New research commissioned by Experience Invest has revealed that 85% of Brits are unaware of the new tax relief rules introduced in April 2017.
Landlords are now only allowed to claim 20% of their tax relief, compared to the 45% they were able to claim before the changes were introduced.
The new regulation came into play in April and will be phased in over a four-year period. High-rate tax payers are likely to be the most affected group in terms of profitable earnings.
In addition to the new taxation laws being highly criticised, it is assumed that with the introduction of the changes, a large number of landlords will raise rent prices to compensate for the money lost to the tax. Despite this prediction, the vast majority of Brits (86%) do not expect their rent to rise as a consequence over the next 6 months, especially because over half (51%) believe the UK is already lacking in affordable housing.
Property remains the UK’s no.1 choice
Despite understandable concerns, the survey has further revealed that buying property remains among the most desirable investment methods for Brits, followed by investing in ISAs, gold, stocks and shares. Property investment maintains its spot at number one even though 93% of respondents fear it would be unpleasant to be a landlord in today’s property market.
Furthermore, the new research confirms deep rooted fears about current trends in the housing market. Nearly a quarter (24%) of Brits believe property is unattainable to rent or buy in London and the South East, while more than 1 in 5 (21%) are worried about overseas investors gaining control of the UK property market. In fact, 30% think that the potential rise in rent will lead to an increase in homelessness.
“Potential landlords need to understand their obligations, in particular when it comes to tax so we believe that it is important for landlords to fully understand their financial situation and most importantly to seek the right advice from a trusted source. This will allow you to ascertain how the new laws may or may not impact you and your property portfolio.
“If you are a would-be landlord and you are looking to buy property investments, just make sure that you do the right research, conduct due diligence, look at locations where you will get the best returns which a strong demand for the type of investment property you wish to purchase. Make sure that the property is not cash-flow negative and make sure there are no hidden surprises,” Dale Anderson, Project Manager, Experience Invest.
“The survey we conducted showed that only 85% of the British public are unaware of the introduction of the new tax relief rules. The sentiment in our industry is that the government is not doing enough to educate landlords on the new changes and more needs to be done to make sure landlords are aware of the changes and how it will affect them,” Anderson added.
More information can be found in a new 2017 UK Buy-to-Let Guide.