Buy to Let Landlords Worried Over April 2017 Tax Hikes

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It has been reported that almost two thirds of buy to let landlords are in fear of the April 2017 changes to income tax relief and tougher mortgage affordability checks.

Results from the latest Property Investor Survey showed that one in ten landlords had not even heard of the imminent tax changes.

Despite their worries over the tax hikes only 9% of those who responded to the survey have said they planned to reduce their property portfolios over the next six months, 45% said they are looking to invest in more properties, which would suggest that most are willing to absorb the increase in costs and adapt to the new changes and remain in the property investment market, which still provides better returns and 46% said they will hold on to their investments

The survey also showed that landlords are continuing to move towards incorporation with 32% of the respondents owning at least one property in a limited company, which is up by 2% on May 2016.   Those holding property in companies tend to own four or more properties.

53% of respondents have loans of between 50% and 74% LTV (loan-to-value) against their portfolios, with a further 25% having borrowing of between 25% and 49% LTV and 9% with borrowing of up to 24% LTV and the five-year fixed rate mortgages being the most popular product type with 34% of respondents.

David Whittaker, CEO at Mortgages for Business said: ‘The percentages feel about right for the market in general and it has certainly been a tough 18 months or so for landlords.

‘We are still encouraging landlords who haven’t already taken professional advice on the matter to do so ASAP, as some may find that the new formula will tip them into the next tax bracket leaving them worse off.’

Base rate taxpayers and those landlords who manage the property portfolios through a limited company, which will be subjected to corporation tax, will be the least affected by these new changes.

We would recommend any Buy to Let landlords who are concerned about the tax rises and how it will affect them contact us immediately for advice on 01772 788200.  We offer a free initial consultation.