Falmouth Packet Business Jul ’18 – Is this One step too far for Buy to Let Investors?

Is this One step too far for Buy to Let Investors?

A new government proposal is looking to extend tenancy agreements providing them with greater security.

The government’s proposals are that tenants will be able to vacate early whilst landlords will have greater financial security.

Greater regulation and tax changes for the investor have resulted in property investors making losses on property investment.  These changes include a 3% stamp duty surcharge for second properties, the removal of offsetting lending costs and a withdrawal of 10% wear and tear depreciation.

Many investors view bricks and mortar as a low risk tangible asset. However, there are many risks by investing in property including rental voids, liquidity & price volatility.  There is also the risk of a future interest rate increase.

An alternative, more flexible investment offering greater tax concessions is to consider a well-managed diverse investment portfolio, with the ability to use valuable annual allowances including ISA, capital gains, dividend and savings allowances. Capital gain tax rates are far more beneficial on direct investments with 8% lower rates than investing in property.

Consequently, for a rental property to match the capital return on a diversified portfolio of stocks and bonds, the housing market will need to outperform other asset classes.

The Labour party believe proposals do not go far enough so there could be even more changes in the years ahead.


This article does not provide individual financial advice and are the views of the columnist only. Vision Independent Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority.

Sarah Williams of W.T Independent Financial Planning is an Appointed Representative of Vision Independent Financial Planning Ltd

Article July 2018