Landlords continue to feel the pinch after the latest phase of the government crackdown on buy-to-let came into effect last month, which means that landlords will only be able to offset 50% of their mortgage expenses against their tax bill in the existing tax year.
The phasing out of mortgage interest relief and tougher mortgage lending conditions has contributed to what has been a rather difficult couple of years for buy-to-let landlords.
The introduction of the 3% stamp duty surcharge for those buying additional properties, the clampdown on mortgage interest relief and more stringent lending conditions have also made buy-to-let a less attractive proposition for many landlords.
Recent tax changes are having an adverse impact on the private rented sector across the country, including Scotland.
Fresh research by Aberdein Considine reveals that almost two-thirds of homeowners have been deterred from investing in a second home due to the 3% additional levy introduced by the Scottish government two years ago, as well as the phasing out of mortgage interest relief, with sales down in more than half of the country.
However, Adrian Sangster, national lettings director at Aberdein Considine, believes that despite everything, the buy-to-let sector in Scotland continues to provide good opportunities for investors who can “ride the storm”.
He said: “The additional tax, together with the staged withdrawal of relief on mortgage payments by the UK government, is undoubtedly having a detrimental impact on the Scottish property market.
“By targeting landlords, politicians north and south of the border are squeezing one of the biggest and most powerful buying forces out of the Scottish property market, which is already affecting sales in certain areas.
“However, this is only going to end one way – with rents increasing due to fewer good quality private lets being available. Landlords who can adapt to this new climate for the private rental sector stand to reap huge benefits in the medium to long-term.”
To help landlords north of the border to deal with changes in the Scottish letting industry, a conference is being held in Edinburgh by tax experts from Anderson Anderson Brown LLP and letting industry specialists from Aberdein Considine.
The Edinburgh Landlord Conference, which is free for landlords to attend, is designed to primarily help those with multiple properties deal with recent tax and legislation changes.
Aside from the additional tax, the biggest change to hit landlords in recent years is The Private Housing (Tenancies) (Scotland) Act 2016, which has introduced the Scottish Private Residential Tenancy, the new form of private tenancy for Scotland.
Under the new regime, tenancies will have no minimum period and will continue indefinitely unless the tenant wants to leave or the landlord terminates using a prescribed ground for eviction.
The Edinburgh Landlord Conference takes place at the Radisson Blu on the Royal Mile from 8am-12pm on Thursday 28th June.
You can buy tickets for the event by clicking here.