From April 2016, the ability to deduct around 10% of rental income as a wear and tear allowance will be removed in the UK. Instead, landlords will only be allowed to deduct amounts they have actually spent on the property within that tax year, which could make a big difference to the viability of some landlords’ retaining their UK properties.
Stamp duty is also set to increase by 3% for second home owners and buy-to-let investors from April. This could affect thousands of British home owners who have property abroad as they could be liable for the new additional stamp duty under the rules on second homes, say reports.
Further, from 2017, the ability to reclaim tax relief on mortgage interest on properties in the UK or abroad will be reduced and landlords will ultimately be restricted to a 20% tax relief. This will be phased in and will finally reach this level in 2020/2021.
Despite this, surveys conducted by various portals and publications have revealed that these restrictions will not dampen the enthusiasm of many Brits whether based in the UK or abroad, to buy overseas property. Most do so in order to live permanently or partially abroad. With the British pound still very strong and low bank interest rates, the appeal of foreign properties won’t go away anytime soon.