House prices are predicted to fall following the end of the stamp duty holiday and tax bills are high. If you’re a portfolio landlord, now is the perfect window to sell part or all of your buy-to-lets, from the experts who know exactly how to do it, for the best price.
We’re all in the same boat, having built up a handful of properties in our portfolio, we’re now facing higher tax bills than ever before, and the fear of our portfolios losing their value when the stamp duty holiday ends. As a private landlord myself, I understand all the challenges landlords are facing right now. It’s why I believe we have the best team in the business to help, with over 20 years of experience behind us to solve every landlord problem, no matter what the problem. I’ve personally got 2,500 houses over the line and sold, even with tenants still in the properties. There’s no issue myself and my team can’t overcome, delivering win-win solutions for landlords, so they can sit back and relax knowing everything is in hand.
A study conducted by landlord insurance provider Simply Business found that over a quarter of landlords have already made the decision to reduce the size of their property portfolios. That number is set to increase as landlords cash in whilst they can still get the best prices before the 30st June. You need a company you can trust, who will take away the hassle, and make sure you get the best price, fast. That’s where we come in.
Continue reading Portfolio Landlords: Now is the time to sell your properties for the best price
Tax expert David James provides this advice for Investors.
HMRC has recently changed its guidance for stamp duty and multiple dwellings relief claims. How have the changes impacted you and are you entitled to a stamp duty refund?
Last month, HMRC changed its guidance surrounding the 3% stamp duty surcharge on second homes or property investments in the Stamp Duty Land Tax (SDLT) Manual. The changes state that the 3% surcharge will not apply if an investor purchases a non-residential property or a mixed-use property. These transactions will instead be taxed at the non-residential rates of stamp duty.
Also, when a buyer purchases more than one property in the same transaction or within a linked transaction, multiple dwellings relief is available. This can significantly reduce the stamp duty bill. However, when this relief is claimed on a mixed-use property, this is when things become complicated.
Continue reading The HMRC Changes To Stamp Duty Guidance Could Mean You’re Entitled To A Refund
Landlords face many problems, most relate to property and/or tenants however ongoing economic and legislative changes have added a lot more things for landlords to worry about. Shrinking returns, increased costs, more rules, more penalties and the prospect of fewer options to end tenancies have resulted in more and more landlords selling some or all of their rental properties.
New Rightmove research indicates 24% of landlords are planning to sell at least one property from their current portfolio, 13% will be selling more than one and 11% report they wish to sell their entire portfolio. This is despite rents being at record levels having increased by 2% in the last year.
We take a look at some of the common problems forcing landlords to sell and how we can help landlords wanting to sell up because of them.
Continue reading Helping Landlords Solve Problems No Other Estate Agents Can Manage
What Will Happen To House Prices After Brexit?
A lot of people have speculated about what will happen to house prices after Brexit. The uncertainty has had a dire affect on the housing market with fewer buyers, fewer sellers and sales taking longer to complete. Despite the smaller volumes of trade and slowed growth rate, house prices have largely remained the same with only Scotland showing a small fall in house prices in the months immediately running up to the first withdrawl deadline in March , so why is the market so affected by the uncertainty over Brexit?
Stark Warnings About House Prices After Brexit Have Excited Buyers
There have been stark warnings from the Bank of England’s governor Mark Carney that house prices could fall by up to 30% from their pre Brexit level if there is no deal. He also said that is his job to plan for the worst case scenario suggesting that the pessimism is based on possibility rather than probability. While most industry experts do predict some sort of drop in price following a no deal Brexit, although there are also those who predict no change and those who predict slight increases .
Gauged by the reduced activity in the housing market it seems as though a significant number of buyers are delaying their plans to buy property until after Brexit due to the fear of negative equity if the property values drop significantly.
The buyers most tempted by the prospect of a drop in property costs are those who are not also selling during the same period – i.e. first time buyers, second home owners and buy to let landlords. They represent a significant percentage of the housing market buyers.
Will House Prices Drop After Brexit?
The simple answer is that nobody can know until a plan has been agreed and even then the extent of any affect on house prices after Brexit will also depend on a range of other economic factors including Secton 24, aka The Landlord’s Tax.
The following information gathers together some relevant factors and attempts a logical understanding of the situation. It is NOT intended as any sort of advice.
Continue reading House Prices After Brexit
Section 24 Means Buy To Let Landlords Can No Longer Offset 100% of Mortgage Interest Against Rental Income.
Section 24 is a HMRC taxation change affecting what costs can be deducted from rental income to calculate ‘Net Profit’ – i.e. the figure counted as income and the figure that you will pay taxed against.
As tax relief drops and tax bills rise, in some cases* the annual sum of mortgage repayments and taxes will be more than rental income minus costs. Some landlords will need to sell at least part of their portfolio to avoid making SIGNIFICANT annual losses.
Chris Cooper of Axe The Tenant Tax said,
“A perfect storm is brewing in the rental market, landlords will either have to raise rents or sell because of the tax rises. Landlords are sleepwalking into disaster”.
According to Landlord Referencing UK, circa. 1.4 million landlords are unaware of the drastic effect it is going to have on their rental income and their tenancies over the next 4 years while RightMove research indicates 24% of landlords are already planning to sell at least one or more properties from their current portfolio in response to the new regulations and tax changes.
* See below for examples.
Continue reading Section 24 – HMRC UK Tax Changes
Buy To Let Section 24 Finance Expenses, Tax Changes
NB. All figures are intended as a guide only. The calculations have not been confirmed by the HMRC however they are based on the formula given on the HRMC guidance – please see HMRC Case Studies re Section 24 Tax Changes
Anyone considering selling their property based on these figures should seek confirmation from their accountants. National Residential cannot be held accountable for any inaccuracies in the information given.
All case studies are based on before 2017 (i.e. before the tax changes come in force) or after 2021 (i.e. after the gradual changes have been phased in).
The 4 phases are:
- 17/18: 75% of finance costs deductible from rental income, 25% basic rate tax reduction for finance costs.
- 18/19: 50% of finance costs deductible from rental income, 50% basic rate tax reduction for finance costs.
- 19/20: 25% of finance costs deductible from rental income, 75% basic rate tax reduction for finance costs.
- 20/21: 0% of finance costs deductible from rental income, 100% basic rate tax reduction for finance costs.
As summarised on Section 24 – HMRC UK Tax Changes, the biggest affect to tax bills will be to people whose income is taken into the higher tax brackets however people whose tax remains the same could find that they lose some benefits as the amount classed as income will change.
As a general rule of thumb, the bigger the finance costs are, the bigger the effect of Section 24.
Continue reading Case Studies of Section 24 Buy To Let Tax Changes