The latest twists and turns for property
It’s an interesting time for those managing, or indeed considering, a property portfolio. The pandemic has certainly put the cat amongst the pigeons, bearing in mind the focus the Treasury had had on property investment before Covid-19 struck. Let’s take the steps Rishi Sunak has had to take to stop a housing recession as an example.
Firstly, there’s the temporary stamp duty holiday on properties up to £500k until 30th June, which will then drop to £250k until the end of September, before returning to the normal level of £125k.
Then there’s the new mortgage guarantee scheme, which is intended to help homebuyers with small deposits get a mortgage. This support is available for properties worth up to £600k, so will go a long way to helping first-time-buyers who are struggling to secure lending.
But how is this impacting the property investor? Bear with us whilst we explain. For starters, investors have been able to take advantage of the stamp duty holiday to a certain extent. Plus those who operate their portfolio through a limited company structure have continued to benefit from tax relief on mortgage interest. In tandem with this, is the fact that the gap between interest rates on mortgages for limited companies and personal mortgages has been narrowing. However, if your profits are likely to be over £50k from April 2023, No. 11 has decreed corporation tax will be increasing from 19% to 25%.
As current times suggest, therefore, there’s lots to consider. Mortgage payment deferrals and the furlough scheme have protected the property market well up to now, but unemployment is inevitably going to rise. This is likely to make things tougher for residential buyers starting on the ladder, which may see them delay their purchasing decisions whilst they continue to rent. This in turn then suggests that rental demand will continue for some time yet.
Thus, as the twists and turns of the property market continue to wend their way, we recommend you take professional advice on what is best for your situation. It’s not straightforward… but that doesn’t mean some wonderful opportunities aren’t out there.
If you have any questions relating to property, contact Matthew on 01908 774320.
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