This is an overview of the effect of the recent budget in the UK for existing landlords and those thinking of entering the buy to let property investment market. The real news from the budget on 8 March 2017 is that there is no news.
Landlords in the UK already feel that they have been punished harshly by the government with the introduction of higher stamp duty for buy to let properties, and the scrapping of the mortgage tax relief by George Osborne.
No Further Punitive Measures For Property Investors
The latest budget did not impose any further punitive measures on landlords. This means that the buy to let property owner will not be suffering any more – well for a while anyway. The bad news is that there was nothing to make life any easier for those involved in buy to let property investment.
Abolition Of Mortgage Interest Rate Relief Starts April 2017
In July 2015 the abolition of the mortgage interest rate relief was announced and this comes into effect in April 2017. This was not discussed in the last budget. The majority viewpoint in property investment circles is that this change will do nothing for those who currently rent their homes. Landlords will have to increase rents to cover this cost.
A similar policy was introduced in Ireland and this caused rents to soar. It got so bad that the Irish government had to repeal the policy decision. A similar outcome is expected in the United Kingdom. You would have thought that the UK government would have been aware of the Irish situation and learned from this.
Stamp Duty Hike And It’s Effect On Property Investment
Raising the stamp duty by 3% on buy to let properties was another of George Osborne’s bright ideas. He did this in an attempt to make more homes available for first time buyers. There was some expectation in the property investment world that this might of been abolished in the latest budget, but sadly it was not mentioned.
The feeling is that this stamp duty surcharge has actually slowed down the housing market. It has been difficult for UK property investors in particular. With the Pound weakening over Brexit, those who can buy UK properties in Euros or US Dollars are coming out on top. UK landlords will have no choice but to pass the charge on to tenants.
It doesn’t help either the property investor or the tenant.
Delay In Digital Tax Returns
In the budget it was announced that there will be a delay of 12 months before self employed people will have to submit their tax returns digitally. This is good news for landlords that are still using paper based records or spreadsheets for their accounts. They will need additional time to prepare for the change.
The buy to let market in the UK is still worth pursuing. Rents will rise and tenants will get used to this or policy decisions will have to be repealed. It is not all doom and gloom. The best way forward is to work with an expert in property investment so that costs can be kept down to an absolute minimum.
That is where we come in at CPI. We can work with you and bring our experience to the table to ensure that your property investment is a success. Find out more about our “hands off” property investment partnerships by contacting us.