Is it just us or is everyone feeling the government is out to get anyone who makes property their business?!
Being targeted is an understatement. Not only are second homes and investment properties stamp duty taxes going to be increased but also sweeping tax changes could potentially see the end of many amateur landlords. The NLA feel that up to half a million investment properties may be sold in the upcoming months due to these changes.
Now is this panic justified?
Lets look at stamp duty changes. An increase in 3% above the background rate for investors. Ok its not ideal and a bit of a pain in the butt but I think the reaction from investors is massively OTT. On a £275K house this is a jump from stamp duty at £3750 to £12000 i.e. extra £6250. Yes that’s a lot of money but put it in perspective. In our Bristol market you will have a property increasing hugely in value every year and creating you fantastic cash flow. £6K over the 30 plus years this property will be a part of your investment portfolio is a drop in the ocean. Just think if history repeats itself that £300,000K property will be worth £1.2M in 20 years. £6K…quit worrying.
In summary it’s a pain but not a deal breaker by any means. If anything these changes will make the competition less and likely put a few more deals back on the table for the advanced investors. Bring it on.
With regards the longer-term tax changes I think amateur investors with small portfolios and doing property as a sideline could find times tough. The professional investors with great power teams and in particular great accountants will be fine. Again I think the opportunities created for the more professional investors will more than match the negatives. Property has created wealth for centuries and will continue to do so. There are opportunities in any market. It’s about learning to spot them and being able to accept change and adapt.
Happy investing folks.