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Wednesday, January 06, 2016

KPMG predictions for BTL in 2016

Consultants KPMG are predicting 2016 will see a reversal in the BTL boom following this Government's sequence of tax changes. (sighs....)

Head of Private Client at KPMG in the UK, Dermot Callinan predicts:

“Over the past four year, there have been 14 tax changes targeted at residential property and in particular buy-to-let landlords, making the economics of such an investment less and less attractive.

“So far, experience had shown that the majority of individuals have opted to pay the higher taxes than invest differently, and in the short-term, we may well see a rush to invest in rental properties before the additional 3% in stamp duty land tax on buy-to-let and second home properties (above £40,000) comes in from 1 April 2016. However, following its implementation and on top of a number of other measures phased in from 2017 onwards such as landlords facing a restriction in their ability to offset mortgage interest, it will be interesting to see whether buy-to-let investors opt to keep property portfolios or sell up ahead of the further changes coming in to force.

“If large numbers of landlords take the decision to sell leading to a significant amount of second hand stock being put up for sale, this will certainly have an impact on the housing market and could also cause problems for some developers reliant on investors to maintain the current rate of sale.”

“Added to this, if fewer buy-to-let properties are available thereby creating a squeeze on the market, there is also the risk that these changes could result in high rental rates as landlords seek to compensate for increased costs.”

“While a number of the tax changes have been highlighted as major revenue raisers for the Government, the thinking behind them is also to deter some from investing property in order to leave more opportunities for owner-occupiers to get onto the housing ladder."

“Whether these changes achieve the Government’s policy aims remains to be seen, but these measures may well dampen demand for the kind of properties that are marketed as buy to let investments in the medium to long-term.”


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