Recent tax changes such as Clause 24 Interest Restrictions, 3% extra SDLT and 8% extra Capital Gains Tax have hit landlords hard and these NLA videos explain the full impact
http://nla-video-graphic.s3-website-eu-west-1.amazonaws.com/
The NLA predict that the changes will mean that 20% of Landlords will sell their portfolios.
Since September lenders to Portfolio Landlords have been required to look at the whole portfolio before lending and this has lead to 70% of landlords with four or more properties saying that they have found it hard to obtain finance.
Overall Residential transactions have seen a slight decline in activity
Since 2015 more and more landlords have been using Limited Companies to purchase property investments even though mortgage interest rates are a around 1% higher there are many advantages:
- Clause 24 Interest Rate Restrictions don’t apply to companies
- Lenders can take a specific change and a debenture over a company and this is why separate companies for each investment can be an advantage
- If you sell the company shares rather than the property the buyer will pay 0.5% SDLT on the shares, the capital gains tax on shares is 8% lower than on residential property and the potentially the company purchaser can takeover the existing debt without needing to refinance
- Corporation Tax is 19% where as Landlords pay Income Tax rates, which means companies can help you to build a portfolio quicker as you retain more profit
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