As part of changes to the Construction Industry Scheme (CIS), BTL landlords who carry out restoration or extensive repairs to their properties could be liable to tax increase, with the development being listed as a business including construction operations.
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As part of the scheme launched by the Treasury, landlords could be forced to file monthly tax returns listing payments to builders and other subcontractors. Fines of up to £5,000 could be issued to unregistered firms, the Treasury indicated.
Andy Young, chief executive at The Business Mortgage Company, admitted that the introduction of CIS plans could have an adverse impact on the BTL market. He said: “It is not clear whether or not the Construction Industry Scheme will be applied to buy-to-let investors and further clarification is needed. I think this type of scheme, if applied to buy-to-let, could discourage some landlords from buying run down properties to renovate and then let out. This would be a shame because the UK needs all the good housing it can get as the demand for property continues to increase. The availability of good rental property is vital to the housing market and making improvements to existing properties to raise accommodation standards should be encouraged.”
