The most recent Property Investor Survey from Mortgages for Business shows that 60% of landlords believe upcoming changes to tax relief and mortgage affordability checks will impact them.
This survey was conducted during a two-week period in November and a total of 283 landlords responded.
Tax impact
60% of respondents felt they would be affected by the changes, while 29% felt that they would not. It is predicted that these landlords are likely to be a mixture of basic rate income tax payers and those that have incorporated their portfolios and are subject to corporation tax.
David Whittaker, CEO at Mortgages for Business, said: ‘The percentages feel about right for the market in general and it’s certainly been a tough 18 months or so for landlords, so it’s encouraging to learn that the majority are getting to grips with changes that will dramatically alter the way they operate.’[1]
Somewhat alarmingly, 11% of landlords said that they were unsure if the changes would impact them directly.
These results marry closely with those from the Prudential Regulation Authority on buy-to-let lending. 60% of respondents to its survey said they understand the impact on borrowing, with 25% saying they partially understand.
6 in 10 landlords think they will be impacted by tax changes
Affordability
From 1st January, buy-to-let lenders have been permitted to tighten affordability constraints in recognition of the larger tax burden on landlords. 9% of respondents to the PRA survey said that they were unsure how the affordability calculations would impact on their borrowing, while 6% said they were totally unaware of the new guidelines.
In addition, this survey revealed that many landlords are moving towards incorporation. 32% of those questioned said they owned at least a single property in a limited company. 54% said they would look to purchase through a limited company moving forwards.
[1] http://www.propertyreporter.co.uk/landlords/60-of-landlords-believe-new-tax-changes-will-affect-them.html
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