Taylor Scott International News
Around one in four of people in the UK who were considering investing in a buy to let property have been put off by the Government’s plan to introduce a 3% additional stamp duty and cut tax relief on their finance costs, according to new research. Overall some 9% have given up on aspirations to own a buy to let property and 14% of existing landlords say they will sell one or more of the properties in their current portfolio because of the changes. The research by online investment platform rplan also found that 30% say they are planning to invest their buy to let deposit in an ISA instead. Under the changes, the stamp duty on buying a £250,000 buy to let property will rise from £2,500 to £10,000 from April, while that for a £400,000 property will more than double from £10,000 to £22,000. Also, from 2017, the tax relief currently allowed on finance costs such as interest payments on mortgages and loans to buy furnishings will be gradually reduced over four years. Those planning to invest in buy to let were going to use savings and investments worth an average of £43,592 to buy a property. Instead, 39% of these adults will use the money to save in a cash account, 30% will invest in an ISA, 20% will put it into their pension and 13% will put it in other stock market investments. Latest figures in the Bank of England’s Credit Conditions Survey have revealed a rush for buy to let properties before the new tax is introduced. Lenders reported that demand for secured lending for house purchase increased slightly in the fourth quarter of 2015 and is expected to increase in the first quarter of 2016. But within this, demand for buy to let lending increased significantly in the last three months of 2015. ‘The British have strong faith in property as an investment and many see it as a means of providing a pension income. But the government clearly has a policy to dis-incentivise BTL and the sharp increase in landlord mortgages revealed by the Bank of England credit survey will probably be a last rush before the gate slams shut,’ said Stuart Dyer. ‘Having a buy to let property can also mean an over exposure to one asset class for many investors, who should strongly consider the alternative of investing in a diversified portfolio for the long term, especially if this can be achieved through a tax free ISA wrapper,’ he added. Taylor Scott International
Taylor Scott International, Taylor Scott
