2018 got off to a sluggish start in the property market. Estate agents and market analysts all reported a slowing down while lenders confirmed a drop in the number of mortgage approvals.
While there have been some finger-pointing at Brexit and the uncertain political landscape, many are not satisfied that the reasons are entirely political.
Money Week argues the case for the decrease in landlords across the UK. Changes in buy-t0-let taxation and stamp duty levels being upped have left landlords facing a massive reduction in profits. Not the lucrative way to make cash it once was, landlords are leaving the market in droves.
Profound changes to the way buy to let mortgages work have dramatically altered the livelihoods of a lot of property landlords.
In 2017, changes to the law made it no longer possible for higher rate taxpayers to offset all their mortgage interest against rental income before working out what tax they owed. This led to higher tax bills, even if their income had not changed.
This is being phased through to 2020, where it will be replaced by a 20 percent tax credit.
This has affected not only higher rate income tax payers but also some basic rate tax payers who will be pushed into the higher rate bracket as a result. Means-tested benefits may also be affected.
The change applies only to private individual landlords and not to those who own property through companies.
According to Money Week, the number of landlords who bought UK homes stood at 12.5% in 2017, a drop from 14.7% in the year before and 16,3% in 2015. London saw the biggest slump.
So Brexit or no Brexit – this could be a permanent change in the property market in the UK. Which is what the government was aiming for. Their modus operandi, at least partly, in changing the tax arrangements for buy-to-lets was to reduce the number of landlords which would hopefully trigger a rise in first-time buyers successfully getting on the property ladder.
The problem is that landlords are generally in a different financial situation to a first time buyer. With tax advantages, and access to cash for significant deposit, landlords were in a far better position to buy property than a young professional. So this managed tilt to owner occupiers is a flawed plan.
Which is where HiP come in. We remove the big obstacles that landlords and first-time buyers have when it comes to buying or investing in property. We democratise the system so everyone benefits, no matter what their financial standing is.
What we’re about to do is game-changing.
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