Posts with tag: landlord finances

New Buy-to-Let Mortgage Products Available for Purchases and Remortgages

Published On: March 17, 2017 at 10:51 am


Categories: Finance News

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Ipswich Building Society has launched new buy-to-let mortgage products for purchases and remortgages.

New Buy-to-Let Mortgage Products Available for Purchases and Remortgages

New Buy-to-Let Mortgage Products Available for Purchases and Remortgages

A new two-year fixed rate buy-to-let product at 3.39% will be available, along with a two-year discount at 3.44% for new purchases and remortgages at up to 75% loan-to-value (LTV).

The buy-to-let mortgage products are available to those borrowing up to £500,000, and are subject to an application fee of £199, a completion fee of £1,300 and a standard valuation fee.

However, the valuation fee will be waived for buy-to-let landlords remortgaging a property worth up to £1m, while they will also receive assistance with their legal fees.

The Chief Executive of Ipswich Building Society, Richard Norrington, comments on the new buy-to-let mortgage products: “We continue to provide choice in the marketplace for mortgage misfits and those who may not fit a one-size-fits-all assessment.

“By employing a manual approach to underwriting, with consideration of each application based on individual circumstances, this new initiative will help creditworthy buy-to-let borrowers who may be finding it hard to remortgage away from their existing lender.”

While you may be attracted to the new buy-to-let mortgage products on offer, be aware that from April this year, the amount of mortgage interest that individual landlords can offset against tax will be restricted.

As of 6th April 2017, mortgage interest tax relief for individual buy-to-let landlords will be gradually reduced to the basic rate of Income Tax. The measure is part of the Government’s so-called attack on the buy-to-let sector, and will force some landlords into the higher rate tax bracket.

It is essential that all landlords are aware of the changes. This guide from the Government explains the change in more detail and who it affects: /government-guide-tax-relief-changes-residential-landlords/

Make sure you keep up with all of the changes in the market at Landlord News and seek financial advice when necessary.

Number of Landlords in Mortgage Arrears at Two-Year High

Published On: January 5, 2017 at 9:25 am


Categories: Landlord News

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The number of buy-to-let landlords in mortgage arrears has hit a two-year high, according to new figures from the Council of Mortgage Lenders (CML).

Number of Landlords in Mortgage Arrears at Two-Year High

Number of Landlords in Mortgage Arrears at Two-Year High

Mortgage arrears among landlords rose by 6% – from 4,700 to 5,000 – between July and September last year. This was the first increase seen since records began two years ago.

Following a rush of buy-to-let activity early last year ahead of the introduction of the 3% Stamp Duty surcharge in April, fewer investors are now adding to their property portfolios.

But some experts fear that many landlords, especially those entering the buy-to-let sector for the first time, acted too hastily in acquiring property that they could not afford to avoid being hit by the higher tax on additional homes.

The Chief Executive of the National Landlords Association (NLA), Richard Lambert, believes: “Some first time landlords may have rushed in to the market ill-prepared to beat the Stamp Duty hike. Unless landlords begin to make plans to mitigate the impact of these changes, it’s likely that buy-to-let mortgage arrears will continue to rise.”

The increase in the number of landlords falling into mortgage arrears has led to concerns that thousands more investors could get into debt when they are hit by further tax changes in April this year.

The existing rules that allow landlords to offset all of their finance costs against tax will, from 6th April 2017, be phased out under Section 24 of the Finance Act 2016, restricting the amount of tax relief that landlords can claim on mortgage interest.

The NLA estimates that around 440,000 basic rate tax payers will be forced into the higher tax bracket from April, once the changes come into force.

By April 2020, when the change is fully implemented, the consequences of Section 24 will mean that it is likely that higher rate tax payers will only receive 50% of the relief they currently get, with various experts warning that landlords will be left with little alternative but to pass higher costs onto tenants.

And with the forthcoming ban on letting agent fees for tenants, it’s highly likely that landlords will be forced to put their rents up considerably, leaving many tenants struggling to afford a home.

Most Private Landlords Set to Increase Rents

Published On: April 15, 2016 at 8:31 am


Categories: Landlord News

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The majority of private landlords are considering increasing rent prices to accommodate the higher taxes they now face, according to the Residential Landlords Association (RLA).

In a survey, the RLA found that 84% of landlords in the private rental sector are likely to increase rents following recent changes in the buy-to-let sector, introduced by Chancellor George Osborne.

Most Private Landlords Set to Increase Rents

Most Private Landlords Set to Increase Rents

The organisation also says that 78% of landlords feel the changes will deter them from further investing in rental properties, with half of all landlords thinking of getting rid of their investment properties.

This news arrives as estate agent Savills reports record demand for rental properties, predicting that one million new homes to rent will be needed by 2021.

The RLA believes that while less investment in buy-to-let properties may meet the Chancellor’s desire to free up homes for homeowners, these tax changes will make it increasingly difficult and more expensive for the large amount of people who cannot afford to buy, or who prefer not to, to access affordable housing.

In pushing up rents, the Government is in fact hitting those it is eager to support into homeownership, by making it more difficult for them to save for the high deposits they need.

The RLA is now calling on the Government to exempt all rental property making a net increase in the supply of new housing – new builds – from the 3% Stamp Duty surcharge that was introduced at the start of the month.

Some 39% of landlords said that they would be more likely to invest in new build rental properties if they were exempt from the higher tax rate.

The Chairman of the RLA, Alan Ward, says: “The Chancellor’s tax policies are impacting on tenants’ lives – not only are more than four in five facing rent increases, but half of landlords may be selling rented properties, which might result in tenants being given notice to leave their properties.

“Ministers need to end the myth that landlords are to blame for the country’s housing crisis and base policy on fact, not political expendiency.”1

If you are worried about how current and forthcoming tax changes will affect your lettings business, we have financial advice for landlords: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/ 



Landlords’ Challenge of Tax Relief Reduction to Receive Response from HMRC

Published On: March 8, 2016 at 12:38 pm


Categories: Landlord News

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Two landlords’ legal challenge of Clause 24 of the Finance (No. 2) Act 2015 will receive a response from HM Revenue & Customs (HMRC) by 16th March 2016.

Under the clause, landlords will not be able to deduct the cost of their buy-to-let mortgage interest as a business expense from their rental income by 2020. This will mean that their rental income will be added to any other income, potentially pushing them into the next tax band.

Therefore, tax will be paid on turnover, not profit, meaning that tax could be due on non-existent income. For some higher-rate taxpayers, mortgage costs above 75% of their rental income will mean they make a loss on their buy-to-let investment.

Landlords' Challenge of Tax Relief Reduction to Receive Response from HMRC

Landlords’ Challenge of Tax Relief Reduction to Receive Response from HMRC

The clause, announced by Chancellor George Osborne in the 2015 Budget, has received criticism from buy-to-let landlords, who have often invested in property to boost their pension pots.

The measure is part of the Government’s plan to turn generation rent into generation buy. Meanwhile, some believe that the Government is favouring large-scale investors over smaller private landlords.

Landlords Steve Bolton and Chris Cooper are leading a legal challenge in an attempt to bring a judicial review of the reduction in mortgage interest tax relief, which will be gradually imposed starting in 2017.

Cooper is a modest investor and part-time landlord, who is boosting his pension through buy-to-let, while Bolton owns around 20 residential and commercial properties, and is also the founder and owner of Platinum Property Partners, a buy-to-let training franchise.

Cherie Blair’s Omnia Strategy has been appointed to represent the landlords.

The application has been filed and signed off by the firm, which gives HMRC and the Treasury until 16th March to respond with an Acknowledgement of Service. This must detail the grounds on which the departments intend to contest the challenge.

The challenge will argue that the Government’s tax change flouts “a long-established principle of taxation that expenses incurred wholly and exclusively for the purposes of the business are deductible when calculating the taxable profits”.

The landlords have set up a crowdfunding page, which had raised just over £50,000 from 740 supporters in January.

A statement from the landlords says: “We expect the Government to respond aggressively. We are hoping for a positive result, but are mindful both that judicial review proceedings are inherently difficult and also that, even if we win, the Government might introduce changes or new measures that are more defensible legally, but still unattractive and problematic for hard-working private landlords.”1

We will keep you updated on the landlords’ case and continue to provide information for landlords on all issues affecting the buy-to-let sector.


Number of Tenants in Serious Rent Arrears Going Down

The number of private tenants in serious rent arrears has gone down, according to the latest Tenant Arrears Tracker from estate agents Your Move and Reeds Rains.

In the fourth quarter of 2015 (Q4), 1,500 households renting from private landlords had moved out of serious rent arrears, compared to the previous quarter. This is a 1.5% quarterly improvement, reversing the worsening trend recorded throughout the early parts of 2015.

In Q4 last year, there were 82,900 households behind on more than two months’ rent, down from 84,200 in Q3 2015.

Number of Tenants in Serious Rent Arrears Going Down

Number of Tenants in Serious Rent Arrears Going Down

As a proportion of all households renting from private landlords, just 1.6% are in serious rent arrears, says the report.

Comparatively, 2.9% of tenancies were in serious rent arrears in Q1 2008 – a record high. The absolute number of tenants suffering serious rent arrears was also considerably higher in Q3 2012, at 116,600.

The Director of Your Move and Reeds Rains, Adrian Gill, comments on the findings: “Private renting is still absorbing thousands of extra households every month, housing millions more than just a few years ago. As this tenure of housing and this way of living grows, affordability is the issue that goes hand-in-hand with questions of capacity.

“An individual tenant is still extremely unlikely to fall into serious rent arrears. In fact, the proportion of renters getting seriously behind on payments has dropped considerably over the longer term. But absolute numbers are now going the right way too. With fewer people at risk from more serious consequences of struggling to pay the rent, this is great news.”1 

Additionally, cases of landlords falling behind on their buy-to-let mortgages are also falling. In Q4 2015, 5,500 landlords were in mortgage arrears, down by 3.5% from 5,700 in Q3.

Annually, landlord finances have progressed even further. The amount of buy-to-let mortgage arrears has dropped by 54% since it stood at 11,900 in Q4 2014.

However, it is still uncertain how the forthcoming changes to landlord taxes will affect investors. Positively, one finance expert has expressed his belief that buy-to-let is not dead, and recent research found that many landlords are still confident in the sector.

If your tenants are suffering from rent arrears, or you just want some peace of mind, the best thing to do is take out a rent guarantee insurance policy, which ensures that you still get paid even if your tenant defaults on the rent.

For more advice for dealing with and avoiding rent arrears, this guide for landlords should help:



30% of All Households to Rent from Private Landlords in 30 Years

The private rental sector will continue to grow over the next 30 years, leading to 30% of all households renting from private landlords, according to the latest prediction from franchise estate and letting agent firm Martin & Co.

This forecast was announced in a breakfast briefing yesterday, held to acknowledge the 30 years since Martin & Co let its first property.

The company’s CEO, Ian Wilson, stated that forthcoming changes to landlord taxes and Stamp Duty for buy-to-let investors will not stop landlords making profits.

30% of All Households to Rent from Private Landlords in 30 Years

30% of All Households to Rent from Private Landlords in 30 Years

He claimed that the gradual reduction in mortgage interest tax relief on buy-to-let property loans will not affect many landlords.

He said: “A current income after tax of £1,789 per annum would fall to £894 if rents remain unchanged. However, a 5% per annum increase in rents would take income – after tax – to £1,858 per annum in 2020.”1

Speaking of the more imminent Stamp Duty surcharge, Wilson commented that it is possible that landlords will leave the sector, leading to lower rental property stock levels.

However, he thinks that this will push rent prices up, making monthly yields more attractive to existing landlords, while encouraging investors to return to the buy-to-let market.

As of 1st April, buy-to-let landlords and second homebuyers will be charged an extra 3% in Stamp Duty on properties costing £40,000 or more. The change has led to many investors rushing to buy before the surcharge is implemented.

The Managing Director of Martin & Co, Michael Stoop, also expects the sector to adapt in order to provide private rental accommodation for the rise in larger families who must rent their homes.

He said that landlords would diversify their portfolios by purchasing larger properties in less affluent areas, such as three and four-bedroom houses with gardens.

The firm told those at yesterday’s briefing that as a group, it manages 45,000 rental properties – equivalent to the size of Winchester.

Martin & Co has around 300 offices, trading under five different brands.

How do you expect the changes to landlord finances and the expanding private rental sector to affect how you invest in the market?

We will continue providing information for landlords on all issues that may affect their lettings businesses.