Key points for Buy to Let Landlords
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Although still unregulated by the Financial Conduct authority and the government are continuously shaping up the property investment market and 2018 is another year where certain aspects need to be taken into consideration.
- Energy Performance Certificate
The energy efficiently rating of the rental property will require to be a minimum of E as of April this year. This requirement will first of all only apply to new tenancies and renewals before reaching all existing tenancies by 2020.
Failure to comply or submitting false information could result in a cumulative fine of up to £5,000. Not to be taken lightly!
- Agency fees
An ongoing government topic since November 2016 is the agent’s fees and deposits. The proposal was to eliminate the fee letting agents impose to new tenants along with setting a limit to holding deposits at no more than one week's rent and security deposits at six week's rent. This is more than likely to come into affect this year, so keep an eye out.
- Bad reputation
Come spring, if there's still such a season, a new database will be launched identifying all dishonest landlords and letting agents in the UK. It has not yet been confirmed whether or not the public will be able to access it but rogue landlords and letting agents will be named and shamed!
- Identity check
Since 2016, the Right to Rent legislation requires landlords or managing agents to verify whether or not a tenant has the right to live in the UK. A breach of the legislation will impact in a fine.
- Bad tenants
Even with all the best intentions, bad tenant(s) are still out there. The eviction process can become a very expensive process especially if rent is no longer being paid, as your lender will still request their monthly payments no matter the circumstances. Landlords insurance is becoming more popular as they give that extra piece of mind for the owners.
- Lending criteria for portfolio landlords
This point only takes into account landlords with four or more properties. If this applies to you, the top line profit will no longer be enough to apply for additional finance and you will be require to provide full finances for each property.
- Tax relief
Since April 2017, the percentage of mortgage interest allowed to be offset has been reduced to 50% down from 75%. Sadly, this figure will keep reducing all the way to zero by 2020 when a tax credit worth 20% will be put in place.
- The stamp duty of the stamp duty
The 3% surcharge was put in place 18 months ago and is still in place. This is a very important factor to include in any buy to let investment as this could impact your initial investment quite considerably!
Even with the continuous changes in legislation there is still a need in the buy to let market. Demand for rental property remains high with the Government unable to fulfil the housing shortage. It is likely to take decades to satisfy the housing crisis and we feel there is still a place in the market for Buy to Let lenders who will continue to offer a wide range of products for landlords meaning there is a willing market for investors to continue in the buy to let market.