# Buy-to-let makes way for buy-to-NET as April tax changes approach
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2017-03-04
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Avoid April Tax Blow: Strategies for Buy-to-Let Investors
Meta Description: Discover how to navigate upcoming tax changes and still profit in buy-to-let investments. Expert advice from Properties of the World CEO.
URL: https://financedigest.com/buy-to-let-makes-way-for-buy-to-net-as-april-tax-changes-approachhtml

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- **“Buy cheap and buy smart” to lessen impact of tax changes (Properties of the World)**

- **440,000 landlords could move up a tax bracket in April (National Landlord’s Association)**

- **Cash is king when it comes to beating new taxation rules (Properties of the World)**

It’s fair to [say that buy-to-let investors haven’t had the easiest time of it in recent years](https://www.financedigest.com/veterinary-suture-kit-market-will-generate-new-sales-opportunities-in-upcoming-year-says-fact-mr.html "Veterinary Suture Kit Market Will Generate New Sales Opportunities In Upcoming Year, Says Fact.MR"). With the government squeezing an increasing amount of [tax out of them, the National Landlord’s Association has estimated that some 440,000 landlords will find themselves pushed up a tax bracket](https://www.financedigest.com/explainer-bracket-creep-fiscal-drag-how-inflation-warps-the-tax-take.html "Explainer-Bracket creep, fiscal drag: how inflation warps the tax take") next month.

So, will the April [tax changes](https://www.financedigest.com/rd-tax-important-exemptions-and-upcoming-changes-for-the-it-software-industry.html "R&D Tax: Important Exemptions and Upcoming Changes for the IT & Software Industry") finally ring the death knell for buy-to-let? Not according to industry experts…

![Buy-to-let makes way for buy-to-NET as April tax changes approach-2](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2-4-1736844120992-compressed.jpg)

**“Yes, the taxation landscape for buy-to-let [investors is becoming harsher, but there’s still plenty of profit to be made for those looking in the right places. Investors need](https://www.financedigest.com/exclusive-new-investor-backs-bt-says-fibre-jv-may-not-be-needed-source.html "Exclusive-New investor backs BT, says fibre JV may not be needed – source") to focus on buying to NET profits by seeking out developments with strong yields. The right properties can still produce healthy returns. Instead of the death of buy-to-let, we’re seeing the birth of buy-to-NET.”**

**Jean Liggett, CEO of visionary property investment consultancy** **[Properties of the World](http://r20.rs6.net/tn.jsp?f=001KZMIvGO_j8uNUqJTHsgl6bhEePlFgRN8W_FNsIClOlTA6_qyJTRe4Tsh84WuuHno5qiPrDAJsGaDcgISWJF7yI5ulJVmzx8CBjwsBaHuVmC73UyrASaafFNA1xw9noq0AyFVnC0-FITk6vCimVxwuSjAYsq7BRPHeIbZKfLNNAkb9FTEadk3v1FLb8IDvr9g&c=O5jCR53VCmCh6kZ37sc3sZ9bZmmvDqfX4GHKyVQEkzr7AdzVNNLBdg==&ch=PILVYRgcuBkwmT8ULvlGBpW-fXizb6BhbuN-qX6K3iFbU-RBILyS8A==)**

Landlords have already swallowed the 3% stamp duty land tax on second homes that was introduced in April 2016. Now, from April 2017, they’ll see the tax relief from their finance [costs phased out, with the percentage of these costs deductible from rental income dropping](https://www.financedigest.com/harley-davidson-profit-drops-on-rising-costs-and-chip-shortages.html "Harley-Davidson profit drops on rising costs and chip shortages") by 25% per year until it reaches 0% in the 2020 to 2021 financial year.

The restricted finance [costs include interest on mortgages](https://www.financedigest.com/caixabank-proposes-sector-wide-freeze-in-variable-mortgage-costs-source-says.html "Caixabank proposes sector-wide freeze in variable mortgage costs, source says"), loans, and overdrafts, including borrowing used to buy furnishings, as well as to cover the purchase cost of the property. For those already in possession of one or more buy-to-let properties purchased on finance, the change means a gradual reduction in profitability over the [coming four years](https://www.financedigest.com/stocks-hit-two-year-lows-sterling-comes-under-fire.html "Stocks hit two-year lows, sterling comes under fire").

So what can potential landlords do?

**“The simple answer is to buy with cash and thus avoid the tax relief deductions entirely. However, that’s not always an ideal solution for some [investors. For those still using mortgage or other finance to purchase a buy-to-let property](https://www.financedigest.com/some-uk-property-funds-defer-investor-withdrawals.html "Some UK property funds defer investor withdrawals"), the best plan is to buy as if it’s 2021.**

**Calculate the property’s yield based on the end of the phasing in period in [order to ensure that it will still be a profitable](https://www.financedigest.com/elevator-maker-kone-hikes-outlook-as-q1-profit-orders-beat-forecasts.html "Elevator maker Kone hikes outlook as Q1 profit, orders beat forecasts") venture once the tax changes are fully implemented. Work out now whether the changes will push you up a tax bracket and make your investment decision with full knowledge of that fact.”**

**Jean Liggett, CEO,** **[Properties of the World](http://r20.rs6.net/tn.jsp?f=001KZMIvGO_j8uNUqJTHsgl6bhEePlFgRN8W_FNsIClOlTA6_qyJTRe4Tsh84WuuHno5qiPrDAJsGaDcgISWJF7yI5ulJVmzx8CBjwsBaHuVmC73UyrASaafFNA1xw9noq0AyFVnC0-FITk6vCimVxwuSjAYsq7BRPHeIbZKfLNNAkb9FTEadk3v1FLb8IDvr9g&c=O5jCR53VCmCh6kZ37sc3sZ9bZmmvDqfX4GHKyVQEkzr7AdzVNNLBdg==&ch=PILVYRgcuBkwmT8ULvlGBpW-fXizb6BhbuN-qX6K3iFbU-RBILyS8A==)**

![Buy-to-let makes way for buy-to-NET as April tax changes approach-3](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/3-2-1736844121003-compressed.jpg)

There are certainly still plenty of options available to [investors looking to avoid being stung by April’s taxation changes](https://www.financedigest.com/entrepreneur-investor-dale-w-wood-shares-how-he-is-using-his-funds-to-create-change.html "Entrepreneur & Investor Dale W Wood Shares How He Is Using His Funds to Create Change"). Purchasing lower [cost properties](https://www.financedigest.com/the-hidden-costs-of-property-investment.html "The Hidden Costs of Property Investment") that are more achievable as cash purchases is one strategy.

At  [Victoria House](http://r20.rs6.net/tn.jsp?f=001KZMIvGO_j8uNUqJTHsgl6bhEePlFgRN8W_FNsIClOlTA6_qyJTRe4fUtit3JM5tpqRCb6JSLEjaHNDjIgBmEcvLZuE-ok0rei-A5LybJ2Ja2Yq_guJT2Ie6u5SBNfF02qUSK14YnTPjDNC50DsIcwlAF5vBYCQkWjoBuQ8RNgkUnlNA7RYlRZNIoHuJGRIsRNw5FF3e05EAjDF9PINkh149LfDNWVYc7Dfdkhm8HlXY=&c=O5jCR53VCmCh6kZ37sc3sZ9bZmmvDqfX4GHKyVQEkzr7AdzVNNLBdg==&ch=PILVYRgcuBkwmT8ULvlGBpW-fXizb6BhbuN-qX6K3iFbU-RBILyS8A==) in Liverpool, superb penthouse apartments are available from as little as £68,750. Such a purchase may well prove a better longer-term prospect than opting for an [investment of double that value](https://www.financedigest.com/the-rise-of-fractional-investing-accessing-high-value-assets-with-small-budgets.html "The rise of fractional investing: accessing high-value assets with small budgets") (or more), which would require borrowing.

Opting for a city flagged as a hotspot is another good approach. HSBC has identified Manchester as one of the UK’s top four buy-to-let hotspots, while Jones Lang LaSalle has projected that [house prices](https://www.financedigest.com/uk-house-prices-show-unexpected-strength-in-october-nationwide.html "UK house prices show unexpected strength in October: Nationwide") there will rise by 4.5% per year for the next five years. Such strong figures can serve to offset reductions in tax relief for investors interested in properties there, such as the brand new development at [Barrel Yard](http://r20.rs6.net/tn.jsp?f=001KZMIvGO_j8uNUqJTHsgl6bhEePlFgRN8W_FNsIClOlTA6_qyJTRe4eru6RQ0L3hhegyLfwfuHz2pOKLqSsH_C_hXgZQqGw-vfEQR50WAe1xI71u8J1A9w24FA1sO15zEg8IRmHA0IvftZpBcoEdtuLFCqB5yLE5O02KWuWWgmbFghBn35NIwJcqDHJgtdYa0RoiftibMEqHKJWASZmqb0tR3UaFm_WU6&c=O5jCR53VCmCh6kZ37sc3sZ9bZmmvDqfX4GHKyVQEkzr7AdzVNNLBdg==&ch=PILVYRgcuBkwmT8ULvlGBpW-fXizb6BhbuN-qX6K3iFbU-RBILyS8A==).

**“Really it’s about going back to basics. Buy cheap and buy smart. Don’t be deterred by the spectre of increasing taxation – those who [plan carefully should be able to minimise the impact of April’s tax](https://www.financedigest.com/tom-l-r-griffiths.html "Thomas LR Griffiths’ top 10 strategies for US tax planning") changes and ensure they still buy to net a healthy profit.”**

**Jean Liggett, CEO,** **[Properties of the World](http://r20.rs6.net/tn.jsp?f=001KZMIvGO_j8uNUqJTHsgl6bhEePlFgRN8W_FNsIClOlTA6_qyJTRe4Tsh84WuuHno5qiPrDAJsGaDcgISWJF7yI5ulJVmzx8CBjwsBaHuVmC73UyrASaafFNA1xw9noq0AyFVnC0-FITk6vCimVxwuSjAYsq7BRPHeIbZKfLNNAkb9FTEadk3v1FLb8IDvr9g&c=O5jCR53VCmCh6kZ37sc3sZ9bZmmvDqfX4GHKyVQEkzr7AdzVNNLBdg==&ch=PILVYRgcuBkwmT8ULvlGBpW-fXizb6BhbuN-qX6K3iFbU-RBILyS8A==)**


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