Government measures to reduce Buy-to-Let purchases

[KGeeson]

It's been on the news today that the government are considering bringing in more measures next year to squeeze Buy-to-Let investors (giving first time buyers a better chance of snapping up cheaper properties). They are talking about putting a limit on the amount a Landlord can borrow on a property (increasing the deposit amount required) and also specifying a percentage that the rental income must exceed the monthly mortgage payment by (for example, you could only get a mortgage on a Buy-to-Let property if the rental income exceeds the monthly repayment by 125%).

They are predicting a rush for Buy-to-Let investments before April next year, then a significant drop off. Do you agree?

 

[Luke Masters]

I think there will be a rush in the run up to April most definitely although, I don't think there will be a significant drop off.

It will take on average 11 months rental income to pay off your increase in stamp duty so as long as you are planning to keep the property longer term and it is not disastrous.

Also should you sell the property as long as you can afford to pay the Stamp Duty when buying the property you can offset this additional cost against Capital Gains Tax when selling to recoup some of the cost.... Of course this is dependant on the Treasury not changing the current rules on this, which based on the current stance against BTL is something that could well happen in the future.

Lastly I am sure many investors will set up LLP's and buy properties through these companies in order to avoid the tax in its entirety. If you are looking to do this make sure you speak to a specialist legal property professional to advise you exactly how to set this up in accordance to laws and legislation.

Luke

 

[Veronica]

I know this will affect people many people who buy up properties to make money out of renting them but in recent years the growth of this tend has pushed up the price of property out o the reach of many young couples. I have seen many couples struggle to buy even the most basic property to try to get on the first rung of the ladder so in my opinion it can only be a good thing if it slows down the buy to let market a little.

 

[Nicholas Wallwork]

These changes Kelly is describing are related to buy to let mortgages. If you're a larger investor who uses cash to buy and then commercial finance to exit after development (for example) then these mortgage restrictions won't effect you at all...

Again it's an attempt to curb the average BTL investor not the larger professional investors...

As Luke says most professional landlords will be able to cope, part of being a professional property investor, developer or landlord is to adapt to the changes thrown at you like in any business!

 

[George79]

I see nothing wrong with allowing first time home shoppers the chance to save money. We all know how hard it can be to make a living and then invest in your first property. Landlords and the like will be upset but they will get over it in time.