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Housing Crisis and BTL Crackdown: Should You Sell?

Government changes to the BTL industry over the last six months in order to ease the housing crisis, have made many landlords consider reducing their portfolio, or getting out of the market altogether. Perhaps you are considering taking measures to protect your assets or offloading some to keep yourself profitable. Here, we give you a summary of measures being taken and present you with options.


Stamp Duty Changes

From April 2016, you will get an extra 3% stamp duty bill every time you buy a property (with some exceptions). While this may sound as if it will have a large impact on your profits, if you have no intention of selling or buying in the near future, then you will be unaffected. The immediate impact on the housing market is that there may be, for the next few months, a glut of houses available on the market. Anyone owning or wishing to own a second property will be affected.


Mortgage Tax Relief Reduction

George Osborne announced in the last Autumn Statement that from April 2017 there will be a reduction of mortgage tax relief for buy to let property owners. Previously, those who own houses that they rent out were able to claim back a certain amount of tax. This, the government claims, will free up a number of houses for purchase by people who wish to buy them for a home rather than for investment. Many feel that the lack of available housing has driven up both house prices and the cost of renting.


Should You Sell?

As a landlord of student property, there are several things you need to consider before selling a property. Firstly, you should consider whether each is profitable enough to continue ownership. The student market, though it works the same as the general property market, appeals to a very narrow demographic of which there will always be a supply – so the supply and demand aspect will remain constant. Your only competitors will be others in the student market in your town or city.

Credit: Leo Davy. No changes. Creative Commons License (link)


Secondly, if you do not intend to buy more properties, then you will not have to pay stamp duty. The only concern you might have – and assuming mortgage tax relief is removed in the 2016 budget for 2017 – is whether you can afford to lose that which you presently receive. For this, it may be worth waiting until March-April once you know how it will affect you. The downside is that you will be subject to extra stamp duty when selling after April 2016.

Ultimately, your decision on whether to sell must be based on the local market for student housing – whether it is profitable enough for you to maintain your present portfolio and whether there is enough demand to do so.