Harry Singh considers the repercussions of having the Conservative party in power for dentists investing in buy-to-let property.
So, it’s old news that in May the Conservatives came to power and set the UK a-flutter for all sorts of reasons in all sorts of areas. For those of us who are in the property game there was something of an initial sigh of relief – just in that regard – since the Labour party had said it would introduce rent controls, leading to fears that the property industry would become more heavily regulated and overtaxed.
But what has the reality been? Has there been the expected increase in confidence in the UK property market? Given the last few months of political shenanigans, what might we expect over the next few years?
Broken promises
The truth is that George Osbourne is now looking to restrict mortgage interest tax relief for buy-to-let property purchasers to the basic rate of income tax, even if, as many dentists do, they pay the higher tax rates of 40% or 45%. The current system, whereby buy-to-let landlords can offset their mortgage interest payments against their income, is set to be phased out from 2017.
In advance of the Conservative party conference in October, Damian Green, a Conservative MP, laid it out for us in The Telegraph. He wrote: ‘We need to reclaim the mantle of the party of home ownership, and to do that we not only to build more houses but ensure that they are available for people to buy. Too many new houses and flats are immediately snapped up by buy-to-let landlords, and never become available for first-time buyers. I am delighted that we have taken the first steps towards removing the tax advantages for buy-to-let, but I suspect there is much further to go (and therefore more political courage required).’
Well let’s face it – all of that certainly doesn’t tally with what I and others perceived we would be dealing with; namely, a political party that appeared more in favour of landlords and property investors than Labour in the run up to the election.
If you feel you may be affected by the proposed changes I would encourage you to visit http://saynotogeorge.co.uk/. There is a wealth of information on there explaining the potential repercussions in depth, and if you decide you are against what is being planned you may choose to sign the on-line petition.
Dealing with reality
According to the experts, however, it’s not all gloom and doom. As reported in The Guardian, Andrew Montlake, a director at mortgage broker Coreco, said: ‘These changes will undoubtedly make some prospective landlords think twice about entering buy-to-let, but the response we have had from landlords suggest that while it will cut down on their profits, it is not enough to fundamentally change their views and start selling off all their properties.
‘It will just be a case of taking these changes into account when making a business decision on each property to see if the basic maths of a new purchase still works.’
We also know that earlier forecasts of interest rate hikes mid-2016 are unlikely to come to pass now, with conservative (with a lower case ‘c’!) predictions suggesting the first quarter of 2017 to be more likely. This is good news for anyone looking to source a mortgage over the coming months.
However, here’s the caveat – always be prepared for the worst. When making your buy-to-let decisions hope for the best but factor in the worst. Make sure your calculations allow for George’s tax changes to come to pass and interest rates to increase at any time, and you’ll be able to face the future with equanimity come what may.
Harry would like to share his professional property secrets with his dental colleagues free of charge. For further information, please visit www.dentalpropertyclub.co.uk.
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The content of this article is for information purposes only and should not be relied upon when making legal or financial decisions. It is recommended you seek the help of a financial and/or legal expert to assess your needs fully before making any decisions and/or making changes
Bio - Dr Harry Singh, BChD (Leeds), MFGDP (UK)
After qualifying from Leeds Dental School in 1996, Dr Harry Singh followed the traditional VT, Associate and Principal routes in dentistry, owning three dental practices along the way. Amongst these was ‘Aesthetics’, an award-winning private practice in Hertfordshire.
Like most dentists, Harry was making good money; however, it left him working long hours and missing out on family time, hobbies, holidays, going to the gym, healthy eating, etc. Even when Harry was away from the practice, he found himself thinking about patient emergencies or complaints, as well as staff issues.
Feeling alone on a professional level and unhappy with his lifestyle, Harry sought to make a change so, as well as practising dentistry, he started to invest in property and stumbled upon some professional property secrets that helped to develop his business interests.
Over a 2-year period Harry bought 27 properties and sold 6. The profits from these deals allowed him to buy into dental practices and set up 2 squat practices.
The passive income that these properties brought in covered all of his financial commitments, enabling him to reduce his clinical dentistry hours and to spend more time with his family and on himself.
Eventually he found that he was making more money from property and practising dentistry two days a week, rather than full-time. Two years ago he retired from dentistry to concentrate on the property side of his work.
He now has a property portfolio valued at around £7 million, yielding a passive income of £8000 per month.
Understanding that many dentists feel as isolated and trapped as he did, Harry wants to ‘give something back’ to his dental colleagues via the Dental Property Club, which is designed to share with members the information, expertise and knowledge he has gathered along the way.