The government has proposed that the levy on subsequent property purchases, which includes buy-to-let investments, will be implemented from 1 April. However, its consultation on the matter will not close until 1 February, with the final policy design expected during the March Budget announcement.
Ying Tan, managing director of The Buy to Let Business, said: “In terms of the Stamp Duty changes, I think investors have only got until the first week of February to get their cases in. I think after that it’s going to be very difficult to get deals completed in time and therefore they need to go in with open eyes knowing that it will cost them 3% more.”
In an online poll conducted by Mortgage Solutions, 40% of respondents appeared confident that incoming tax changes, which also include cuts to landlord interest tax relief to the basic rate, will not affect their businesses.
Almost a third of readers said they will employ a number of tactics to support their businesses, including diversifying advice geographically and across different sectors, while working with a tax adviser to understand the tax implications.
A further 18% will handle the impact by simply working with a tax adviser and 10% will expand advice outreach to different sectors.
Tan added that the Mortgage Credit Directive (MCD) was a good opportunity for brokers to develop their advice offering.
“Any business has to look at all avenues, you mustn’t have your head in the sand and think everything is going to be rosy. You might need to understand seconds a little bit more because that will become more important post-MCD.
“Brokers need to evolve and expand their knowledge base and if you can’t advise on second charge loans in house then you need to align yourself with people that understand it.”
Wesley Davidson, director of mortgage broker Fox Davidson, added that the firm’s clients were still likely to continue investing in buy-to-let.
“Although it is a pain I don’t see why buy-to-let shouldn’t become more expensive, because it is a commercial investment rather than a residential investment for someone to live in.”
Davidson said his team has been advising all buy-to-let clients to speak to their accountants to find out whether a limited company is the right way forward.
“We wouldn’t actively say to a client ‘we advise you to purchase in a limited company’ because everyone is different. However, we’re seeing a lot of clients create limited company buy-to-lets and we see it as a big market for this year.”
