about the additional 3% stamp duty on buy-to-let properties comes as another blow to landlords following the announced reduction in tax relief being phased in over the next couple of years. These changes are likely to have some impact on the buy-to-let market in the short and medium term.

    The new buy-to-let surcharge will certainly make prospective landlords think seriously about whether rental property is a viable investment. It is likely to deter amateur landlords in particular – those with just one or two properties, who see their buy-to-let investments as a supplement to other pensions plans - for whom the returns may not be attractive enough anymore.

    In the short term however, we may see a surge in activity as landlords seek to secure property purchases before the additional levy comes into effect.

    As for professional landlords – those with a considerable property portfolio – there could be a less noticeable impact, if any at all. The Chancellor included in his statement that buy-to-let investors with more than 15 properties will be exempt from the new charges. Also, professional landlords are more likely to hold their properties in a limited company which are not affected by the previously announced changes to buy-to-let tax relief.

    These increased costs to be incurred by buy-to-let investors could ultimately be most detrimental to tenants, as landlords may feel compelled to increase rents in order to make their business profitable. It is also unclear how these levies will actually benefit the housing market in the UK. The intention of assisting first time buyers to purchase a home to live in is certainly credible, but imposing increased taxes on landlords may not be the solution.
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    Hello, please comment on an imaginary scenario if you wish to 
    b2let purchase in own name will become 2nd home at £90,000 is the 3% sdlt chargable on the £90,000 or (£90,000 – £40,000) ? and if the “2nd home” is bought under a ltd then i assume theres no cgt as its not a “2nd home” if you see what i mean.

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    It is charged on the £90,000.

    The 3% SDLT surcharge is charged on all properties bought by ltd companies (where the price is over £40.000).

    CGT is also charged on properties bought by ltd companies.

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    I think most BTL Landlords work in other areas and Being a Landlord is a side line ie a way of building up a pension

    Most of the above will have a salary and will use there tax-free allowance and tax banding in there full time employment

    When S24 has full effect this sector will feel the full impact it wont take much to push them into higher rate tax and it may well have the result that they make no profit from BTL

    The cream of BTL is capital growth and some may feel that the Capital growth is worth staying in the game and that's if interest rates don't rise which makes S24 worse

    The Professional BTL will survive and will grow via Company formations but as we all know it has its drawbacks compared with BTL in your own name

    The next five years will be interesting to see how this pans out

    I think we will have the same number of rental property but they will be owned by Company Landlords

    Will we have a Crash I feel that if we do see a slide in coming years it will be in the areas who have gained most since 2007

    Other areas will stagnate

    The UK property market is in a Phoney stage at present We all know whats coming but nothing at present has changed

    BRIX and Imagination will all so have effect again I believe it will be the SE who will see the biggest change

    Benefit Caps will also effect the SE

    S24 could not have been planned for such a worsted time than Now

    It may well cause a crash in the market along with all the other measures the govt has taken

    The Dream of the level playing field may turn into a very very bumpy field indeed and it will not be easy to cross

    Affordability is the key capital growth  tighter mortgages will slow down the stream of cash needed

    If you are going to stay in the market buy on yield and hope for capital growth don't rely on it





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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    We will probably still have the large number of landlords who do not have mortgages (over half currently), since S24 has no effect on them.

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