Landlords are under mounting pressure which is making them vulnerable to non-compliance in their accounting following a raft of changes, including tax measures, in the buy-to-let sector, according to Visionbase Software.
The change to mortgage interest relief, which was first announced in the 2015 emergency Budget, will be introduced gradually from 6 April, restricting relief for finance costs on residential properties to the basic rate of income tax.
However, with recent research from the Council of Mortgage Lenders showing that a third of buy-to-let landlords in the UK do not understand that their ability to offset mortgage interest payments against tax is being scaled back, Paul Oxley, managing director of Visionbase Software, has expressed his concern that many landlords could soon find themselves falling foul of the rules.
He said: “Most landlords will be looking at ways to minimise the tax changes to protect their profits. While the most obvious plan is to raise rents, other options open to landlords include transferring property ownership into a corporate structure, or to a partner who pays a lower income tax rate.
“All these new tax measures, combined with mounting legislation, is putting landlords under huge pressure. It can be overwhelming to keep up and failure to do so, can lead to fines and loss of licence.”
Oxley advises buy-to-let landlords to take advantage of the various advanced property management software products available on the market, including unsurprisingly his firm’s own Decorus for Sage system which offers landlords the ability to easily generate financial reports, forecast future income and expenditure accurately and budgeting for maintenance work, to help them manage the raft of changes for their property portfolio.