Members comment on boom in buy-to-let mortgage products
Members of the UK200Group of independent chartered accountancy and law firms have responded to research showing that the number of buy-to-let mortgage (BTL) deals on the market is at its highest level in seven years.
David Whiscombe, director of tax at UK200Group member firm BKL, said: “It is to be expected that this boom in BTL lending will be stopped more or less dead by the controversial proposal to restrict tax relief on BTL loans, which will massively increase the effective rate of tax on BTL profits for higher rate (and many basic rate) taxpayers, raising it some cases to over 100%. If the government had wanted to decimate the private rental sector, it’s hard to think of a more effective way of doing so.”
Duncan Montgomery, tax partner at UK200Group member firm Whittingham Riddell LLP, said: “With the tax changes in the last Budget restricting relief for interest, and wear and tear, profitability of buy-to-lets has come under pressure.
“For many higher rate taxpayers, owning property directly as an individual is not the most productive way to go. Providing the right finance is in place, company or limited liability partnership routes are more effective, restrict liability just in case, and provide greater growth for long-term portfolios.”