1/4 of would-be BTL investors put off by tax changes

Nearly one quarter of would-be BTL investors have been deterred by the forthcoming 3% additional stamp duty hike and reduction in tax relief.

Research from online investment platform rplan.co.uk revealed that 9% of UK adults have abandoned plans to own at BTL property because of the upcoming alterations. 30% said that they were still insure about their plans.

14% of existing landlords admitted that they will now sell one or more of their homes because of the new rules.

Stamp Duty surcharge

Under the upcoming changes, stamp duty on buying a £250,000 BTL property will increase from £2,500 to £10,000 in April. For a property worth £400,000, property will more than double from £10,000 to £22,000.

The survey reveals that those looking to invest in BLT were going to utilise their savings worth an average of £43,592 to purchase a home. Now, 39% of adults will use the money to save in a cash account. 30% said they would invest in an ISA, while 20% will put it into their pension. 13% stated that they would look at other stock market investments.

Late rush

Stuart Dyer, CIO at rplan.co.uk, said, ‘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.’[1]

‘Having a BTL 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,’ Dyer added.[1]

[1] http://www.propertyreporter.co.uk/landlords/one-in-four-discouraged-from-btl-by-government-plans.html