There is clearly a balance to be had between profitability and compliance for landlords, who are again coming under increasing pressure from legislative changes. Here are our top four current issues that you really should know about:
1: Mortgage Applications for Landlords.
New lending criteria for landlords mean that lenders are now obliged to take into account all properties in your portfolio - not just the one for which you are applying for a mortgage. The portfolio as a whole must be viable, so it’s worth looking at the issue holistically, keeping full records, and putting a proper business plan together before applying.
2: Mortgage Interest Tax Relief
The amount of interest that can be claimed against tax began to shrink in April 2017 and by 2020 only the basic rate of tax will be claimable, even if you are a higher rate tax payer. So before you do this year’s tax return, it’s worth checking with your accountant how much you can claim.
3: Minimum energy efficiency standards
As of the 1st April 2018, all rental properties must have a minimum ‘E’ rating on their EPC (Energy Performance Certificate). Any property which scores below this can no longer be let, or re-let to the existing tenants. If you are in any doubt about your EPC please contact us for advice.
4: Universal credit
Universal Credit is a new form of benefit that is replacing several others, such as Income Support, Housing Benefit and Jobseeker’s allowance. One of the elements of this from a housing perspective is that the allowance will be paid directly to the tenant, who in turn pays the landlord, rather than the LA paying the landlord/agent on the tenant’s behalf. If you currently have tenants on benefits then it’s certainly worth ensuring that they are aware of how they should be managing their rental payments under the new regime.
Fines for non-compliance are rising in many areas of lettings. The cost of employing a managing agent such as ourselves to help oil the wheels far outweighs the potential expense and headache of an unwitting failure to comply. So if you are not yet one of our valued clients, maybe it’s worth a chat?