Tax relief is currently the biggest influence on landlords looking at their investment strategy, with one-in-four landlords making it their primary concern, ahead of increased stamp duty and changes to capital gains tax. This research from Simple Landlords shows that tax relief and government legislation are the biggest influences on landlords’ decision-making, while unoccupied property and tenant damage come third and fourth, respectively.

The research shows that about 47% of landlords have changed their investment plans due to recent tax changes. However, less than 10% of landlords actually intend to reduce the size of their portfolios, although only 4.4% of those owning at least two properties intended to invest further, and 63% said that the changes would not affect their plans.

The research also found that 38% of landlords with two or more properties would look into forming a limited company, trust or partnership to try to combat the changes in tax. It’s certainly been a challenging year for landlords, with the introduction of the stamp duty surcharge on second homes, increased regulations and the tax relief on mortgage payments being phased out. And next year could prove just as challenging with proposed new requirements for the licensing of Houses of Multiple Occupancy, new energy performance requirements for new lets and renewals, and the proposed register of rogue landlords. Buy-to-let investors must adapt to these changes in the market, as well as find opportunities to develop their portfolios profitably and sustainably. This has led to many landlords questioning whether the rental market remains sustainable.

Buy-to-let has certainly become a more complicated business recently, and investors in property who use a Special Purpose Vehicle (SPV) have also been hit. Due to a freeze on indexation allowance, there will be an increase in capital gains tax when investors sell properties using an SPV. Until recently, an SPV was a convenient way to hold investment property due to the lower tax rate. Coupled with the other recent changes to tax and mortgage relief, this means that landlords will not only pay more tax on their income from rental properties but will also pay more tax on any profit when they come to sell.

Previously, buy-to-lets were a relatively straightforward way to make money. But increased regulations and tax means that buy-to-let is requiring greater effort to ensure investors stay on top of the paperwork and property management, as well as keep abreast of all the changing rules and regulations.