Earlier this month (May 2016) the residents of St Ives in Cornwall voted overwhelmingly to restrict the purchase of new build homes to those who can prove they intend to live in the property for more than six months in any year. It’s a move which is already under consideration by other areas of the country which have seen property prices soar in recent years thanks to multiple home ownership.
It’s also another potential nail in the coffin of those who are looking to buy second homes, either for their own use or to rent out to others. The cost of buying a second home increased on 1 April 2016 when higher stamp duty land tax rates for second and buy to let homes came into force. This change will potentially hit many who already have a home, either in the UK or abroad; including joint purchasers where one already owns a property. The Government consultation covers many common scenarios but there is ongoing discussion about some of the more complex scenarios so it is worth taking advice in advance of any purchase decision.
Adding to the complexity is the change to tax relief on buy to let mortgage interest payments which is being phased in from April 2017. Together these changes leave those thinking of entering the buy to let market or who already have property portfolios needing to rethink their finance model. This was highlighted in the last week by the fact that Barclays has followed the Nationwide in upping its minimum rental cover requirement for landlords to 145%.
If you would like to speak to a tax adviser about taxation in respect of additional properties, please contact Newshams Tax Advisers on 0800 211 8657 or email us at firstname.lastname@example.org.