The tax rules for property investors tend to change each new budget, and so lenders need to incorporate this into their affordability assessments.
For example, a property purchased as an additional home, or as a second or subsequent property to let will attract a higher stamp duty rate.
There are also tax implications with changes to tax relief on buy-to-let income. Previously, tax relief was available on the interest cost of buy-to-let mortgages, meaning that these costs could be deducted from profits to lower the income tax liability.
This has now changed, and this tax relief is no longer available. The change will likely increase the tax cost for portfolio investors; however, it does not impact commercial landlords.
If you are considering expanding your property portfolio or taking out a new mortgage through a portfolio lender, then it is critical to understand the tax implications and costs.