Monday, 21 December 2015

New Additional 3% Tax on Landlords, thaks Mr Osbourne, luckily it's not as bad as it seems, claims Paul Ainsworth Lord, Darwen's Local Property Expert and Estate and Lettings Agent

Osbourne's Impact on the Darwen Property Market
Has Osborne killed buy to let in Darwen? Don't be silly!

Well George Osborne, in his Autumn statement the other week, caused Darwen landlords to ask whether buy to let is a viable investment option, when he announced that landlords, when buying another buy to let property from April 2016 will have to pay an additional 3% stamp duty on top of the standard rate.

So for example, if you were to buy a for say £75k today you wouldn’t pay one penny in stamp duty but next April it will be £2,150. For more upmarket landlords, it means that the stamp duty bill for a £120k buy to let home will rise from £0 to £3,600 from April next year. 
Some say property in Darwen will be worth less because potential landlords will not be willing to pay as much for them, and if house builders or existing home-owners don't feel they are going to get as much for them, then there is less motivation to build / sell them?... and the person we can blame for this is George himself.

Back in 2012, he choose to utilise the British housing market to kick start the UK economy, with  subsidies, Funding for Lending and Help to Buy. However, whilst that helped the Tory’s get back into power in 2015, some say this impressive growth in the UK property market has been at the expense of pricing out youngsters wanting to buy their first home.
Others say this is the straw that breaks the camel’s back as over the next four years Landlords will slowly lose the ability to offset all their mortgage interest against tax on rental income, after changes announced in the Summer Budget.

At the moment, landlords can claim tax relief on buy to let mortgage monthly interest repayments at the top level of tax they pay (ie 40% or 45%). However, over the next four years this will be reduced slowly to the basic rate of tax – currently 20%.
Surely this is the end of Buy to Let in Darwen? I don't think so personally, but there's no doubt a lot of people are worried... but before we all run to hills panicking .. let me give you another thought.
Stamp Duty rules were changed in December 2014. Before then, landlords were eagerly buying up properties under the ‘old slab style Stamp Duty’ system. For example, the stamp duty bill on a £285,000 property was lower on the old slab style duty (pre Dec 2014), at £8,550, yet it isn’t a million miles away from a new £12,800 stamp duty bill.

Interestingly though, George has left a legal loophole in the new rules, because when it comes to selling up, they can offset purchase costs against any eventual capital gains tax, including stamp duty.
I believe that total returns from buy to let will continue to outpace other investments, such as the stock market, gilts, bonds and even pensions. Also, the best part about investing in property is that it is bricks and mortar. You can touch it, you can feel it, and it isn’t controlled by some City whiz kid in Canary Wharf .. the British understand property and that goes a long way!
Buy to let has enough impetus behind it that prospective landlords will continue to buy even with a larger stamp duty bill. Us Darwen landlords will need to be savvy with what property they buy to ensure the extra stamp duty costs are mitigated.

Buying buy to let property is a long term venture. In the past, it didn’t matter what property you bought in Darwen or at what price – you would always make money. Now with these extra taxes, the adage of ‘any old Darwen house will make money’ has gone out the window (well not quite - and I'll cover this in another blog post soon).  

You wouldn’t dream of investing in the stock market without at least looking in the newspapers or taking advice and opinion from others, so why wouldn't you take the same advice and opinion about buying a buy to let property in Darwen?

One source of information, opinion and advice is this DarwenPropertyBlog

 HOWEVER If you want to know about some of the new strategies I have been working on to circumnavigate this additional tax on us Landlords then make sure you register for updates.
Once I have seen the specific details of the planned changes I will be happy to discuss them openly with you guys.

PLUS If you want to know what the real threat is to us here in Darwen is then watch out for another article I'l be putting out early in the new year.
And as always.... the other source of advice is directly from myself, so if you've seen any interesting deals and want a second opinion here's my details:
My office is in Darwen Town Centre opposite Boots the Chemist..
Ainsworth Lord Estates
49 Market St
Darwen BB3 1PS

Or ring me on 01254 760660
or ping me an email..

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