Landlord Strategies – The Future of Buy-to-Let

In the last few weeks Property118 has received tax planning enquiries from nearly 200 landlords with combined property portfolio values well in excess of £1billion. 

All enquirers have had at least two have two things in common; they are not Limited companies and they are extremely concerned about how the restrictions on finance cost relief for individual landlords will affect their businesses. The operators of larger portfolio’s will, by and large, be OK because they will be able to afford to pay for the advice required to incorporate and pay lower rates of tax without paying CGT or stamp duty, and many will not even need to refinance. However, given that such advice costs upwards of £50,000 to obtain and implement it is out of the reach for the majority.

Having engaged on several Facebook groups, the consensus amongst landlords with portfolio’s worth less than £5million is that they will sell at least some if not all of their property portfolio within the next five years. There is no doubt the UK property market is experiencing an all time high in demand. This is evidenced by “open house” sales becoming increasingly common, often resulting in properties being sold at or above the asking price within a couple of weeks of marketing having commenced. The vast majority (82%) are being purchased by owner-occupiers, the remainder by investors. These investors are either unaware of the proposed tax changes or are unaffected by them due to be cash buyers or companies.

Landlords who are familiar with the potentially devastating effects of the Chancellors tax grab can see the pitfalls for the economy more generally. Most people who rent do so because they cannot afford to buy or have other good reasons not to. If demand for rented property increases then the only logical outcome is that prices will rise and that many renters on lower incomes will become homeless. Whilst the affected landlords generally have a social conscience it is human nature to put the welfare of themselves and their families first. If that means selling up, or in extreme cases emigrating to avoid CGT prior to selling up, that is what they will do.

Those landlords able to structure their tax affairs more efficiently will be the winners. Not only will they pay less tax on rental profits, they will also benefit from even stronger rental demand than it is already. This will enable them to cherry pick their tenants from a much larger pool of applicants for every available property, and of course to maximise their rents.

How can Property118 help?

In the first instance, we can show landlords what the effects of the tax changes are likely to have on their finances – click here for details

We are working with National Media and several landlord groups to campaign against the tax changes announced in the Summer 2015 Budget.

Where landlords decide to sell we can help them to achieve the best possible price.  There is no need to obtain vacant possession during or prior to marketing or even to pay commission to an estate agent, better to save your money and offer to compensate a tenant for moving out when it is convenient to you. That leaves everybody feeling better about the inevitable disruption and preserves rental cashflow during the sales process for the landlord. We can market the property tenanted and at the same time we arrange for your property to be advertised on Rightmove and Zoopla. We can even organise block viewings with your tenants in order to minimise disruption as well as handling the bidding process to ensure the best possible price is obtained.  Landlords do not pay a commission on sales when using the Property118 portal to achieve this. More details here.

If the value of your property portfolio is in excess of £5million then restructuring your tax affairs may well be the preferred option. Refinancing, CGT and Stamp Duty may all be avoidable. Initial feasibility assessment is not charged where portfolio values exceed £5 million. Advice costs £5,000 and the balance of fees (1% of the portfolio value) are only payable at the point of implementation, deferred until HMRC clearance is granted where necessary. Advice is provided by a Barrister regulated by the Bar Standards Board and specialist tax accountants regulated by the Institute of Chartered of Accountants in England and Wales. All advice and implementation is insured via the professional indemnity insurance policies of these advisers. An enquiry form can be found here.

Share This Article