Landlords have been confronted with a series of issues in recent years which include:
- Stamp Duty – 3% surcharge on additional properties.
- Section 24 Finance Act 2015 – not allowed to offset mortgage interest against your income.
- Section 21 Notice abolished – No longer allowed to take your property back without giving significantly greater notice.
- EPC – government increasing the need for more energy efficient housing, a challenge on older properties.
- Covid 19 and the eviction ban – tenants allowed to skip rent payments but no financial assistance for landlords.
Bad publicity is a fact of life but programmes such as Nightmare Tenants, Slum Landlords has brought pressure to bare on government to legislate against the worst offenders, quite rightly, but offering no reward to quality landlords providing good quality, healthy accommodation.
The National Landlords Residential Association recently pointed out to the Government that 94% of Landlords own just one or two properties, they are not property tycoons, in spite of this the Government ploughs on with its anti-landlord agenda.
Section 24 Tax changes
Full Time Landlord – The graphic shows the decline in personal income a Landlord will suffer as a direct result of the section 24 tax changes. It assumes you have no other business or work interests. This is as good as it gets – a 24% drop in your income and 55% drop in your cashflow! The fact you can no longer offset your full mortgage interest charges puts you in a higher earning bracket that reduces your personal allowance. This is why many Landlords are now looking for tax efficient alternatives or failing that, to get out altogether.
Secondary Income Landlord – The graphic shows the decline in personal income a Landlord will suffer as a direct result of the section 24 tax changes. It assumes you have another job or multiple businesses which use your personal allowances. The effects are significant; this highlights a 23.8% drop in your net income and a 93% drop in your cashflow, which barely makes the project worthwhile. Check out our blog post covering the same issues.