It was great to see so many people at our first property meet of the year as well as a few new faces !
We welcomed Gavin Prideaux-Williams as our main speaker and also had updates on recent developments affecting landlords from Richard and an update on the current financial market from Mark Heywood of Watts Commercial Finance.
Watts Commercial Finance also very kindly agreed to provide the refreshments for the meeting in the form of hot drinks and pastries which were well received by all ! This will be an ongoing treat.
Richard informed everyone that they made be aware by now that Rent Smart Wales are currently running courses for landlords locally. Any landlords who have previously completed the Landlord Accreditation Wales course will be automatically transferred across and will have to complete an online conversion course; detail of which are still awaited. The Residential Landlords Association (RLA) are currently running courses for £45 for their members, should anyone wish to join the RLA, please let us know and we can provide you with a referral code.
He also mentioned the new changes which are being brought into effect by the Welsh Government on the 25th February. These will give local authorities the power to require landlords to obtain planning permission in order to convert their properties from a single household into a HMO property. Essentially this means that all properties with 3 to 6 (unrelated) tenants would require a change of use application to be made. The fees for such are £380 and there is no guarantee of approval and so landlords could find themselves £380 out of pocket ! Whether or not Wrexham local authority decide to bring this in will remain to be seen.
Mark Heywood introduced himself and explained that the majority of what they did as a firm was around finance for property. They deal with numerous professional landlords and have lots of strategies available to landlords. Watts Commercial Finance is based in Nantwich and they are the in the top 3-5 in the UK. They have relationships in place with all of the banks in this sector and arranged £200 million of finance last year. They can help with every aspect of finance and do not charge any upfront fees, they only charge once they obtain a credit approved offer from the bank.
Watts cover finance for residential properties, semi commercial and commercial and most of what they are doing at the present time id refurbishment related. They arrange a lot of short term bridging finance for people, for example where a motivated seller is involved and you need to move quickly Watts can do that. They recently obtained an offer within an hour ! They finance lots of properties purchased at auction which usually have a 28 completion stipulation. In addition they will also fund building properties.
He explained that banks attribute the word commercial to the person as a professional landlord and not the property. Commercial banks will help and support you long term in your business whereas banks are more rigid in their approach. Most residential lenders can’t cope with limited companies buying property and with buy to let lenders the computer makes the decision whereas in his world a human being makes the decision. Part of Watts job is understanding you and your business, they introduce you to the bank as a commercial property person, this hopefully helps you going forward. They can access banks that we as landlords can’t such as the challenger banks Shawbrook, Aldermore, etc. They can also help you with the presentation of your proposal to the bank and can prepare individual proposals for each bank.
Mark finally concluded by taking a look at the current market. He stated that they are averaging thirty inquiries per day and do a lot around Wrexham, Chester and North Wales. They also have a lot of London based clients who are buying up here. The demand is there, it is a really busy market place. He stated that he is more than happy to chat through any deals with anyone.
Should anyone wish to contact Mark his details are as follows:-
Tel: 01270 611000
Mobile: 07855 217508
E Mail: firstname.lastname@example.org
We then turned to our main speaker for the morning, Gavin Prideaux-Williams.
Gavin explained that his business is all about wealth preservation. His presentation was highlighting the incoming changes to Stamp Duty Land Tax for second home owners and Buy to Let investors. He stated that he deals with niche tax planning and in his opinion, there are three sets of tax rules. The first set apply to most people (i.e. PAYE, VAT) the second set are success taxes (i.e. Stamp duty (SDLT), tax on interest & dividends) and the third set of tax rules or “opportunities” apply when you reach a certain level of wealth.
Gavin then turned to SDLT and displayed the following table:-
Band Old New
£0-125,000 0% 3%
£125K-250K 2% 5%
£250K-925K 5% 8%
£925K-1.5M 10% 13%
£1.5M+ 12% 15%
He explained that purchases of up to £40,000 are not affected by the new enhanced tax rates. He gave the example of purchasing a house as a second home or investment property worth £400,000; under the new rules you would be liable to pay £22,000 in SDLT whereas at the moment the SDLT would be £12,000. For a property worth £250,000, the new enhanced SDLT rate would be £10,000 where currently the rate is £2500. The new rules won’t necessarily apply in all instances. For example if you are a pension fund or an asset/fund management corporation or making a significant contribution to new housing supply and supporting the governments housing aims of greater home ownership. Potentially companies with 15 or more properties may also be exempt.
The consultation period for the new changes runs out on Monday 1st February with the results of that consultation coming out on the 15th March. This is when the full and final rules will be issued and it will come into force two weeks later on the 1st April. Unfortunately at the moment there is a lot of misinformation in the public domain surrounding the new changes.
Gavin went on to explain that at the moment if someone decides to help their son/daughter buy a house, then under the new rules they would be liable to pay the higher rate of SDLT on their portion. However if they gave their son/daughter the money to buy the house then the son/daughter would pay the normal rate of SDLT.
If you are buying property to add to your portfolio then you will have to pay the higher rate of tax. He commented that the government wants to open up the housing stock , however investors buying houses to rent out does not comply with this !
Gavin them spoke about multiple dwellings relief (MDR). This applies if you purchase six units or more in one transaction as it is then classed as a commercial transaction. In 2011 new legislation came in whereby if you are buying multiple properties, for example ten flats which total £1M, then you will pay the commercial rate of 4% SDLT on the whole transaction i.e. £40,000. The introduction of MDR gives you the option to pay the residential or non residential rate of SDLT. So in the earlier example, the average price per property would be £100,000. Accordingly if you chose to pay SDLT based on the residential rates you would be paying £0 as things currently stand. Gavin went on to explain that if since 2011 any purchasers have been charged the incorrect amount of SDLT on multiple property purchases, it is possible to get that back, if it’s found the conveyancer did not give you the option.
His opinion is that the government does not want the populous at large to be landlords owning property, they want the wealth to be redistributed back with the big guys, back to the pre buy to let days. This is evident by all of the changes which they are bringing in such as the changes to mortgage interest relief and these new enhanced SDLT rates.
Gavin concluded by advising that if you are buying a property which is over £400,000, the SDLT of £10,000 can be mitigated using robust and proven planning. This rate of a £400,000 minimum value will be reduced significantly for second property and investors, probably down to £250,000 after April 1st 2016. He stated that this type of tax planning is NOT just for high net worth individuals, it is not tax evasion (which is illegal) or avoidance which HMRC will come after you for.
Should anyone wish to contact Gavin his contact details are as follows:-
Tel: 01978 761483
Mob: 07979 697231