The buy to let market in the UK can provide you with significant regular income. It has always been a popular choice with UK Property investors and the demand for rental properties is still strong. There is no reason why you shouldn’t invest in a buy to let property but you need to be aware of the latest government tax law and the impact that it will have.
If you are new to property investing then you may be totally unaware of the onerous rules on Tax Relief that have been introduced by the UK government. This will affect all buy to let landlords.
A recent survey was conducted by Vital Research and they surveyed 2000 people. Of this number 45% of them said that they would choose buy to let Property Investment but 85% admitted that they were not aware of the tax relief changes that have come into force in 2017.
What are these New Rules?
It is all centred around mortgage interest tax relief. Before the changes were implemented the tax relief on buy to let mortgages was 45%. This is being reduced and by 2020 it will be down at 20%. Most new investors did not know about this dramatic change, and this could lead to a fall in the number of buy to let property investments.
What about Existing Buy To Let Property Owners?
If you currently have a large portfolio of buy to let properties then you need to seek good tax advice immediately. If the leverage on the properties is high then you will be substantially affected by these new tax relief changes.
If you are sitting with a buy to let portfolio of 40 properties or more and your mortgages are at the 70% loan to value position then you seriously need to consider consolidating what you have otherwise you could find yourself being severely punished financially.
For future buy to let property investors the new tax rule will make a highly leveraged property a lot less viable economically. Higher deposits will be required to counteract the effect of the lower tax reduction on buy to let mortgages.
Other Interesting Information from the Survey
The participants were asked what would be the most likely investment route they would take if they had £50,000 to £100,000 to invest. 45% of the participants said that they would invest in property in the United Kingdom or overseas.
Only 9% said they would invest in gold and only 8.4% in stocks and shares. For those interested in property investment just 6.7% said that they would invest in property overseas and 4.7% said they would invest in UK and overseas property. Only 3.9% said that they would look at student accommodation investment.
Property Investment is still Very Viable
Some people reading this may think that property investment in the UK is not viable any more after the tax changes but this is not the case. Working with experienced property investment professionals is now more important than it has ever been. For a short time we can offer you a “hands off” property investment partnership. Contact us for more information.
