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Some recent tax changes landlords should know about

July 19, 2017Article by Paul Avery

The pace of change affecting UK landlords has slowed significantly since last year, but a couple of new tweaks to tax and mortgage obligations will soon be upon us.

The first concerns tougher lending standards for investors who already own multiple properties. The Telegraph reports:

“In two months’ time the Prudential Regulation Authority, part of the Bank of England, will start to enforce tougher standards for landlords with four or more mortgaged properties.

“The change means that, for the first time, lenders may be forced to look at a landlord’s entire portfolio when they decide what mortgage deal they can offer on a single property. They may want to see proof of rental income and a business plan to support a new application.

Brokers are warning that the greater burden being placed on lenders is likely to mean that some decide to exit the market. They are urging borrowers to arrange new deals before the rules take effect on September 30.”

Click here for more details.

The second change concerns inheritance tax exposure on UK properties owned through non-UK companies. Lexology reports:

“The Government confirmed on 13 July 2017 that the new rules imposing inheritance tax on UK residential property owned through non-UK companies (and certain other structures), extending deemed domicile to income tax and capital gains tax for those who have been UK resident for 15 out of 20 tax years, and introducing associated changes to the taxation of non-UK trusts, will be [retroactively] effective from 6 April 2017.

“These rules had previously been included in the Finance (No. 2) Bill 2017 but were removed following the announcement in April of the snap UK General Election on 8 June, leading to a period of significant uncertainty.”

The outcome of the original consultation can be found here.

Neither change should be of significant concern to most UK landlords, but if in doubt about whether your specific circumstances apply, explore the links above and, if necessary, get in touch with a tax or mortgage professional or speak with a member of our team first.


Paul Avery

Paul joined us in 2016 to lead our in-house research efforts, producing reports and guidance for clients as well as the strategic market analysis behind our new project launches. His background is in sustainability in the construction sector, and he is currently being trained in property valuation to further bulk up his investment creds.
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