Incoming Changes in the UK Property Sector
changes in the uk property sector In response to concerns raised by some clients we would like to explain several changes that can impact landlords and second home owners. These concerns come from the incoming change in the Stamp Duty Land Tax introduced by the Autumn Statement and for mortgages, the possibility of the Bank of England hiking interest rates next year.

We encourage individuals who wish to invest in the UK property market to act now and purchase properties under the old Stamp Duty Land Tax (SDLT). We would also like to advise individuals who wish to set up a corporate structure for the purchase, as that may now be a more efficient method to hold property.

We have seen a number of individuals mortgage or re-mortgage with no professional advice. We strongly believe our clients can achieve significant savings in this area. If this is something that is of interest, please do get in touch.
Tony Flanagan
Managing Partner
changes in the uk property sector
Company buy-to-lets to be sheltered from SDLT
changes in the uk property sector The new second home and buy-to-let stamp duty rates will affect investors purchasing properties in the UK from April 2016. During his Autumn Statement George Osborne announced that buyers looking to purchase a second property, including buy-to-let and second homes, would be subject to a higher rate of SDLT.

Here are the details:

changes in the uk property sector

The numbers – An example:
Property price: £275,000
Portion 1: £0 – £125,000 – 3% tax (£3,750)
Portion 2: £125,000.01 – £250,000 – 5% tax (£6,250)
Portion 3: £250,000.01 – £275,000 – 8% tax (£2,000)
Total paid: £287,000 (£12,000 tax)

On the other hand, it looks like the Government intends to exempt limited companies with a portfolio of 15 or more properties and if this is the case, these kind of buy-to-let investors will not be subject to a 3% increase in Stamp Duty Land Tax.

This kind of property acquisition requires additional tax planning which will need to be carried out, not only to mitigate the stamp duty taxation but also to shelter from any future capital gains and potentially, UK inheritance tax.
Savings achievable in the Mortgage area

Most of our clients with mortgages take a product that has a tie in for 2, 3 or 5 years. When this period finishes, they usually revert to the lender’s standard variable rate for the remainder of the mortgage term. This is often considerably higher than the product they originally took, which means they could be paying too much for their mortgage unless they have it reviewed.

With interest rates at their lowest in years and speculation of an increase as soon as next year, now is a really good time to review your mortgage.

Why else would you review your mortgage?

Other than reducing monthly mortgage payments with a lower interest rate, some of our clients choose to release equity and raise a deposit for an investment property or to pay for an extension or conservatory. Alternatively they may wish to change the repayment vehicle, or to change the term of their mortgage to repay their mortgage earlier or tie in with their retirement age.
changes in the uk property sector
In the light of the recently announced increase in SDLT for second homes and buy-to-let properties, now could be the time to re-mortgage if you are considering buying a second home or investment property and you need to release equity from your home to achieve this. As the lead time for a re-mortgage could be as long as six weeks, it would be prudent to arrange any additional funding sooner, rather than later.

As ‘whole of market’ mortgage brokers, our mortgage and private finance team are here for you. Get in touch to take advantage of our mortgage review service and we would be happy to review your mortgage with no cost.

Your home may be repossessed if you do not keep up repayments on your mortgage. For arranging a new mortgage or re-mortgage, a fee of a maximum of £1,000 is payable on completion. Typically this will be £500.