Councils using ‘Intelligence’ to track down low EPC properties and fine £5,00015:08 PM, 29th March 2021
About 2 weeks ago 36
Developers are looking at renting their homes instead of selling them as demand for buy to let hots up.
As property prices fall and buyers have trouble in tracking down mortgages, renting out homes gives developers a better financial return.
The latest to consider switching from building or refurbishment to buy to let is Rushbond, the firm converting Crispin House, Leeds, in to 82 flats.
The firm has never acted as landlords before, but the flat sales market has encouraged them to consider a change of tack.
Managing director Jonathan Maud said: “We have taken a unique approach to this project and will not be releasing the apartments for sale as we believe that the rentals market will continue to go from strength to strength over the next five to 10 years.”
The building is a city landmark that has housed several well-known local businesses like Henry Heaton’s Clothing Company and HW Poole & Sons, Boot and Shoe Manufacturers.
Property developers need to carefully consider their tax position when changing the use of their properties.
If a home is bought as a buy to sell to churn for a quick profit, then the proceeds are subject to income tax, whereas the proceeds of selling a buy to let are liable to capital gains tax.
A tax event is generally triggered when transferring a home from stock as buy to sell to a letting property as both are separate property businesses.
However, no tax rules stop a developer renting out a property until market conditions improve so the home can be sold at a profit. Similarly, a landlord can sell a buy to let to reinvest the proceeds in to a better yielding property without making the home a buy to sell.
Case law supports both these arrangements – but landlords switching property use should expect queries from the tax man. HM Revenue and Customs will try and prove any property transaction like this is a buy to sell rather than a buy to let as the tax take is higher.
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