Buying a second property – What you need to know for 2017

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With so many drastic changes taking place in 2017, there have also been plenty of changes to the housing market. Mortgage tax relief changes, stamp duty costs and Brexit are just a few of the things to be wary of when buying a property this year.

So, If you have been thinking about purchasing a second property in 2017 but don’t know where to begin, don’t worry! North West property solicitors Abacus Law are here to lend a helping hand.

Equity or buy-to-let mortgage?

Equity – Here you can remortgage your first property, using the equity to put a deposit down on the second property. Where possible, you could use the equity to buy the second property outright.

If you do decide to take out a second mortgage, you will need to demonstrate to your provider that you will be able to pay off both houses.

Buy-to-let mortgage -This option should be implemented if you plan on renting the second property out. A minimum deposit of 24-40% will be necessary to secure a good deal. However, from this year, the Prudential Regulation Authority (PRA) will be rolling out new rules for the buy-to-let market. This will put stricter underwriting standards on buy-to-let mortgages.

A new mortgage tax relief

New tax relief for landlords are being introduced as of April 2017. Presently, landlords can deduct the cost of items from their rental income such as repairs, mortgage interest and estate agent fees.

When the new tax relief kicks in, landlords will still be able to deduct these expenses but taxpayers on a higher rate can only deduct a small proportion of their mortgage interest rate costs from their rental profits. However, don’t fear, as most basic rate-paying landlords won’t be affected.

Stamp Duty

When you buy your second property, there will be an additional 3% charge to the standard rate of Stamp Duty Land Tax.

• 3% on the first £125,000
• 5% on the amount between £125,000 to £250,000
• 8% on the amount between £250,000 to £925.000
• 13% on the amount between £925,000 to £1.5 million
• 15% on anything over £1.5 million

There have been many calls for this controversial stamp duty land tax to be reversed. Introduced in April 2016, this is something you will have to factor into your budget for 2017.

Brexit

With so much uncertainty over what leaving the EU will mean for the property market, some experts believe in the long run that possible restrictions on migration may lead to mean less demand for rental properties.  This is a risk to take into account if you intend to let the Property to tenants following Brexit as it may lead to a reduction in rental values.

Location

When you are thinking about buying your second property, your investment will always be more valuable if you take the time to research the areas. For instance, Liverpool’s Baltic Triangle is set to undergo huge developments. This sort of knowledge on areas set to undergo development may yield rewards in the future.

Legal implications

Purchasing another property in 2017, especially buy-to-let, can be a complicated process, not to mention the legalities that come with being a landlord. It’s always advisable to seek the assistance and experience of a solicitor well versed in property law.

… LandlordZONE.

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Three-Dimensional Tax Planning With IHT Benefits (Case Study)

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Mr & Mrs Smith own their property portfolio jointly and each account for 50% of their income and profits on their self-assessment tax returns. This is what I would call two-dimensional accounting. It is very normal. When their twin daughters were about to reach the age of 18 they approached a tax consultant to see… Read more

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Upskilling the landlord community

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Landlord Knowledge: LandlordZONE® has been involved in a major protect by Direct Line for Business (DLB) which advises UK landlords on relevant issues involved with letting property. Direct Line for Business has developed an interactive content hub for landlords with the involvement of LandlordZONE® and its impressive 30+ years’ property letting & management experience! Direct […]

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RLA membership hits 30,000

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A massive 30,000 landlords are now members of the RLA – just 18 months after membership hit the 20,000 mark. Set up in 1998 by landlords for landlords, the not-for-profit association – Britain’s leading landlord body – has seen huge growth in recent years, representing landlords with a total property portfolio of 340,000 homes. Answering […]

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Subletting to spouse for tax purposes?

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My property portfolio is in joint names with my son. 95/5 split to me. I collect all the income, my son receives no income, and I declare 100 per cent on my tax return. My husband is about to retire and will therefore not be utilising his tax allowance. Is it possible for me sublet… Read more

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RLA Membership hits 30,000

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A massive 30,000 landlords are now members of the Residential Landlords Association (RLA) – just 18 months after membership hit the 20,000 mark. Set up in 1998 by landlords for landlords, the not-for-profit association – Britain’s leading landlord body – has seen huge growth in recent years, representing landlords with a total property portfolio of […]

… LandlordZONE.

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Hamilton Fraser announces launch of new website

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Hamilton Fraser, parent company to mydeposits, Total Landlord Insurance, the Property Redress Scheme and Client Money Protect has announced the launch of its brand new website, designed to create an amalgamated hub for all its brands. A year in the making, the redesigned site is now live and forms part of a larger initiative for […]

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Specialist investor finance for all types of properties and projects

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The specialist property finance market can now cater for a very wide ranging types of projects, properties and timescales. With ever more niche lenders, products and criteria becoming available to private individuals and companies. Short Term Loans: Designed to assist in purchasing or refinancing property quickly, whether you are looking to add value with light… Read more

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Annual RLA YourSay Survey

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The RLA has launched its annual members’ YourSay survey. We are committed to providing members with an excellent membership experience. To do this, we need to know what works for members and what doesn’t. This is a really important opportunity for members to have their say on the membership and services offered by the RLA […]

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Students turned into Landlords

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The Loughborough Building Society has launched its new ‘Buy for Uni’ mortgage targeting university students who want to get onto the property ladder while they are still studying. This is similar in criteria to the Bath Building Society student mortgage that has been available since 2012 see >> https://www.property118.com/student-buy-to-let-mortgages/33850/ The Loughborough BS will lend up… Read more

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