So, for example, on a £124,000
property, the stamp duty goes from nil to £3,720. It becomes quite stark when
you look at the middle market, so it means that the stamp duty bill for a
£285,000 buy to let home will rise from the current £4,250 to £12,800 from
April next year.
Some say property in Oakham (and Stamford come to that) will be worth less
because potential landlords will not be willing to pay as much for them, and if
house builders or existing homeowners don't feel they are going to get as much
for them, then there is less motivation to build / sell them?... and the
person we can blame for this is George himself.
Back in 2012, he chose to utilise
the British housing market to kick start the UK economy with subsidies, ‘Funding
for Lending’ and ‘Help to Buy’. However, whilst that helped the Tory’s get back
into power in 2015, some say this impressive growth in the UK property market
has been at the expense of pricing out youngsters wanting to buy their first
home.
Others say this is the ‘straw
that breaks the camel’s back’, as over the next four years Landlords will
slowly lose the ability to offset all their mortgage interest against tax on
rental income, after changes announced in the Summer Budget. At the moment
landlords can claim tax relief on buy to let mortgage monthly interest
repayments at the top level of tax they pay (i.e. 40% or 45%). However, over
the next four years this will reduce slowly to the basic rate of tax –
currently 20%.
Surely this is the end of Buy to Let in Oakham? Probably, but
before we all run to hills panicking let me give you another thought…
Stamp Duty rules were changed in
December 2014. Before then, landlords were eagerly buying up properties under
the ‘old slab style Stamp Duty’ system. For example, the stamp duty bill on
that £285,000 property was lower on the old slab style duty (pre Dec 2014), at
£8,550, yet it isn’t a million miles away from new £12,800 stamp duty bill. Interestingly though, George has left a
legal loophole in the new rules, because when it comes to selling up, they can
offset purchase costs against any eventual capital gains tax, including stamp
duty.
I believe that total returns from
buy to let will continue to outpace other investments, such as the stock
market, gilts, bonds and even pensions. Also, the best part about investing in
property is that it is bricks and mortar. You can touch it, you can feel it,
and it isn’t controlled by some City whiz kid in Canary Wharf. The British understand property and that goes
a long way!
Buy to let has enough impetus
behind it that prospective landlords will continue to buy - even with a larger
stamp duty bill. Oakham landlords will need to be savvy with what property they
buy to ensure the extra stamp duty costs are mitigated.
Buying buy to let property is a
long term venture. In the past, it didn’t matter what property you bought in Oakham
or at what price – you would always make money. Now with these extra taxes, the
adage of ‘any old Oakham (or Stamford) house will make money’ has gone out of the
window. You wouldn’t dream of investing
in the stock market without at least looking in the newspapers or taking advice
and opinion from others, so why would you take the same advice and opinion
about buying a buy to let property in Rutland / South Lincolnshire / North
Cambridgeshire?
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