‘Punitive tax regime’ forces investors to leave BTL

Institutional and individual investors are moving away from buy to let and into multi-use buildings and because of the punitive tax regime against landlords, according to one firm of estate agents. 

That’s the verdict of Winkworth who say that investors are rejecting the buy-to-let residential model.

The firm’s head of development and commercial investment, Adam Stackhouse, “That’s partly down to the taxation structure in this country.

“With multi-use buildings, entry costs are lower with a reduced rate of stamp duty.”

‘Lower level of capital gains’

He added: “They are very tax efficient during ownership and it’s a lower level of capital gains when you look to sell the property.

“There are also inheritance tax benefits as well.”

The VAT rating on buildings under construction also needs to be reviewed to speed up regeneration and the conversion into multi-use buildings with retail, office and residential, Mr Stackhouse says.

He says this is the only way to make these projects viable.

Mr Stackhouse said: “We need to see the 5% VAT rating extended beyond listed and heritage buildings and applied to a regeneration/benefit to the community type assessment model.

“Reduced VAT levels may harm the government in the short term, but it would speed up the creation of these hybrid buildings and bring renewed energy to city centres.”

Would like to see a reduction in business rates

With a new Government in place next month, Winkworth’s chief executive, Dominic Agace, says he would like to see a reduction in business rates.

He said: “It seems odd that businesses are incentivised not to have a high street presence.

“We want to encourage local communities, independent shop owners, and small businesses.

“They create pleasant environments, which is good for everyone, and we should be supporting them.”

He added: “Expensive business rates deter people from setting up on the high street, which is a shame.”