Buy-to-Let landlords throughout the UK have been warned that recent tax changes announced in the July Summer Budget could significantly reduce their post-tax income.
It has been decided that from 2017, mortgage interest relief on rental properties would be reduced to the basic rate of income tax at 20%. Higher earners currently paying 40% or more will therefore end up paying more tax on their rental income. These changes will be phased in over a four year period, and are intended to make the UK Property Market a fairer, more level playing field.
These amends in the law could see buy-to-let investments become a less attractive option. However, investors are drawn to property investments by the high yields that can be gained with the security of owning a property. Further to this, the demand for rental property has soared over the past few years and many are arguing that these small changes in tax relief won’t have a dramatic effect on this booming market.
Andy Golding, Chief Executive at OneSavings Bank said “The sheer demand and demographic growth prospects for private rental property are likely to keep the market going despite these small changes to the tax regime”
Time will tell, and for those considering property as an investment choice there are alternative ways to do so without the buy-to-let commitment.
For example, Wellesley & Co offer the opportunity to invest in property without the responsibility of owning a property. Wellesley is an asset backed Peer-to-Peer lending platform which sees each loan made secured against residential property. Therefore, Wellesley can seek to sell the asset to recover any losses incurred by the lenders if there was a loan default, however this is not guaranteed. Investors can see returns of up to 6.32% through our Peer-to-Peer lending platform but must note that Peer-to-Peer lending sees capital and interest payments at risk if a borrower defaults. Investments are not covered by the FSCS.
Take a look at our borrowers page to view the types of property you could invest in with our asset-backed platform. For more information about what Wellesley can offer, contact our Customer Service Team on 0800 888 6001 or email [email protected].