What are we up to?
After a busy start to 2016, the next six months are gearing up to be some of our busiest yet as we concentrate on securing festival and student lets. General festival interest is ramping up and we have been proactively contacting our regular visitors and hunting out potential new guests. Many performers are still confirming dates and budgets so we expect demand to continue over the coming weeks.
Most of our student properties will be going on the market for the next academic year in the coming weeks. For the few that we have already marketed demand has again been very high and they have let quickly.
Look out for our new taxi advertising campaign which will be hitting the road at the end of March. The taxi campaign is just one of the few new marketing tools we will be implementing over the coming months as we endeavour to build our profile and brand awareness.
Vicky and baby Alfie are doing well and she will be returning to work in June, just in time for the main festival rush.
Tax Changes Impacting Landlords
Many of our landlords have been discussing with us the impact of the recently announced changes to mortgage tax relief and the second home supplement. The technical update below focuses on these changes.
Second Supplement
In December the Scottish Government announced a (LBTT) Land and Building Transaction Tax ‘second-homes’ supplement on purchases of additional residential properties, including buy-to-let properties. This will come into force from April 2016. The LBTT supplement is 3% of the total price of the property for all transactions above £40.000.
Therefore a buyer of a second property will have to pay LBTT charges plus an additional 3% levy. For example if you were looking to purchase a property at £150,000 – under the current rates you would pay LBTT of £100 but from April, this figure would increase to £4,600 (£100 LBTT plus £4,500 second homes supplement).
The definition of what is deemed to be a main residence or second (and additional) home is still to be fully defined but the purchase of a single buy-to-let property will certainly incur this supplement.
In recent months there has been an increase in sales activity as sellers and buyers try to complete before the changes take effect in April. This increase in demand has further pushed up property prices. All the expert media opinion expects the increased purchase tax to be passed onto tenants through higher rental prices in the longer term.
Mortgage Relief
The Chancellor announced a surprising change to mortgage tax relief in the 2015 emergency budget. The change removes a landlord’s ability to deduct mortgage relief from their rental income. In other words interest on a mortgage is no longer seen as a cost. Landlords will instead receive a basic rate reduction from their income tax liability for their finance costs.
Starting in April 2017 the new tax rule will be introduced on a sliding scale until 2020 when mortgage interest relief will be removed altogether. We have found the following article very useful in simplifying what can be a complicated subject –
http://www.propertygeek.net/budget-2015-mortgage-interest-relief-changes-explained/
The change does not apply to properties that meet all the criteria to be a furnished holiday letting. HMRC’s definition of a furnished holiday let is very specific –
http://www.hmrc.gov.uk/manuals/pimmanual/pim4112.htm
Communicating with you
Our newsletters have always been sent directly to your email accounts. Going forward we will be posting more concise regular updates in the news section of our website and on our Facebook page so please ‘Like’ us if you have not done so already.
https://www.facebook.com/AtHomeInEdinburgh/
https://www.athomeinedinburgh.co.uk/information-news/
Landlord Referral Scheme
If you know anyone who is considering renting out their property then please put them in touch. We will be happy to offer them advice on any aspect of lettings with no obligation. Should we subsequently let their property on any of our full management packages then we will happily offer you £50 as a wee thank you!
Another big thanks to the 2 landlords who kindly referred us in the last month.