Following the restriction of tax relief for mortgage interest and the 3% increase in Stamp Duty Land Tax all is not doom and gloom for buy to let landlords. Following on from the consultation this summer the draft Finance Bill 2016 includes the legislation to reintroduce tax relief for the replacement of furnishings in buy to let properties from 6 April 2016.
This will apply to both furnished and unfurnished lettings and will mean that the cost of replacing items such as cookers and washing machines will again qualify for relief following the withdrawal of a concession from 6 April 2013.
Note that the alternative, and simpler, 10% wear and tear allowance will be withdrawn from 6 April 2016 for those letting properties fully furnished.
Those letting properties under the more stringent furnished holiday letting rules will continue to be able to claim the Annual Investment Allowance which provides 100% tax relief for the initial furnishing as well as renewal of furniture in holiday properties.
A sixth of the UK’s population lives in accommodation rented from private landlords, according to a report published by property group Knight Frank.
The report analysed rental and capital growth in six UK cities and examined wider trends in the private rented sector.
Key findings reveal:
The number of rented households is expected to rise from 3.9 million in 2010 to 5.3 million in 2018
Demand for rented accommodation will continue to grow, particularly in urban areas
The average yield across all six cities was 6.6 per cent in 2013
Leeds and Manchester saw the highest yields in Q4 2013, at 8.2 per cent each.
Gráinne Gilmore, head of UK Residential Research and the report’s author, commented:
“The rental revolution is here. The dynamics in the housing market in the UK mean that the private rented sector is set to continue growing in the years to come, boosted not only by the difficulties many face in climbing onto the housing ladder, but also the need for flexible tenure among workers who are increasingly concentrated in the key cities around the UK.
“Investors keen to tap into the market are starting to move their attention beyond London to the regions, where, as our index shows, yields are higher.”
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