Advanced tax planning benefits for incorporated landlords

admin    Uncategorized     agents

This is PART TWO of the video we launched this time last week.

In this video, Ranjan Bhattacharya and Mark Smith discuss a number of  strategies you can read about in greater detail by clicking on the cards at the bottom of this page

The post Advanced tax planning benefits for incorporated landlords appeared first on Property118.

View Full Article: Advanced tax planning benefits for incorporated landlords

A new TAX PLANNING angle for landlords to consider

admin    Uncategorized     agents

If you have children or grandchildren over 13 years of age and it is your intention to leave your property business as a legacy for them, why not consider involving them now?

There are certainly inheritance tax planning advantages of doing so and if they are over the age of 18 there could also be income tax advantages too.

The post A new TAX PLANNING angle for landlords to consider appeared first on Property118.

View Full Article: A new TAX PLANNING angle for landlords to consider

RLA opposes plans to renew additional HMO licensing scheme in Cardiff

admin    Uncategorized     agents

The RLA has opposed plans put forward by Cardiff Council to renew an additional HMO licensing scheme in the city. Cardiff Council is proposing to renew an additional licensing scheme in the ward of Plasnewydd. Additional HMO licensing applies to HMOs which are not subject to mandatory HMO licensing but which are of a description […]

The post RLA opposes plans to renew additional HMO licensing scheme in Cardiff appeared first on RLA Campaigns and News Centre.

View Full Article: RLA opposes plans to renew additional HMO licensing scheme in Cardiff

Is Buy-to-Let Still a Good Investment in 2020?

admin    Uncategorized     agents

Demand from private tenants continues to grow with one in five UK households
today being rented. While the Government has imposed tax changes that have
reduced profits for many landlords, is Buy-to-Let still a good investment?

Hiten Ganatra, managing director of Visionary Finance,
says: “Despite efforts to stem the growth of the Buy-to-Let investment market,
many would argue it has shown some serious resilience. “It is still a
compelling story for investors.”

If becoming a landlord is on your list of things to do for the New Year
then here are the eight things you
need to know:

1. Understanding Tax

Rental income is added
to any other relevant income you earn during the financial tax year. You must
declare this income on a Self Assessment tax return each year. Certain expenses
can be claimed to offset against your rental income and reduce your tax bill. Though
landlords will only be able to claim basic rate tax relief
on mortgage interest at 20% from April – previously it could be claimed at a
higher or additional rate. The property income allowance means property owners
can earn up to £1,000 rental income tax free each.

2. Stamp Duty

A 3% additional rate
of Stamp Duty Land Tax
(SDLT) is now payable on purchases of additional properties such as Buy-to-Lets.

3. Find Buy-to-Let Mortgage Advice

When it comes to
finding a Buy-to-Let mortgage,
the benefits of using a broker is a no-brainer. While many UK brokers
charge a fee, choose a broker that offer their brokerage service completely
free like Visionary
Finance. They offer a whole of market service which means they have
access to over 60 different lenders including all mainstream and specialist Buy-to-Let
lenders. This will help to ensure you find the best deal suited to your
individual circumstance.

4. Calculate Rental Income

Working out your expected profits is an
important guide for calculating if the investment is worth your while. Make
sure you factor in stamp duty, solicitors fees, mortgage payments, agency fees
and maintenance when you crunch the numbers. You must also be prepared for
times when a rental property is empty.

The net yield is calculated after all costs
have been deducted – upfront expenses such as transaction charges and stamp
duty, and ongoing costs including everything from mortgage repayments on the
property to the income tax due on rental income. You can do some number
crunching using a Buy-to-Let
calculator.

5. Location Matters

Making sure your investment property is in
a desirable area will help ensure demand – and a consistent rental income. You shouldn’t buy in an area just because you
like it. The numbers need to add up.

The UK’s top cities for
Buy-to-Let investment in 2020 are (in order) Birmingham, Manchester, Liverpool,
Sheffield, Leeds, Leicester, Nottingham, Oxford, Cardiff and London.

Birmingham came in at number one because growth has outpaced all UK cities outside the capital in recent years, leaving a chronic undersupply of homes. As a result, property price growth has hit 19.3% since 2014 and Knight Frank predicts a further 12.5% increase by 2022. What’s more, the city has rental yields sitting comfortably between 4.4% and 5.3%, according to PropertyData. But do your homework on your preferred location and see how the numbers stack up.

6. Choose Your Rental Wisely

Purchase something that performs well in
the chosen market. Having plenty of space is an important feature listed by
tenants. Space is important to a tenant because it does not feel they are
outgrowing the property and choose to move on elsewhere. Having decent storage
will mean tenants enjoy a less cluttered home – and hopefully, they will stay
longer. Having equal sized bedrooms will be very important to sharers, while a decent
garden is crucial for families.

7. Ownership Options

The cutting of tax relief on mortgage
interest for landlords has prompted more to move their properties into
a limited company. If the property is owned by a company, all costs,
including mortgage interest payments, can be deducted as business expenses.

Profits incur corporation tax at a rate of 19% marking a significant cut
to a tax bill for higher-rate taxpayers.

As a landlord, you can draw income in the
form of dividends. In 2019-20 the first £2,000 of dividends is tax -free but
you pay tax on further withdrawals at 7.5% as a basic rate taxpayer or 32.5% if
you fall into the higher rate bracket. 

Setting up a limited company is something to take professional advice on. Getting a mortgage on a limited company-owned
property means getting a special deal from a lender. A broker can help you.

8. Don’t Forget About Resale

While investing in residential property is
a long-term commitment and Buy-to-Let investors don’t typically enter the
market with a view to selling, it’s important to have an exit strategy.

Should your circumstances change and you
need to sell up to access your capital at, it’s smart to ensure that the
property you buy can sell without any obvious complications. Market conditions
are, of course, out of your control.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Is Buy-to-Let Still a Good Investment in 2020? | LandlordZONE.

View Full Article: Is Buy-to-Let Still a Good Investment in 2020?

A lost decade for house price growth, but affordability lags further behind…

admin    Uncategorized     agents

House Prices:

The 2010s decade has
seen the weakest house price growth since 1990s. Figures from
Savills, shared ex­clusively with The Times, and the
Nationwide’s research show that average house prices across Great
Britain have risen by 34 per cent over the past decade.

But this compares to
an affordability decline as average wages rose by just 20 per cent
over the same period.

Also, when adjusted for inflation over that period, the figures for average house prices would indicate a slight fall of 0.3 per cent, and affordability an even bigger one.

“There has been
practically no real house price growth across the country as a
whole,” Lucian Cook, head of research at Savills, who analysed
aver­age house prices from Nationwide between 2009 and 2019, told
The Times.

“That is
reflective of the fact that parts of the country have been left
behind until very recently. A lot of those lower-value markets in the
north of England are only returning to house price growth very late
in the day,” he said.

In a nutshell:

• House prices up
33% in 10s vs 180% in 80s

• London top
performer in 2010s with house prices rising twice as fast as UK
average

• Low interest
rates have helped support affordability through the decade

• High house price to earnings ratio make deposit a major barrier for first time buyers.

Forty Years of House Price Growth (source Nationwide)

Andrew Harvey,
Nationwide’s Senior Economist, has said:

“We’ve looked at
how the last 10 years compares with previous decades across a variety
of housing metrics. The 2010s has been the weakest decade for house
price growth since the 1990s; nevertheless, prices still rose by 33%
over the decade, somewhat above the 20% rise in average incomes over
the same period.

“Despite recent
weakness, London has been the top performing region over the last
decade, with house prices rising twice as fast as the UK average (at
66%). The neighbouring Outer Metropolitan region (which includes
places such as Slough, Guildford, Crawley and Chelmsford) also
significantly outperformed, with prices rising 54% during the 2010s.

“The northern regions, in particular the North, Yorkshire & Humberside and North West, saw relatively weak house price growth over the decade, with prices slow to recover following the financial crisis. House price growth has remained subdued in Scotland, with just an 8% rise over the past 10 years. Northern Ireland saw the lowest growth, with prices up 2% compared with the end of 2009.”

Growth Across the Regions in the 2010s (source Nationwide)

As the Nationwide charts show, price rises have been very mixed across the regions. Mr Harvey says:

“House price
growth has continued to exceed earnings growth, resulting in a
further rise in the house price earnings ratio. At the end of 2019,
the UK First Time Buyer (FTB) house price to earnings ratio stood at
5, close to 2007’s record high of 5.4, and up from 4.4 at the end
of 2009.

“The last decade
has also seen a significant widening in the gap between the least
affordable and most affordable regions. London been the least
affordable region for most of the past 40 years, but its house price
earnings ratio (HPER) has reached new highs in recent years, reaching
10.2 in 2016, from 6.1 at the start of the decade, with only a modest
improvement to 8.8 at the end of 2019.

“The region with
the lowest house price to earnings ratio in 2019 was Scotland with a
HPER of 3.2 – a decade ago it was the North with a HPER of 3.3.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – A lost decade for house price growth, but affordability lags further behind… | LandlordZONE.

View Full Article: A lost decade for house price growth, but affordability lags further behind…