Visit England indicates that UK holidays have become more popular this year, which is good news for the holiday-let market. However, the tax treatment of this sector is set to change next April. Since 1984, property owners have enjoyed the same tax advantages as those running other tourism businesses, enabling entrepreneur, holdover and rollover relief’s from CGT purposes. These benefits are quite complex but, for those affected, very valuable. From April 2010, holiday lets will be treated as an investment, not as a trade, and therefore have the same tax treatment as normal rental properties, meaning possible additional CGT liabilities and increased levels of taxable profit.
The Deposit Protection Service claims that almost £5m of deposits are still waiting to be claimed by more than 8,000 tenants. They say that deposits cannot be repaid as these tenants have failed to keep their contact details up to date. A review of processes is underway in order to make it easier, to avoid deposit money being held in limbo, due to tenants not responding – All it could take is a valid mobile number or email address to speed up the process.
The BTL market has had it`s share of criticism over the last couple of years and suffered from the largest drop in availability of products, when compared to residential mortgages. However, there are signs of activity with both movement on interest rates and LTV`s. Encouragingly there are also new lenders now joining the mainstream BTL market and HMO finance is again available.
The Energy Saving Trust has called on the Government to prevent owners of poorly insulated homes from selling or renting them until energy efficiency improvements are made. Some 5.5 million homes in the lowest two bands of energy performance could be subject to higher Council Tax bills and additional Stamp Duty. The EST estimates that 85% of homes in Bands F and G could be made fit for less than £5,000. The Landlords Energy Saving Allowance allows landlords to claim £1,500, per property, against tax each year for property improvements, including insulating and draught proofing.
New lines of funding currently include:
Building and development finance, a property purchase and refurbishment scheme, below market value finance for BTL`s, and business leasehold purchase or remortgage funding where short leases are involved. Self Certification residential mortgages, deceased, are likely to be replaced by income-evidenced mortgages, particularly for the self-employed, where income may be irregular.
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