Buy-to-let interest still strong despite LBTT

Purchasing a buy-to-let property is still a popular prospect for those looking to manage their finances, despite a new tax being introduced from April 1, according to ESPC (Edinburgh Solicitors Property Centre).

It was announced in December that a Land and Buildings Transaction Tax (LBTT) “second-homes” supplement would be introduced on purchases of additional residential properties, including buy-to-let properties. The proposed supplement is three per cent of the total price of the property for all relevant transactions above £40,000.

ESPC surveyed those who came along to an event last month to find out their main reasons for thinking about buy-to-let.

Seventy-four per cent of the people who attended were thinking about purchasing a buy-to-let property, but hadn’t quite made that step in becoming a landlord. Over half of the people who filled out the survey were between 35 and 44 years old, and only 11 per cent were aged between 55 and 64, indicating that the demographic who are most interested in buy-to-let are those who are perhaps already established in a career, and are likely to have purchased a first property.

For the majority of those surveyed (58 per cent) a buy-to-let property was considered a form of long term income. It was clear that amongst our respondents increasing assets and boosting pension provision were key reasons for entering the buy-to-let market and given the relatively low return currently being made in traditional stocks and shares this is perhaps unsurprising.

There were other reasons for considering a buy-to-let property - 11 per cent were looking to buy a property for a child and 11 per cent were planning on expanding a portfolio.

With a new LBTT tax for second homes being implemented on April 1, 40 per cent of our attendees were hoping to let out property in less than three months, perhaps in the rush to avoid paying an extra 3 per cent in tax. 20 per cent of people were hoping to rent out a property between three and six months, 25 per cent of people were planning to let out property from six months to a year, and 20 per cent of people were planning to wait a year before rushing into it.

Head of ESPC lettings Orlaith Brogan said: “Despite a number of changes directly impacting landlords, interest in purchasing a property to let in Edinburgh remains strong. Many people in their thirties and forties see property as a viable long term option and these short term changes as something they can overcome.

“Due to Edinburgh’s large student population, as well as young professionals who are not quite ready to get onto the property market, the city has a large tenant market who play a valuable role in the private rented sector. We anticipate this will continue despite the tax changes.”