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Is Buy to Let Dead?

on Tuesday, 25 July 2017.

Over the last few years, the government has introduced various measures to deter and penalise buy to let (BTL) landlords.

These have included an extra 3% Stamp Duty Land Tax charge and the gradual removal of tax relief for mortgage interest expenses.

It is open to debate whether this increases the supply of flats and houses for first time buyers or merely slows down the property market for all and actually prevents supply increasing.

So is it all doom and gloom for serious BTL investors? No, and here are four reasons why.

  1. In the right circumstances, you can convert a portfolio of properties in personal names into a company structure. This means full tax relief can still be claimed.

  2. Although the extra 3% SDLT charge may hurt, if prices are increasing at 5% per annum, then you still recover the cost of the extra stamp duty in about seven months.

  3. In England and Wales, births exceed deaths by 168,197, and net immigration is 248,000. This is an increase in population of over 416,000. All these people need somewhere to live. At the same time the average age of a first time buyer has increased. This means that the number of people wanting to rent has increased.

  4. Despite the best efforts of social housing providers, the number of social housing units being built is too small to accommodate the increase in population.

At the same time as attacking BTL landlords, the government is encouraging and giving full tax relief to large private institutions to enter the Private Rented Sector (PRS) market which is simply 'buy to let' by another name.

BTL may be dead for some, but for others who take it seriously, a change of name to PRS will keep it very much alive.

For more information, please contact David Marsden, in our Commercial Property team, on  01923 919 303.

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