The UK’s buy-to-let market has benefitted small landlords for years. But all of this changing.
Essentially, Section 24 will change how private landlords are being taxed on their rental income. No longer will landlords be able to offset the cost of mortgage payments from their rental income. Regardless of what mortgage payments are being paid, landlords will now be taxed on the full rental income of their property. This restriction of mortgage interest relief is set to affect small landlords significantly across the UK and overseas with higher taxes on their income and thus smaller profits.
Many speculate that this is purposely deterring small landlords operating buy-to-let properties so that larger commercial landlords will control the market. Many argue as to whether this is more or less beneficial to tenants. There is a lot of chatter and arguments on Section 24 at Property Tribe and other landlord advice sites.
Life Tenancy Investments (LTI), which MacBeale specialise in, fortunately are unaffected by this change and still provide a great way for landlords to make healthy profits. Because of the unique way that LTIs are arranged, the rental income can be perceived to be paid all up front and in the form of a discount from the purchase price of the property. Even the 3% Stamp Duty surcharge on second homes is exempt on LTIs.
To learn more about Life Tenancy Investments, click here