What does 2018 hold for Landlords & tenants ?

 

As the year progresses with an ever increasing pace, the property crystal ball is swirling with panic, predictions of the negative fallout in April 2018 of section 24 (which sees the phasing out of the the ability of claiming interest against tax & also no win no fee tenancy deposit claims) are very much on the cards. Landlords who have been avoiding taking note of their portfolios and their finances will be in for a shock.

Law firms across the UK are already reporting an increase in the level of consolidation amongst private landlords wishing to reduce or sell off their property portfolios. Be warned that even disposing of BTL portfolios will not come without its problems as landlords will also face the threat of Capital Gains Tax bills.

If you have not taken steps to mitigate and limit the potential negative impacts on your property portfolio you may want to assess the following for guidance:

• Critically review your finances and assess how your tax bill may be affected.
• Consider paying off some of your BTL mortgage.
• Review capital appreciation not just rental yield.
• Look at ownership transfer options to a spouse or partner.
• Investigate setting up a limited company.
• Look at ways to streamline your business and cut costs.

It is advisable to seek the advice of a property accountant specialist, before committing to any of the above. You may need a bespoke solution as every individual will have different circumstances.

2017’s Autumn budget brought very little relief to the UK’s landlords. Nothing quite tops section 24. Announcements that were made included a 100% tax charge premium on empty homes. A kick in the side to investors who have procured real estate for pure land banking purposes. This was introduced to improve the rental standards currently facing the UK’s growing tenant market.

The budget also unveiled an opportunity for first-time buyers on stamp duty tax on property purchases up to £300,000. Current figures by the Deposit Protection Service show that 38.4% of renters have no plan to purchase a property. It has also been seen that home ownership amongst 25-34 year olds has fallen over the last 13 years from 59% to 38%.

With the cost house prices increasing and the real wage on an ever decreasing cycle, home ownership is looking less achievable to many locked in areas with high rents.

Taking stock of this detail, landlords should be optimistic with their futures in the market as long as their property portfolios are set up to mitigate the challenges presented by government housing legislation.

If you have any questions on the latest insights and how you can make the most of Brent’s property market, feel free to chat with us so we can share our expertise with you