We all know that planning ahead is the key to success – and to avoiding any costly surprises. Reviewing your mortgages and insurance cover and planning for upcoming tax changes might not seem like the most festive of pasttimes, but taking the time to do it now over the Christmas break could save you hundreds of pounds in 2018.
Here are a few things to consider:
Lending rules were made more stringent for the buy-to-let sector last year for portfolios of four properties or more. The new regulations came after Westminster asked the Prudential Regulation Authority (PRA) to carry out a review of the buy-to-let market, and lending therein.
Many lenders increased their criteria further in the face of uncertainty caused by Brexit.
If you’re looking to take out a new mortgage now, you will need to demonstrate that you can afford to keep up repayments if their borrowing costs go up by 2%, or to an interest rate of 5.5% (whichever is higher).
Lenders will also scrutinise your tax liabilities and personal income sources to judge how they could change or shift. They may also request a higher level of rent relative to the mortgage payments in order to ensure that borrowers have the ability to pay back what they owe.
The regulation doesn’t apply to mortgages with rates fixed for five years or more, however.
By law, all income received, rent or otherwise, must be declared to HMRC.
Landlord Tax will be increasing again from April 2018. It’s important to understand how much tax you will be paying going forward so you can factor it into your plan for the year.
From this coming April, too, the amount of interest you can offset against tax will reduced again. This is part of an initiative to reduce all offsettable interest to 0% by 2020, and means any interest on buy-to-let mortgages will be taxed at a standard rate of 20%.
Stamp Duty remains at an additional 3% on top of the standard rate for second properties. If you’re planning to expand your portfolio in 2018, you willneed to factor this in as an additional cost.
We would urge all landlords to take independent advice from a qualified accountant such as Morgan Hemp.
Having the right insurance is essential for any landlord. Make sure you are covered for prolonged void periods, and remind yourself of your excess amounts. Knowing exactly how your insurance will help you in the event of an emergency will give you peace of mind. It could also save you thousands should the worst occur.
You may also be able to save money on your policy, so it’s well-worth an annual review.
Give Eastside Insurance Services a call on 01792 641611 to get a competitive landlords insurance policy quote.
Maintaining your property is a necessary part of being a landlord. Planning maintenance in advance should help minimise any unexpected repairs, and might allow you to make more cost-effective decisions about how they should be done.
Get your boiler serviced. A regular service can reduce the likelihood of a breakdown, and prolong the life of the boiler. Asking an engineer to carry out a service at the same time as your annual gas safety certificate checks can also reduce the costs (and the time!) associated with multiple visits.
Arrange for gutters to be cleared. This will help prevent blockages that, as well as being a nuisance, can cause damp within a property. Damp can be costly and take a long time to rectify. Prevention might be easier than a cure!
If you self-manage, plan when you will visit your tenants next year and make sure they know how to contact you or a nominated contractor over the festive break. You don’t want to start the new year off paying a huge bill for an out-of-hours plumber your tenants were forced to call when they couldn’t get hold of you!
It is now a legal requirement for all landlords with property in Wales to be registered with Rent Smart Wales. Landlords and Agents who manage a property must have a license, too.
Enforcement officers are now taking action against landlords and agents who have not yet complied. If you haven’t started the process yet, we would suggest you start it today.
Penalties include fines, rent-stopping orders, and the inability to serve a Section 21 Notice for Possession.
Growing Your Portfolio
If you’re looking to invest in property in 2018, we can help. You can read our latest blog on the subject by clicking here, and you can request a free, 30-minute consultation with me (Hannah) by clicking here.
For more information on all of the points raised here, you can visit our blog.