Diary of Award Winning Sales and Letting Agent

Is It Worth It- Being A Landlord?

The government have not been kind to the private investor during 2015 announcing plans to increase stamp duty from the 1st April 2016 by an extra 3% to anyone purchasing a second property. On a £250,000 property this will be an extra £7,500 stamp duty (which you can claim back when you sell the property).

They are also going to be taxing landlords on turnover rather than net profit by taking away the ability to deduct mortgage interest as a tax deduction by 25% each year over the next 4 years, so that by 2020 it will be nil! (Clause 24 of the Finance Act 2015). This will have a serious impact on a lot of landlords.

Hooray for two private landlords who have raised over £50,000 so far through the website Crowd Justice to fight this as they believe it breaches human rights and/or EU rights. Many landlords, have a one or more properties to fund their retirement years and see their investment not only as a business but also their pension. Up until now, it has been the logical way to buy several properties with mortgages which not only bring in an income but are also growing in capital versus buying one property outright with cash.

In my opinion the government are doing two things. One, to try and rid from the market the accidental landlords and not very good landlords and two to back the big institutions who are going to be building rental accommodation in big blocks over the next few years. Frank Knight recently reported the build-to-rent market will grow over the next few years and could be worth £50 billion by the end of 2020.

One way of being able to overcome this could be to put your properties into a limited company as this will only attract 0.5% stamp duty and will allow the mortgage interest to be tax deductible- this is certainly something to be seriously thinking if you are purchasing, however, existing properties being transferred into a company will attract capital gains and therefore I would recommend you seeking legal advice from an accountant who specialises in property.

Don’t forget to try our new valuation button on our websites www.moveonrentals.com or www.moveonsales.com or www.landlordtolandlordsales.com

Just look for the orange button!

Sharon

If you would like a friendly, no obligation chat regarding any property matter, then please email This e-mail address is being protected from spambots. You need JavaScript enabled to view it or telephone 01202 711169.  Don’t forget to tune into the Business Show on Hope FM 90.1 and listen to Sharon produce and present two hours of live and up to date property industry news on the first Wednesday of each month.

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