UK landlords should be aware of changes to income tax that are due to affect them once they are introduced in April of 2017. The Government are also going to be toughening up the mortgage affordability tests which will also have an affect on some, if not many, landlords around the UK.
Research conducted by broker Mortgages for Business reveal that up to 60% of surveyed landlords believe that the combination of income tax changes and new mortgage affordability tests will directly affect them, while only 29% of the remainder were certain that they would not be affected. The unaccounted 11% are marked as not knowing what affect the changes will have on them, but it is believed that a contributory factor to this is a lack of information and knowledge on what the changes are and how they will affect property investors.
Landlords of Confusion
This lack of understanding in some quarters is revealed by the same percentage of those believing they will be affected also declaring that they fully understand the affect that the new guidelines implemented by the Prudential Regulation Authority will have, which is 60%. A further 25% of those surveyed declared that they only partially understood how the changes in income tax and tougher mortgage affordability tests would affect them.
UK Landlords Urged to Seek Professional Advice
The Chief Executive Officer of Mortgages for Business, David Whittaker, said in response to the survey’s results, “We are still encouraging landlords who haven’t already taken professional advice on the matter to do so as soon as possible, as some may find that the new formula will tip them into the next tax bracket leaving them worse off.
“The new regime starts in April, so there’s not much time left to make strategic decisions and take action. It has certainly been a tough eighteen months or so for landlords, so it’s encouraging to learn that the majority are getting to grips with changes that will dramatically alter the way they operate.”
A Significant Amount of Landlords Remain Unaware of Coming Changes
However, it is the minority that is still causing concern. Mr Whittaker also went on to air his concerns regarding the 9% of those surveyed who didn’t have any idea how the tougher mortgage affordability tests would affect them, while a small but still significant 6% were completely ignorant of the changes in their entirety.
It’s clear that there is a small minority of landlords who could end up getting caught short when the changes are introduced, so it’s up to everybody involved to try and ensure that the changes are covered extensively in the media to give everybody the best chance of getting their houses in order to minimise the negative impact of the changes in April.
FOR MORE INFORMATION ABOUT THE CHANGES THAT MAY EFFECT YOU CHECK OUT SUMMARY OF TAX CHANGES AFFECTING UK RESIDENTIAL LANDLORDS
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