The Central London Buy-to-Let Market

By Charles Curran, Principal at Maskells Estate Agents

 The additional 3% stamp duty to buy-to-let homes and second homes was an interesting move in last year’s Autumn Statement.  Firstly for second homes, if you are in a civil partnership or married, it is easy enough to buy a second property in the spouse or partner’s name.  For example, if you spend the week in London and your spouse in the country, each property could be argued as being your primary residence.  Overseas buyers will now be indifferent if they buy into a SPV or Trust versus buying it individually as the Stamp Duty payable is the same as the Additional Stamp Duty.  The upside of buying into a ‘structure’ is that it allows you to better plan for IHT and the financing of the asset the downside is the annual charge.

For the buy to let market, our feeling reaction is that the additional income tax payable under the proposed changes currently in consultation, were largely very unpopular.  We understand that on this basis, representations have been made to the Exchequer by lawyers and accountants. Property companies (we need to see the fine print) may be excluded, so has the Chancellor provided an opportunity where landlords may consider buy-to-let companies where taxes may be paid on EBIT rather than on turnover (subject to close company rules)? However, it does seem rather short-sighted to continue to tinker with the one asset class that represents the largest single asset in terms of value an individual may own, and whose sense of confidence in the economy hinges on that value. 

Posted on Wednesday, October 26, 2016