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Attleborough Fields

Nuneaton

CV11 6RY

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Landlords Guide To Mortgage Tax Relief Changes


A~t present, landlords can reduce their taxable income by deducting the cost of certain expenses from their rental income.  Until now, these allowable expenses have included costs such as repairs, letting agent  fees and  mortgage interest.


Under the new rules, landlords will still be able to deduct repairs and other legitimate expenses from  their taxable income, but will only be able to offset a portion of their mortgage interest costs against tax, if they are higher rate taxpayer.


Although there is no doubt  that this change will makes things more difficult for landlords, the majority of  buy-to-let investors will not be affected quite as severely.  To begin with, landlords that are still classed as basic rate taxpayers after the changes are introduced will not be affected at all.


Secondly, most  landlords have a lower LTV  than 75% therefore,  landlords with lower mortgage costs will lose less under the change. Another bit of goods news is that the change will be phased in gradually.  In the current tax year (15/16), there will be no change at all.  The tax change will begin with four equal increases over the financial year.  Putting it simply, the current rules give most landlords a 40% discount on their interest costs. Under the new system, this drops to 20%.


Having your rental property re-valued to take house price growth into account would make your mortgage lender recalculate your LTV,  and  a lower LTV  means a better interest rate.











 




 



Minimum Energy Efficiency Standards (MEES) Law Changes


The Minimum Energy Efficiency Standards (MEES) will make it unlawful to let buildings which do not achieve an Energy Performance Certificate (EPC) rating of ‘E’ of higher from 2018.


This affects all domestic an commercial property in England and Wales. Poor energy performance is not limited to old or obsolete buildings.  The landlords who take action now will avoid the rush for improvements later on.


The April 2018 deadline will apply to lease renewals as well as new lettings.  If a lease has not be renewed by 2023, then MEES rules will kick in for all existing tenancy agreements. This means that even existing tenants should expect upgrades if performance falls short.


Our Energy Performance Surveyor can give help and advise  to the Landlords that need to carry out improvements to their properties.

Landlord’s Right to Rent Obligations

Under the Right  to Rent,  landlords can be fined  up to £3,000 for letting their property to someone who isn’t  allowed to rent property in England.  However, Landlords are allowed to  terminate tenancies within an appropriate timeframe should they find a  tenant is residing in the UK illegally.




Letting Agents Fees

 At present the fee situation for Letting Agents and prospective  tenants hasn’t changed at all. This is a proposed change on Letting Agent’s fees which the Government still need to consult on, assess the impact and find time to implement.  These changes are likely to come into force later next year,  but nothing has  been decided upon yet. Once we know the situation we will let you know.