In our last blog, we explained the meaning of Section 24, its impact and its timings. For some property investors, the effect will be fairly minimal, but what are your options if you’re adversely affected? Well, you have several:
1. Reduce your costs.
The changes won’t be fully rolled out until April 2020, so you have plenty of time to prepare. Start by focusing on managing your property portfolio efficiently and effectively. Just a few simple steps can make all the difference to your bottom line. We’ve outlined how to do this in some of our previous posts:
2. Consolidate your lettings portfolio.
Landlords with higher mortgage repayments will most impacted by the changes. If you have three, four or even five properties with interest-only mortgages, you might be better off selling one or two and moving the capital into the others, thereby reducing your mortgages and saving money on taxation.
3. Sell your investments.
If you have little capital and your mortgage payments are high, you may be smarter to sell and reinvest the capital in cheaper properties, or to get out of the buy-to-let market altogether. However, bear in mind that selling through the traditional market can be time-consuming, costly and expose landlords to significant risks. Our selling for landlords blog outlines another option.
4. Move properties into a limited company.
Another, more complex option is to move your properties into a limited company which would be exempt from the Section 24 changes. However, this would probably require remortgaging and incur significant costs – so always consult a financial expert to assess your specific circumstances.
5. Explore more radical options.
Finally, some landlords may want to consider different ways to generate income from their property investments. Traditional holiday lets; short-term rental services like AirBnb; or HMOs all offer an alternative to seeking and retaining long-term tenants. We’ll be looking at these options in more detail in our next – and final – landlord blog.
See you then! And if you’d like any advice in the meantime, just get in touch.