Residential property landlords urged to learn about tax changes
Two Lancashire businesses joined forces to explain how the imminent tax changes could impact on the rental profits of residential property landlords and those purchasing second homes.
Over 100 residential property landlords gathered at Moorhouse’s Brewery in Burnley to hear presentations from Cassons business advisers LLP and Petty Estate Agents.Cassons explained how the changes, which begin to come into effect from April will alter the way rental profits are calculated, leading to increased tax bills.
Tax adviser Sinead Duffy used an illustrative example to demonstrate how the changes to allowable expenses and finance costs could affect their profits – both in the next tax year and once the restrictions to mortgage interest are phased in.Colin Tice, tax partner at Cassons then explained how the proposed changes to Stamp Duty Land Tax, which come into force from April 1, could affect residential property landlords and anyone purchasing a second home, also providing the benefits and implications of purchasing property through a company.
Simon Westwell, lettings director at Petty’s, spoke about matching property portfolios to target markets and identifying investment strategies to help maximise return, as well as the future of the residential sales and lettings markets.Simon Westwell said: “Despite the disappointing news on taxation, there are still good opportunities for East Lancashire investors. There is potential for rents to increase by up to 5 per cent and demand in the local marketplace remains strong with over 150 enquiries per month.
“This has seen us let out between 30-35 properties per month to quality and fully referenced tenants. Average tenancies are 18 to 24 months, compared to just 12 months in 2010, and we’re seeing yields up to 10 per cent in parts of Burnley and Pendle.”Colin Tice said: “It’s fair to say there was a collective sense of shock in the room as landlords realised the impact these changes are likely to have when they are phased in from April. Some of these changes are particularly shocking and are set to be challenged by judicial review.
“It will be interesting to see if any concessions are introduced when this new legislation is finalised in the Budget on March 16 but as things stand it’s going to have major repercussions for residential property landlords and those looking to purchase second homes.“My message to people is seek professional advice before purchasing a property and I would strongly recommend carrying out a review of your property portfolio to gain a clearer understanding of how you will be affected.” After the seminar there was a lively question and answer session, which was followed by a pie and peas supper and a tour of Moorhouse’s brewery.