It’s fair to say that over the course of 2017 the Buy to Let landscape has changed, so what does this mean for Buy to Let landlords?
Things have certainly changed for Buy to Let landlords over the last twelve months, even without counting the continuing ripple effect of Brexit uncertainty. From changes in licensing to EPC and tenants rights, let’s take a look at just how much things have changed for Buy to Let landlords, and what exactly this means for future Buy to Let users. The team at Glenhawk explain.
Changes to mortgage interest tax relief
Since last April, new rules dictate that landlords can only offset 75% of mortgage interest — a figure which will be slowly reduced to 0% by 2020. This is a change from the time before last April when landlords could deduct their mortgage interest costs from their income when calculating their tax bill.
Councils can now decide whether to adopt selective licensing in their areas, as some councils have introduced their own landlord licensing schemes. However, if councils fail to get landlord agreement on schemes, they risk significant fines.
Energy efficiency regulations
Starting in Spring 2018, private rental properties must have at least an E rating on their Energy Performance Certificate (EPC) otherwise new tenants cannot be signed on to the property and existing tenancies cannot be renewed (by 2020). Fines of up to £4,000 can be imposed on landlords if these rules aren’t followed.
The letting fees ban
In 2016, the government announced plans to ban agency fees for tenants in England. At the moment, tenants tend to pay the bills for tenancy agreements, credit checks and referencing, but as of 2018 these costs will be passed on to landlords.
Property market slowdown
Transaction levels have been slowing in recent months, though value growth has yet to follow suit. If it does, those investing in property may see weaker returns.
Tenancy deposit protection
Tenancy deposit schemes have been compulsory for around ten years now, but new possibilities have been floating around the market including deposit free renting and apps offering tenancy insurance.
Stricter Buy to Let laws
Last year, the idea of tougher requirements for Buy to let users were introduced by the Bank of England. These new rules require landlords to bring in higher levels of rent relative to their mortgage costs. Landlords with four or more properties will also face addition stress testing, and will need to provide further information about their incoming and outgoing finances.
What do landlords make of these changes?
Needless to say, landlords are somewhat divided in their opinions of these changes to proceedings. Many landlords feel sick of seemingly never-ending changes to Buy to Let landing regulation, taxation changes and the responsibility of adhering to new EPC rules. As such, they have decided to sell up and slip away with their profits.
However, for others these changes mark an opportunity to review their existing portfolio and discard any underperforming properties, and also to buy up whole portfolios from other landlords who are now looking to sell.
Many landlords are now choosing to move away from London and focus their attentions north of the Watford Gap where lower headline costs are supplemented by higher yields. In the short term, there may be a reduction in the number of properties available to rent, keeping yields positive.
Over time, the flow of Buy to Let properties re-entering the market could create bargains for those in acquisition mode.
No matter what your Buy to Let queries are, it’s always best to seek the advice of professionals. Get in touch with the team at Glenhawk to see how they can help.