Here at Primecover, we like to keep our landlords up to date with news relating to Let Property and as there has been a lot going on in the Residential Let Property Market and the last year or so has seen both financial and administrative challenges for the buy-to-let landlords, with new regulations coming into force and changes to taxation.
Stamp duty increases for buy-to-let and second properties
From the 1st April 2016, landlords became subject to an extra 3% stamp duty land tax (SDLT) surcharge. The regulations also apply to anyone purchasing a property in addition to their main home, with:
- An additional 3% SDLT for the first £125,000
- 5% instead of 2% on the portion between £125,001 and £250,000
- 8% on the amount above £250,001
Landlords and second property buyers can use http://www.knightfrank.co.uk/stamp-duty-calculator to see how much you will be liable for.
For landlords of an HMO (House in Multiple Occupation), registration with your local authority is now obligatory – It is your responsibility to check with your own local authority.
HMO landlords who fail to register face an unlimited fine, with newspaper reports citing a landlord in Sheffield who was fined £29,200 for 56 offences and another who was fined £14,140 as well as having to repay the council £39,022 in the housing benefit claimed during the period when the property was rented without a licence. https://landlordnews.co.uk/landlord-ordered-repay-housing-benefit/
In some parts of the UK, private landlords must register as well, so landlords are advised to check with local councils.
Removal of flat-rate 10% wear and tear allowance
Earlier in 2016, the government removed the 10% flat-rate wear and tear allowance. Claims are now on an item-by-item replacement basis and original purchase values will be ignored.
previously, landlords letting out a furnished property had the right to claim a flat-rate of 10% tax relief against profits to cover wear and tear to furniture and fittings such as household appliance’s and soft furnishings.
Changes to mortgage tax relief
The government introduced legislation to limit the amount of tax relief available on finance costs to the basic rate.
Although government sources indicated this did not mean that most landlords would e paying more tax, they did accept that some would – subject to their overall business and tax position.
Letting agents fees removed from tenants
In the Autumn Statement it was announced that the charges letting agents can levy on tenants for services such as administration and referencing would be banned. The government believes the ban – to be brought in “as soon as possible” following consultation – will help millions of households in private rented housing by sparing them what can amount to hundreds of pounds in fees.
“These fees can spiral, often to hundreds of pounds the Chancellor said. “This is wrong. Landlords appoint letting agents and landlords should meet their fees”
For landlords, this means yet further costs.
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