Has the buy-to-let property bubble burst?

28 April 2023


Personal Tax Planning

It seems a cocktail of high taxes, interest rate hikes, house prices cooling off, inflating trade labour/maintenance costs and more stringent regulations are lessening the benefits of holding investment properties.

Whilst all of the above factors are squeezing returns, if we focus in solely on taxes it’s no wonder second home owners are considering their options and we may see a surge of properties going to the market.

A second home owner suffers a 3% surcharge on stamp duty, on a disposal the Capital Gains Tax free amount has been cut to just £6,000 (£3,000 from 6 April 2024),  a 8% premium on Capital Gains Tax rates is levied compared to non-residential assets, any such taxes are reportable and payable within 60 days of disposal and finally with interest rates rocketing tax relief is still only available at a maximum of 20%.

Perhaps investors could see a better return from alternatives e.g. converting their buy-to-lets to furnished holiday lets, which for the moment offers preferential tax treatment similar to that of a business. Or perhaps investments in ISA’s which protect investments from taxes on income, dividends and capital gains or maybe pensions which provide very generous tax reliefs.

If this resonates with you, it is a good time to explore alternatives.  Mindful that we are unable to offer financial advice, for which we recommend speaking to your financial adviser, we would though be very happy to talk through the tax issues. 

How can Haines Watts help?

We advise clients with a broad range of tax related matters across a number of sectors throughout Exeter and the South West, including property matters.

If you would like to have a conversation to understand the complexities of the above, please get in touch with your usual Haines Watts contact.


Kelly Gould