Buy-to-let tax changes have hit landlords hard over the past few years, from the three per cent stamp duty surcharge for investment properties, to the phasing out of mortgage interest tax relief.
Different property gurus have recommended different strategies for coping with all these changes, but one piece of advice we’ve been hearing a lot lately is that landlords should consider setting up a property company - and it seems people have listened.
A recent Simply Business poll has found that over a third of landlords plan to set up a property company in order to try to alleviate the financial burden these tax changes will cause.
Of the 151 landlords polled, 23 per cent said they intended to form a limited company to manage their buy-to-let properties, while a further 14 per cent were interested in setting up a beneficial interest company trust.
One of the suggested advantages of creating a beneficial interest company trust is that landlords wouldn’t need to remortgage properties, as is almost always required when setting up a traditional limited company.
However, accountants have warned landlords to be careful when it comes to setting up companies as HMRC could well crack down on those it sees as trying to dodge taxes. So if you’re planning to set up a property company, make sure you take expert advice before you make the move.
For those not planning to set up a limited company, raising rents and converting mortgages appears to be an attractive option.
Nearly a quarter of landlords plan to raise rents to combat tax changes, while 11 per cent are considering converting their interest-only mortgages into repayment plans.
However, a fifth of landlords appear to be unfazed by the slew of tax changes, with 20 per cent of respondents saying they didn’t plan to do anything to mitigate the changes coming in. Of course, for landlords who don’t plan to expand their portfolios and who have mortgage-free properties, the tax changes are going to make little impact at the moment, though it’s worth keeping in mind that the ban on letting agent fees could well act as a further tax on landlords.
29 June 2016 • 1-minute read
Landlords believe that the North West is the best place to invest in buy-to-let property. Or at least they do according to over 1,300 voters…
21 April 2017 • 1-minute read
There’s been a three per cent rise in the number of buy-to-let landlords remortgaging their properties, according to new figures from…
6th Floor99 Gresham StreetLondonEC2V 7NG
Sol House29 St Katherine's StreetNorthamptonNN1 2QZ
© Copyright 2020 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.