Taxation of property

The property outlook for landlords remains somewhat contradictory. On the one hand, rents increased by 5% across the UK in the year to May 2023, but set against this, property prices continue to fall, with many sellers having to discount by 5% or more to secure a sale.

Mortgage costs remain high, with the rate for most five-year fixedrate buy-to-let mortgages now around 6%, and further regulation – in the form of the Renters Reform Bill – on the cards. Given that a fixed rate of 4.2% is currently available on a three-year government savings bond – with none of the hassle that comes with property ownership – it is no surprise that a number of landlords are selling up.

The temporary rent cap and moratorium on evictions currently faced by Scottish landlords will also be of concern for potential landlords south of the border. These measures are now set to run until 31 March 2024. The Welsh government is also consulting on possible rent controls.

All of this adds up to a very difficult decision for anyone looking to enter the buy-to-let market as a new landlord.

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This publication is for general information and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The Financial Conduct Authority (FCA) does not regulate tax advice, so it is outside the investment protection rules of the Financial Services and Markets Act and the Financial Services Compensation Scheme. This publication represents our understanding of the Budget 2023, the Finance (No 2) Bill 2022–23, the Budget (Scotland) Act 2023 and Scottish tax legislation enacted by 15 July 2023 and the law and HM Revenue & Customs practice as at 15 July 2023.