If you’re a landlord, or are thinking about investing in the buy-to-let sector, you may have a few questions about what’s happening with rental prices, the effect of Brexit on the property market, new laws and regulations, the importance of referencing tenants, and more.
In a new ebook, by HomeLet (a top UK provider of tenant and landlord insurance) they seek to answer many of these questions, and it’s a must-read for landlords and property investors in the UK.
Industry experts including Ryan Bembridge from Mortgage Introducer, Sarah Davidson from This is Money and Doug Hall from the Residential Landlords Association (to name a few), have weighed in on the important, current topics concerning landlords across the country.
One of the first topics discussed is the effect of Brexit, for example. Many people are rightly worried about how this will affect mortgage and rental prices, and how they should react. Mr Bembridge says that while the pound is currently at a 30-year low, we don’t yet need to be worrying about doomsday.
House prices have actually been robust, he says, and lenders continue to lend, with mortgage brokers reporting that they’re actually busy.
While some potential investors are expected to change their mind, these are more likely to be amateur investors who only own one or two properties, since they can no longer count on the “double-digit house price growth,” seen over the last two years.
However, according to Bembridge, those with larger profiles will be thinking long-term and so are unlikely to be off put by the Brexit vote. Savvy investors may even see this vote as an opportunity, and could buy properties at a discount. With interest rates at rock bottom, there are definitely great deals to be found, he notes.
Sarah Davidson covers some of the new UK laws within her article in the ebook, and how buy-to-let investments could be affected.
George Osborne wasn’t a fan of the buy-to-let which helped first-time buyers, and he managed to change several laws, meaning private landlords will have to pay a 3% surcharge on stamp duty that is already owed. The wear and tear allowance was also removed, meaning landlords could no longer claim 10% of the rental income for any wear and tear, they can now only reclaim any expenses that have actually occurred.
Mortgage interest tax reliefs are also due to be removed from April next year. Right now, landlords are able to claim tax relief on the repayments of their mortgage at the same rate that they’re paying income tax. This means, that for those who pay the highest rate, they can be saving a huge 45% on their mortgage each month.
Unfortunately, from April next year this will be steadily removed, until 2021, when they will only be able to claim 20% at the most. This means that mortgage lenders have already begun raising rental income ratios, and instead of insisting on rental incomes equaling 125% of the mortgage payments, most lenders are now changing this to 145%.
Overall, this ebook is a great resource for those looking to get into the sector and also those who are already established within. To read the resource in full, head to HomeLet’s landlord lowdown blog. And to join the conversation online, jump on the hashtag #LandlordsAdvice on Twitter.