More than two years ago, the Government announced a series of changes to the buy-to-let industry in the hopes to reduce the sector’s attractivity to investors and tackle the housing crisis all in one.
Whilst some of these announced changes have already been implemented to their fullest, others are just about to be phased in.
The announced changes are:
– 3% stamp duty tax hikes (came into effect in April 2016)
– Reform to 10% wear and tear allowance (landlords have to give proof of any repairs to receive reductions)
– Cut to mortgage tax relief (from 45% down to 20%, phased in over the next three years)
On Saturday, April 1st, the phasing in of mortgage tax relief has officially begun. This means, property investors who used to be able to deduct costs they incurred from their payable tax at a rate of 45% will be pushed down to the standard rate of 20% by 2020.
What this means in detail is that landlord will no longer be able to offset the full cost of their mortgage.
Additionally, the Government has decided to grant the Bank of England extra powers in overseeing the buy-to-let sector. Considering the new rules and regulations that may be phased in through this, it may become far more difficult for individuals to secure the mount of funding they would need for their next investment.
What about build-to-rent?
Whilst buy-to-let appears to be doomed an outdated, non-beneficial system by the Government, build-to-rent is here to stay.
The Government proved once again its support for the up and coming sector in its latest Housing White Paper. Build-to-rent is a sector that’s growing fast and wide. Due to the simple fact that it is offering what people want, purpose-built, central and outstanding accommodation, many see this market as the new way forward.
Property will continue to remain one of Britain’s most attractive asset classes, it may only be the kind of property, that will change.