Buy-to-Let Continues to Supplement Investors’ Incomes

With savers receiving miserable returns from banks and building societies, thousands more people are turning to the buy-to-let sector as a means of supplementing their income, new data from HM Revenue & Customs (HMRC) shows.

The figures reveal that the number of private landlords in the UK has increased by more than 100,000 per year since 2011-12, with 1.9m people having earned money from property in 2015-16. Income from property investment has, as a result, hit £16.2 billion – up by £4.1 billion over four years.

The annual personal income statistics, published by HMRC, also show that total income from dividends almost doubled over the same period, from £42.5 billion to £83.8 billion, as the average income soared to £17,000 per investor.

Sean McCann, a Chartered Financial Planner at financial services firm NFU Mutual, comments on the data: “The Chancellor will be rubbing his hands in anticipation as these huge incomes from dividends and properties give the taxman two bites at the cherry.

“It’s not just the income that will be taxed. The latest predictions from the Office for Budget Responsibility show Capital Gains Tax receipts will rocket from £8.8 billion this tax year to £9.9 billion in 2018-19, and £13.3 billion in five years’ time. So they clearly expect many investors to sell up and realise their gains between now and 2022-23.”

However, McCann adds that he believes that the number of landlords is likely to “plateau or even fall” over the next few years, as investors “start to feel the pinch from a series of tax measures that have already come into force”, such as the reduction in mortgage interest tax relief (for which further changes will be introduced in April this year) and the higher rate of Stamp Duty on buy-to-let purchases.

Landlords, do you still consider buy-to-let to be a viable investment option for supplementing your income?