• The London property market continues to grow
  • There are many tax implications of property investment, but owners can realise their goals through clear tax knowledge and good planning.

Last week, Henry Wiltshire held a property tax seminar at Nine Elms, with insightful talks from the team at the Henry Wiltshire Mayfair office, and from Martin Holden at MJH Tax Consultants. In case you missed it, Henry Wiltshire now shares the key points the speakers made.

Nicholas provided an overview of the London property market and the advantages of investing in the UK capital. Listeners took away the following key points:

Growth in London property

While London is something of a byword for property growth, some areas see considerably more growth than others. Currently, London estate agents are seeing increased interest in South London areas, such as Vauxhall, Nine Elms, Kennington and Borough. Certain areas of London’s East End are also doing well, such as Canary Wharf and Docklands. However, prime central location properties continue to see the highest overall growth, with prices approximately 40% higher now than they were five years ago.

Reasons for this

London’s population is continually growing as well, and is expected to increase by another million people over the next five years. With this in mind, it’s easy to see that demand for London property will always outstrip supply, and market values will continue to grow.

After Nicholas’ insights, Martin Holden of MJH Tax Consultants explained the tax implications of investing in London property. Investors with a good awareness of tax law are in a stronger position to achieve their financial goals in the London property market.

Stamp duty land tax (SDLT)

The new stamp duty laws have had a dramatic effect on the property market, with the Chancellor applying an additional 3% levy of SDLT (stamp duty land tax) to all second properties bought after 31 April of this year. It now applies everywhere, regardless of where investors live or where the primary property is. If investors completed their sales by 31 April, they were able to take advantage of old SDLT laws; however, Martin recommended seeking advice about SDLT if completing after that date.

Income & Capital Gains tax

All the normal income tax rules apply to property investors, but non-resident investors should take particular care as they can’t complete their tax returns online. Non-resident investors need to either send their tax return by post or use a dedicated accountant. Capital Gains Tax (CGT) also now applies to non-resident investors, but only on gains from April 2015.

Wear and tear allowance

This year’s budget included a change to wear and tear allowance. Formerly, landlords received 10% of the annual rent to cover repairs necessitated by wear and tear. Now landlords will only receive the tax back on the specific repairs and replacements that took place.

Loan interest restriction

Loan interest restriction is gradually being phased out over the next four years, which means an increase in tax payments for investors. Martin advocated including this increase as a cost in the business plan, paying down loans as promptly as possible and reconsidering ownership structure as means of avoiding the tax increase.

Nicholas Spencer says, “The seminar was very successful. Everyone was able to garner new information which will help them make better decisions about their investments. We hope to organise another seminar soon!

Interested in investing in London? Contact Henry Wiltshire for more information

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