Kent Reliance for Intermediaries and Ernst & Young (EY) have collaborated to create a guide for property investors on the changes to the UK tax system.
The guide, which is titled ‘Changes to UK Tax Relief on Finance Costs’, has been produced to inform its intermediary partners on the key considerations faced by their landlord clients and how they run their rental portfolios.
The guidance concentrates on the implementation of constraints to buy-to-let mortgage tax relief on April 6 2017, which has significantly impacted landlords and the profitability of their portfolios in the years since.
Before April 2017, landlords and investors had been able to deduct 100% of their home finance costs from their rental income to calculate the taxable rental profit. However, the restrictions – the brainchild of George Osborne and continued by successive Tory Chancellors – have been gradually phased in and now, in the tax year 2020/21, there is no allowable deduction for finance costs at all. As well as advice on the changes to mortgage interest tax relief, the guide also lays out each tax that landlords must take into consideration before purchasing, transferring into a company structure (incorporation) or selling an investment property. This includes the Capital Gains Tax liabilities of incorporating and the implications of buying or transferring property for stamp duty land tax and inheritance tax.
Adrian Moloney, group sales director at OneSavings Bank, which owns the Kent Reliance brand, said: “Our broker partners have told us that even though Covid-19 has impacted the purchase or remortgage activity of their clients, professional landlords are not standing idle. Many are taking advantage of the current situation to re-evaluate their investments, in order to maximise opportunities when normality returns.” He added: “The latest edition of our ‘Changes to UK Tax Relief on Finance Costs’ for buy-to-let owners informs our broker partners of the key considerations facing their clients regarding the tax changes.”
Moloney said it was the company’s hope that the guide ‘will be a source of information for landlords and brokers about their portfolios but, of course, this shouldn’t be seen as a substitute for professional advice’. “We always recommend to our broker partners that they advise clients to seek advice from an accountant or tax adviser to ensure they are fully aware of their portfolio’s tax
liability,” he advised.
Martin Portnoy, partner at EY, commented: “Whether you hold an interest in UK property for personal use, as part of a property business or for investment purposes, the UK taxation landscape can be challenging. Professional advice is essential and can add great value”.
You can request a copy of the guide here.
While it shares many similarities with Build to Rent and purpose-built student accommodation (PBSA), with its millennial target base, shared facilities and community events, it hasn’t experienced the explosive growth of those sectors in recent years.
On June 23, the day that Boris announced July 4 as the date for the easing of lockdown in England, Sykes Holiday Cottages, the UK’s leading and fastest-growing independent holiday
cottage rental agency, registered over 276,000 sessions on its booking platform and took a staggering 400 real-time bookings each hour.
Sykes was not alone in this surge. According to a report in the Telegraph Travel, holiday rental bookings have quadrupled across popular UK destinations with many of us keen to have some respite from being stuck at home for the last three months. Andrew Easton, managing director of Cornwall-based self-catering cottage company Beach Retreats, said: “The past few weeks, since July 4 was mooted, have been like nothing I have seen in 15 years. We have seen record numbers of bookings for the summer, autumn and 2021. We’re practically full for July and August, while September and October are well ahead of last year’s occupancy levels.” Continue reading
Unite – one of the largest providers of student beds in the UK – recently announced the successful completion of the placing it carried out, raising gross proceeds of around £300 million.
Placing Shares were issued at a price of 870 pence per share, with the placing price representing a discount of 3.1% to the middle market closing price on June 24 2020 of 897.5 pence.
A total of 34,482,759 new ordinary shares were placed at a price of 870 pence per share. Concurrently with the placing, certain directors of the company subscribed for an aggregate of 20,113 new ordinary shares in the capital of the company at the placing price, raising gross proceeds of around £175,000. Overall, the issued shares account for approximately 9.5% of Unite’s issued ordinary share capital prior to the placing. Continue reading
The green light has been given by Southwark Council to developers Avanton and Urban & Provincial for the £130 million (GDV) redevelopment of a former Carpetright warehouse.
The warehouse, located at 651 Old Kent Road, will be transformed into new homes, of which 40% are set to be affordable housing. Developed in partnership by Avanton and Urban & Provincial, the Carpetright scheme is set to deliver 262 homes, including 170 for private sale, and 20,000 sq ft of commercial space on the ground floor of the buildings, designed around three large outdoor spaces. Continue reading
Since being allowed to officially reopen on May 13, the property market has returned with a bang, according to Rightmove.
The property portal reports that last Wednesday, May 27, it recorded its busiest ever day, with over six million visits – up 18% on the same Wednesday in 2019.
It says that eager property searchers are starting to act as record levels of buyers phoning and emailing estate agents were also recorded. Continue reading
With the new restrictions on daily life imposed by the UK government, several buyers still want to make property purchases despite the uncertainty, according to Edinburgh-based real estate consultant ESPC. Across the country, social distancing measures have been introduced in workplaces, essential shops, supermarkets and even households as the country tries to limit the spread
of Covid-19. Continue reading
The Covid-19 outbreak has impacted all industries, including the whole of the property sector, but the short-lets market has perhaps been harder hit than most thanks to the restrictions on travel, holidays and business trips. As a result, property owners are shifting from short to long-term letting as the coronavirus hits holiday lets, according to Apropos by DJ Alexander. The property management company says it has first-hand evidence of Airbnb owners moving their properties away from holiday letting to long-term letting as the tourist market collapses. Continue reading
The results of a poll conducted by the UK’s short-lets trade body with its corporate membership has revealed just how damaging Covid-19 has been when it comes to companies’ reservations and income.
The feedback the UK Short Term Accommodation Association (STAA) received from its corporate members, representing the majority of the short-let industry, highlighted some very stark issues.
The amount of net income required to cover the cost of renting has increased 16.8% in the last two decades to 45.5% nationally – now accounting for 74.8% of the average salary in London.
That is according to the latest research by sales and lettings agent Benham and Reeves, which found that the average rent accounted for 28.7% of the average income in England 20 years ago.
This was higher in the capital, where 41.1% of income was required to cover rent, with the South East (31.2%) and South West (29.4%) also amongst some of the highest of all regions. The proportion of income required to cover the cost of renting has increased by 16.8% across England to 45.5%. Again, the analysis shows London has seen the most drastic increase with a whopping 74.8% of the average income now required to cover the average cost of renting – a 33.7% increase since the turn of the millennium. Continue reading