Study reveals ‘divided’ buy-to-let sector

A new study suggests that investors in Britain’s buy-to-let sector are ‘divided’ over recent tax and regulatory changes affecting the market.

The research, which featured in BuyAssociation in September, found that 44 per cent of landlords were planning on selling off homes or reducing the size of their property portfolios over the coming years, following changes to the likes of mortgage interest tax relief and Stamp Duty Land Tax (SDLT), which many believe are putting a huge strain on the buy-to-let market.

However, a similar percentage (56 per cent) said that they were planning on either keeping their current investments, or even increasing the size of their portfolios.

The findings suggest that landlords are taking very different approaches to rising above the recent changes – and therefore need to take very different issues into consideration over the coming years.

Those who are considering increasing the size of their portfolios will need to think carefully about tax planning, in order to ensure that they are maximising their profitability.

Landlords who own a large number of mortgaged portfolios will face increased ‘stress tests’ when applying for additional mortgages, which will also require them to prepare detailed tax and financial information about their existing portfolio, and prove that they would be able to cope with potential interest rate increases, ahead of being granted a mortgage.

Conversely, landlords who are thinking of downsizing their portfolio or selling off buy-to-let properties need to think about Capital Gains Tax (CGT).

It is important to plan ahead carefully prior to selling a buy-to-let home, as failure to dispose of the property in a tax-efficient way could attract a hefty CGT bill.

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Posted in Property News.