Andrew Watters, senior tax adviser at Thomas Eggar (part of the Irwin Mitchell Group) comments on the Bank of England’s measures to curb risky lending, including tougher financial checks on landlords buying second properties.
“The rush to buy for landlords is to avoid the increased SDLT on ‘additional property’, which will be imposed from 1st April. The rush to buy has been going on since the announcement of the intention to increase the SDLT charge so the imposition of tougher lending criteria is a bit late.”
“Going forward, the new rules make property acquisition more expensive for landlords and more new rules limit the deductions on interest payments and so increase tax bills. This is meant to discourage investment in property, cool the market and make it easier for young people to get on the property ladder.”
“However, a lot of people with spare cash may trust bricks and mortar more than shares and pensions and try to pass on increased costs by increased rents. Generation Rent may become victims of the law of unintended consequences. And when they turn to the Bank of Mum and Dad, the parents in question had better make sure that they do not unintentionally fall victim to the increased costs in the ‘additional property’ regime.”