British expats still keen to access buy-to-let properties in the UK
British expats remain as keen as ever to invest in a buy-to-let property back home, according to Skipton International.
Despite changes announced in the recent UK budget, Skipton managing director Jim Coupe says there has been no reduction in the number of enquiries the bank is receiving.
He commented: “Our customers generally aren’t higher-rate UK taxpayers, they are small expatriate private landlords keen to own bricks and mortar back home. As a result we’re not expecting the budget to have much effect on their motivations.
“The basic reasons why they want to invest in property are still there, and the rental market in the UK is backing this up. Small private landlords have become increasingly important for the supply of housing in the UK, and their influence is predicted to increase not fall.”
The chancellor has announced a future and phased cut in tax relief for property investors, prompting some commentators to claim it will force a big sell-off as their investments become less profitable.
However, the move will mainly impact large landlords, i.e. those who are likely to have a property portfolio as opposed to one or maybe two interests. The cut will, over the next four years, see a reduction in the 40% or 45% relief. The maximum relief will instead be set at 20%. Expat landlords would have to be receiving more than the current threshold of around £32,000 in rental and other UK taxable income to have qualified for the higher tax rate and therefore the relief.
The other budget change is that, from next April, landlords won’t be able to automatically claim 10% of the rent against wear-and-tear costs, but will instead only be able to deduct costs they actually incur.
Jim added: “Most landlords won’t really be out of pocket. They will still be getting their costs back for any repairs. The essential facts are that the private rented sector has grown dramatically in recent years, and it’s predicted to continue growing as more young people seek rented accommodation rather than buy their own home. It is simple supply and demand, and the reality will be that if costs do go up, so will rents.
“Of course, anyone thinking about entering the buy-to-let market should speak to a qualified tax adviser to ensure the investment is right for them, and that includes considering inheritance taxes.”