Wednesday, October 28, 2020
Landlords

Number of UK ‘accidental landlords’ dropping

accidental-landlords-uk

The number of ‘accidental landlords’ in the UK is declining as property tax rules are set to change, says a report from Hamptons International

Amid upcoming changes to property tax rules in Great Britain, the number of “accidental landlords” is sliding, according to a report Monday from Hamptons International.

A tepid sales market has caused some homeowners to put their homes on the rental market instead of selling, the estate agency said.

But the number of homes on the market owned by accident landlords is at a five-year low. So far this year, 7.1% of homes to have hit the rental market were also listed for sale within the previous six months, suggesting that fewer homeowners are turning to the rental market as a backup.

The changes that are to come into force next year will increase the amount of tax that some homeowners—if they have rented out their property at some point—will have to pay if they sell.

Despite a weaker sales market, which tends to encourage accidental landlords, the proportion of homes to let having previously been listed for sale has fallen for the first time in five years, said Aneisha Beveridge, head of research at Hamptons International, in the report. She said the tax changes being introduced in April 2020 will increase the capital gains tax bill for some accidental landlords who choose to sell after that date.

The country’s most expensive regions and where prices have risen the most have recorded the largest declines in accidental landlords, Beveridge said. Those are the areas where landlords will have seen the greatest profits, and as a result, could see their tax bills rise the most, she added.

Currently, when an accidental landlord sells their former home after renting it out, they can protect up to £40,000 (US$50,305) of their returns from capital gains tax. But from April, only those who live in the property with their tenants will qualify for this benefit, the report said.

Also changing in April is the benefit that allows landlords to write off the last 18 months of ownership as tax exempt, regardless of who lives there if the property has at some point been their only or main home. In April, this period will be cut to nine months.

Important:
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Leave a Reply

5 × 1 =