Almost half of landlords in the UK – 47 per cent – have changed their investment plans based on tax changes, according to new research. Landlords consider changes to tax relief as the biggest influence on their investment strategy, with 25 per cent ranking it as their primary concern, above changes to capital gains tax and increased stamp duty. The research from Simple Landlords also shows that taking into account all landlords’ concerns, tax relief was the joint highest influence at 18 per cent, alongside government legislation, with unoccupancy at 12 per cent and tenant damage 10 per cent. Despite this, less than 10 per cent of all landlords intend to reduce the size of their portfolios as a result of the revised tax regime. Some 4.4 per cent of those owning at least two properties actually intend to invest and 63 per cent of this group said the changes had no effect on their plans. The National Landlords’ Association estimates that the initial loss in tax relief this year alone would push more than 440,000 lower rate taxpayers, around 22 per cent of the market, into a higher tax bracket.
The research also found that 38 per cent of landlords owning at least two properties would consider forming a limited company, trust, limited liability partnership or a combination of these to lessen the impact of the tax reforms. Landlords will face additional challenges in 2018, including proposed new requirements for HMO licensing, and new requirements for energy performance which will come into effect for new lets and renewals on 01 April. ‘We know that landlords are adapting to the changes in the market, and are willing to embrace the challenges and find opportunities to develop more profitable and sustainable portfolios,’ said Alex Huntley, head of operations at Simple Landlords. ‘There is no one solution or route, and landlords need to get expert advice tailored to their individual circumstances. But it’s heartening to see the majority of landlords remaining undeterred, and thinking about how to change with the market,’ she added