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Landlords Sell Off

Posted by Jennifer Jameson on August 21, 2017
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With Britain facing a weakening housing market, new tax legislation and increased difficulty in obtaining mortgages, the buy-to-let market is going is in decline.

The residential landlord association represent 50,000 private landlords – and they have found that nearly half of landlords are planning to increase rents over the coming year.

Landlords in London are suffering the most, as high property values and low rental yields are being supported by weakening rents. Outside of London rental prices have increased by 1.6% from July 2016 to July 2017.

The worry comes from data from the Council of Mortgage Lenders, who have stated they have seen a large drop in the numbers of property purchased by landlords investing in buy-to-let in 2017, compared to previous years. In the first 3 months of the year of 2014, and 2015, a quarter average of 27,250 mortgaged properties were bought by landlords as buy-to-let investments. Whereas, in the first quarter of this year, landlords purchased only 18,100 mortgaged properties – a noticeable decline.

The biggest impact seems to be recent tax changes according to property market analysts. From now to 2020, landlords sitting in the higher rate tax bracket may have to pay income tax on their turnover rather than profit, as a result of losing their ability to offset their mortgage interest against their profits. This will drastically reduce profits and trigger losses in some cases. Another issue arising in the near future is talk of an additional three percentage point stamp duty surcharge applied to any additional home purchases beyond a main residence.

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