Buy-to-let market ‘unprepared’ for impending change

Speaking at the Aldermore Commercial Property Senate earlier this month, MD of Mortgages for Business David Whittaker said there is a failure on the part of investors to make purchases through limited companies and mitigate what he called the previous chancellor’s “assault on landlords”.

Whittaker was referring to the loss of wear and tear allowance from April 2016 and complicated tax relief reductions which come into force on 6 April next year. In addition, landlords have to deal with the stamp duty surcharge and their exemption from reductions in capital gains tax, plus the PRA’s changes to underwriting in buy to let – which also come in next year.

However, it is not only landlords, but lenders and brokers who have failed to prepare for the changes, said Whittaker. “The market at all levels has not got itself well organised,” he added.

Whittaker cited polls conducted at conferences, with no respondents at an event 85 landlords having yet acquired property through a limited company. At another 12 out of 50 had done so. Likewise, Whittaker said brokers are not using limited companies extensively, with some preparing strategies for April next year and others using limited companies for less than one in 10 transactions. In his own business Whittaker said 63% of all purchase applications are now in limited companies – a figure that has doubled in the last 12 months.

“Seminars and roadshows will have to be run through 2017, 2018, 2019 and beyond,” Whittaker said.

“Few landlords know about the changes in tax – and I suspect that few if any of them yet know about the impact of the PRA on what lenders will do for them going forward.”