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.

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

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