Tax changes - have you sought advice?
Many buy-to-let landlords remain unaware of new regulations that could adversely affect their businesses.
It is now six months since the introduction of new Prudential Regulatory Authority rules that require lenders to impose more robust underwriting processes for landlords with four or more mortgaged properties.
But this is only part of the regulatory and tax changes landlords have faced recently. At the start of 2017, the PRA required lenders to apply new stress tests, potentially limiting what some buy-to-let investors could borrow.
At the same time, the Government is in the process of reducing the tax relief landlords can claim on mortgage interest payments. It has also introduced a higher stamp duty surcharge on additional property purchases.
These are wide-ranging reforms, with the potential to influence both the profitability of existing buy-to-let investments and the ability to re-mortgage at a competitive rate.
Importantly, many of these changes will have the biggest impact on smaller-scale landlords — while those who own through a limited company structure will experience far more limited effects. Evidence suggests a sizable proportion of these smaller-scale ‘portfolio’ landlords have yet to seek professional advice about these changes.
A recent survey found that more than half of landlords — some 55% — had not sought advice about these tax and regulation reforms.
This is particularly pertinent at present, with a considerable number of landlords expected to refinance before the end of the year. This is because of changes to stamp duty. The stamp duty surcharge on second homes was introduced in April 2016. Not surprisingly, this created a bulge in sales, with landlords looking to buy before this additional charge came in. Many of these buyers will have opted for the cheaper two-year fixes that were around at the time. These deals are now maturing.
Help required?
If you would like assistance with your new or re-mortgage, please do get in contact and one of our advisers will be happy to guide you.