Hello everyone, I understand there is increased speculation regarding proposals for incremental taxation on buy to let via company structures (to neutralise the tax advantages over direct buy to let following tax changes introduced last year). Any thoughts or developments you may have come across? Thanks
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Further regulation would not surprise me unduly, the key for us will be whether it is restricted to residential letting (the target) or whether commercial property companies will also be caught in the crossfire. The writing re regulation has been on the wall for a while re landlord registration/EPCs /testing for everything/ rent capping etc, whilst not the main drivers to our exiting the residential market (we do have one flat left) the trend would certainly not encourage us to again build flats to rent.
Given our elected representatives do not mind residential property rental as an idea (there has to be some stock) and the signals that have been made to the larger financial institutions to encourage their entry into the market, any legislation impacting corporate entities will need to be very carefully crafted; they may say encourage use of a form of REIT re residential property or more institutional pension fund investment into residential (but not SIPPS/SSAS), the squeeze will likely be on the smaller players- say less than 200 to 300 units perhaps.
Who knows?
But it seems blindingly obvious to me that there will be future legislation aimed at reducing the incentive to incorporate BTL as if the tax structure is "wagging the dog" then it tends to be a short run thing.
Personally I dont think people appreciate the CGT side of things and get fixated by the mortgage interest deduction, but it depends on your gearing and expectations of house price growth and 101 other factors. If you sit an model it "which is best" is an "it depends" type question.