• Posted

The start of a new year is a good time to both reflect and plan ahead. Considering whether buy-to-let properties are still a worthwhile investment in view of recent changes introduced by the Government may be on your list.

The Chancellor has purposefully targeted the buy-to-let sector where he perceives that buy-to-let investors are preventing first time homeowners from being able to purchase their own home. A series of measures have been planned to try and redress the balance.

The most recent change announced last November, is that from 1 April 2016 there will be an additional stamp duty land tax surcharge of 3% on the purchase of second properties. This will mean an additional stamp duty bill of £9,300 on a property purchased for £350,000, the cost of a typical buy-to-let property in Hertfordshire.

Another measure announced earlier last year will restrict higher rate tax payers from offsetting their entire buy-to-let mortgage interest against their rental income. This will be phased in over four years starting from April 2017.

Just before Christmas the Chancellor also announced he intends to give the Bank of England more powers to restrict the availability of buy-to-let borrowing.

These combined measures have left existing buy-to-let landlords feeling under attack and made would be investors wary of entering a fast changing marketplace. As with all investments, landlords should regularly review theirs to ensure they continue to meet their objectives and their property remains a sound investment.

In the short term the stamp duty surcharge is likely to cause a rush of last minute buy-to-let purchases before 1 April 2016 followed by a temporary slowdown.

In the long term, whilst interest on savings remains low, the buy-to-let market will remain an attractive investment, particularly for those not dependent on high levels of mortgage finance.

Ultimately despite these measures being introduced the attraction of investing in a tangible asset which historically increases in value over time may remain just as strong as before.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.