Recent tax changes have not significantly altered landlords’ plans.
- A survey shows only 19% of landlords paused investments due to tax concerns.
- Capital Gains Tax (CGT) was a major worry, but did not materialise.
- Most landlords will continue their investment strategies unchanged despite a Stamp Duty increase.
- Some landlords plan to expand portfolios, though at a slower rate.
In the midst of recent discussions about potential tax increases, a significant number of landlords found themselves concerned about the possibility of a Capital Gains Tax (CGT) hike. However, research by Benham and Reeves illustrates that these worries did not translate into widespread changes in investment behaviour. Only 19% of landlords decided to put their buy-to-let investment plans on hold, anticipating potential changes announced in the Autumn Statement.
The looming threat of a CGT increase was a primary concern for many. Of those surveyed, 22% indicated that an increase in CGT for residential property would have led to a reduction in their property portfolios. A notable 10% were even prepared to exit the sector entirely if such tax changes were implemented. Fortunately for these landlords, the feared CGT increase did not materialise, which was a relief not only for domestic landlords but also for international investors given its potential impact on profits.
Following the Autumn Statement, 84% of landlords intend to maintain their existing investment strategies, which suggests a robust confidence in the stability of the buy-to-let market. A mere 4% expressed intentions to expand their portfolios, and only 12% plan to curtail their investments, reflecting resilience even with the new 2% Stamp Duty Land Tax (SDLT) increase on second home purchases.
While this SDLT increase poses an additional cost, the overall response from the landlord community indicates that it is not seen as a significant barrier. Approximately half of the landlords who planned to expand their portfolios acknowledge that the SDLT hike may slow their rate of expansion, but it is not entirely derailing their plans. Marc von Grundherr of Benham and Reeves remarked that the buy-to-let sector remains a consistent investment avenue despite governmental tax adjustments.
Marc von Grundherr further explained that although landlords faced a modest SDLT increase, it is considered a manageable expense. This sentiment is driven by the belief that the buy-to-let market offers a safe and reliable return on investment. The costs incurred due to the SDLT hike can be absorbed within a short timeframe, which diminishes its potential negative impact on the rental sector.
Despite recent tax changes, the majority of landlords remain committed to their investment strategies, underscoring the resilience of the buy-to-let market.
