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Landlord Tax Changes Predicted to Increase UK Rent

  • 85% of Brits Unaware of April’s Tax Relief Changes
  • Just Under Half (45%) would invest in property over ISAs and stocks
  • Over Half (51%) Claim There is a Lack of Affordable Housing

From April this year tax relief rules are changing; landlords will only able to claim tax relief on up to 20% of their interest payments, compared to up to 45% they can currently claim, and some are predicting landlords will pass these costs on to their tenants(i).

The majority of Brits (85%) are unaware of the tax changes and if given the choice, nearly half would choose to invest in property (45%) over Individual Savings Accounts (10%), gold (9%) and even stocks and shares (8%).  A third of Brits live in rented properties (ii) and over half already claim UK housing is unaffordable (51%). Prices are only predicted to rise with these changes to taxation laws.

Experts suggest that high-rate tax payers will be most affected by this tax change. Despite these new regulations hurting landlord profits, the vast majority of prospective investors (93%) still aspire to put their money into property within the UK rather than looking to invest abroad.

Ray Boulger, mortgage market guru, gives tips for maximum profit for prospective and current landlords:

“Now is a good time for landlords to seek specialist advice as there is not a one-size-fits-all solution.”

“The new way to calculate income may push lower rate tax payers into the 40% tax bracket. There will be a substantial effect on landlords who receive child benefits – especially those who have more than one child – and for those who will find themselves in the 45% tax bracket.”

“For new purchases setting up as a limited company is one option, as properties held in a limited company structure still qualify for tax deductible mortgage interest rates.”

“However, the impact of Capital Gains Tax and Stamp Duty Land Tax will often mean it is not worth switching properties already owned to a limited company structure”

Brits need to become better informed on the regulations and taxation laws so that current and future landlords can look into new options to own property more efficiently. Education on these matters will ensure a less drastic change in housing prices as landlords manage their properties in the most cost effective ways.

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