Being a landlord can be confusing, new regulations changes to the licencing system. New regulations coming in, almost it seems every week. No wander landlords in Wolverhampton and the West Midlands are feeling overwhelmed
1. Cashback is back
Certain lenders are offering cashback on buy to let mortgages.
2. Mortgage interest tax relief
Landlords are continuing to feel the pain of the cuts to mortgage interest tax relief. Which will is still being phased in until April 2020.
The 2019-20 tax year begins in April, meaning Wolverhampton landlords will only be able to claim 25% of their mortgage tax relief when filing their tax returns.
3. HMO licensing
Changes brought in last October mean Wolverhampton landlords who let shared properties in Wolverhampton or indeed any part of the country, will now fall under House in Multiple Occupation (HMO) licensing rules.
In October, the three-storey rule was removed, so any large flat or house share of five or more people now requires an HMO licence.
Local schemes – certain parts of Wolverhampton fall under the article 4 regulation
Article 4 directions restrict permitted rights either in relation to a particular area or site, or a particular type of development anywhere in the local authority’s area. When an article 4 direction is in effect, a planning application may be required for development that would have otherwise been permitted.
4. The Buy-to-let Lender trend
During such uncertain economic times, it is important for landlords to keep up to date with the buy to let mortgage market. Landlords usually need to prove the rent they’ll receive will cover at least 125% of their mortgage payments. Certain lenders depending on product and criteria request 130% – 140% interest cover ratio.
5. Energy efficiency (EPC)
The minimum energy efficiency standards were launched in April last year, what does this mean well, any renewed tenancies and all newly rented out properties have to have a minimum energy rating of E or above from April 2020 if the EPC is below E landlords will not be able to continue letting the property.
6. Letting fees ban
A ban on letting agents charging fees to tenants will come into force on 1 June 2019. From 1 June, the only costs landlords and agents will be able to charge tenants for will be: Rent.
A refundable deposit, capped at six weeks’ rent. The cap could be five weeks’ rent for properties where the annual rent is less than £50,000. A refundable holding deposit to reserve the property, capped at one week’s rent. Changes to the tenancy requested by the tenant, capped at £50. Early termination of the tenancy requested by the tenant.
Defaults by the tenant, such as fines for late rent payments or lost keys. These must be “reasonable costs”, with evidence given in writing by the landlord or agent. Issues for which the tenant is at fault, such as the replacement of lost keys. Utilities, communications services and council tax. Contract changes or termination when requested by the tenant.
7. Stamp duty surcharges
The 3% buy-to-let stamp duty surcharge appears to be here to stay
You will have to search the market hard for your dream home because of Brexit lots of sellers are waiting for a certain outcome. If you wait for the market to move subject to Brexit you will pay a lot more for your first home and also the saga of Brexit and its aftermath could dare I say it go on for years.
9. Eviction rules
MPs have been debating section 21 eviction rules after campaigners claimed that the current laws can result in homelessness.
At the moment landlords can give a section 21 notice of possession to tenants to inform them they wish to take back possession of a property at the end of a fixed term. However watch this space as this could be on the cards for Wolverhampton Buy to Let landlords.
10. Client money protection
From the 1st of April, all letting agents in England will need to be members of an approved Client Money Protection (CMP) scheme. These schemes protect the rent a tenant pays to the letting agent, for example if the agent goes out of business the tenant should get most of their money back.
If you’d like a free consultation with an expert and a professional recommendation on the best mortgage for you, call Paul on 01902 213201