Long-term investors are taking the raft of tax changes and government proposals in their stride and showing ‘true grit’, found Syms after completing a round of client catch-up sessions.
Syms questioned Connect intermediary services’ property investor clients for their views on the Stamp Duty and mortgage interest relief changes and their strategies for profit.
“My belief is that most landlords are just as resilient over change as mortgage advisers,” said Syms.
“Professional landlords will evaluate the properties they wish to buy both for income return and capital growth. Whilst the increased Stamp Duty cost is considerable, most are just factoring this in when assessing the investment value of a property over the longer term.”
She said that her client interviews had been mostly focused on the changes to mortgage interest relief.
From April 2017, the government will begin to phase out the higher rate tax relief gradually over a period of four years. Those who have a buy-to-let property will no longer be able to claim 45% tax relief on their monthly interest payments, instead they will only be able to claim the basic rate of 20%. Properties owned by limited companies will not be affected by the changes.
“Many of our landlords are quite rightly seeking specialist tax advice in relation to both existing portfolio and ongoing purchases.
“Purchases through limited companies have become more popular. However, transferring property currently held in a personal name to a limited company is deemed a sale and implications such as Stamp Duty and Capital Gains Tax need to be considered.”
In one case, a landlord has devised a plan to transfer a portfolio of more than 40 properties into a limited company in two years’ time which they calculated would be more cost effective.
The Prudential Regulation Authority’s announcement that lending to portfolio landlords should be assessed using a specialist underwriting process and the introduction of a wider affordability assessment caused little concern.
“As many lenders already take into account overall affordability, there may be less change than originally anticipated,” said Syms.
She added: “My professional landlords still see property as an attractive investment but these latest changes do heap more negativity on to the market.”