Category: ASK CHRIS

New HMO legislation

In England on the 1st October 2018, the criteria for what kind of House in Multiple Occupation (HMO) needs a mandatory licence was extended.

The UK Government announced in May 2015 that it would be changing the criteria for Mandatory HMO Licensing in England in a bid to address poor conditions and overcrowding in the private rented sector. This means that from October this year, all HMOs must be licensed if they house five or more occupants, from at least two unrelated households irrespective of the number of storeys that the property has.

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PETITION LAUNCHES URGING GOVERNMENT TO REVERSE TAX CLAMPDOWNS ON BUY-TO-LET SECTOR

A petition has been launched on the Government website demanding the reintroduction of full mortgage interest relief for private landlords, and the dropping of the 3% Stamp Duty surcharge when additional properties are bought.

It alleges that both measures had increased homelessness by driving landlords out of the sector.

The petition, which runs until November 14, was launched earlier this month and has already attracted over 11,500 signatures which means the government must respond.

It says: “We call on the Government to reintroduce full mortgage interest relief and to drop the 3% Stamp Duty surcharge which is increasing homelessness by driving many landlords out of the sector, meaning tenants have less choice and higher rents.

“There will still be a continuing growth in demand for housing and a significant part of this will have to be available through private landlords.

“It is time to review the tax changes on buy-to-let landlords. It’s clear that the availability of rental property has decreased and rents have risen markedly.

“We call for policy change to end these disastrous tax policies which cause such profound suffering.”

The petition is launched by Mark Homer, one half of property investor training organisation Progressive Property.

To sign the petition follow this link https://petition.parliament.uk/petitions/219279

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What landlords need to think about for 2018

It looks as though 2018 will be a mixed year for landlords. Some will start to feel the pinch of the legislation that’s recently come into force, such as the loss of mortgage interest relief, while a number of tenants may give notice, due to incentives to buy. At the same time, there are likely to be some good deals around for landlords looking to expand their portfolios. For the rest, who may not have the means to buy in the next 12 months, it’s a good opportunity to take stock of their portfolio and make small improvements where needed to help translate rental income into better profits.

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Keeping money aside for expenses

Renting a property isn’t as simple as purchasing the property and letting it out, you need to ensure the property is maintained and that you set money aside to cover these expenses. Although lenders will typically require the rental income of your investment property to be at least 125% of your mortgage payment amount, this doesn’t always mean that the property will generate positive cash flow or give sufficient net profit to cover all the expenses of maintaining the rented property over the typical 15 to 20-year ownership.

As well as regular and one-off maintenance expenses, allowances need to be made for times when there may be no rental income. Tenants may stop paying their rent and the property is sometimes empty between tenancies, and you still need to be able to cover the mortgage and other costs during this time.

It is therefore vital that you budget properly to ensure that the investment is worthwhile and not going to cost you money month-on-month, before you commit to buying a property to let.

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10 documents every landlord needs to have to hand

As a landlord, no matter whether you have one property or a large portfolio, it’s important to keep on top of all the paperwork associated with owning buy to lets. Here are ten key pieces of documentation you should have up to date and to hand:

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Do I need to inform my mortgage lender that my house is rented out?

You must obtain consent from your mortgage lender to let a property. It may not be allowed under the terms of your mortgage and some lenders may impose special terms conditions or restrictions before giving consent it’s also important to inform your buildings insurance provider.

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which landlords insurances are available?

Landlord insurance is similar to your normal home insurance but is designed to cover rental properties. Your standard home insurance will not be adequate for covering buy to let properties also.

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i have just purchased my first btl property and would like to know what reference checks you conduct on tenants?

We employ the services of an external referencing agency to ensure thorough checks are carried out on every applicant. These include, full credit checks, employment references, affordability checks and previous accommodation reference. We are also required under the immigration Act to check each applicant has the Right to Rent in the UK. As an agency it is important for us that we find you the right tenant for your property.

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i am looking at renting out a property, should i rent it with or without furniture?

The question of renting a property furnished or unfurnished does depend on the location and type of property. For example, if your particular property is more suited to a family, they may already have their own furniture which they would prefer to use. However, young professionals renting flats may prefer the property to be furnished. One of the most important things to note is that any furniture supplied must comply with safety regulations and if it was to break you would have an obligation to provide a replacement for the tenant.

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i have been living abroad for some time and would like to rent out my property in the uk. what do i need to know about tax?

As an overseas landlord, your letting agent would be required to deduct tax from your rental income before sending it to you unless they have permission from HMRC to pay the rent to you in full. This tax would then be paid to HMRC quarterly and at the end of the tax year you would be provided with a certificate in order to complete a self-assessment tax return and prove how much tax you have paid. If you would prefer the rent to be paid in full so you could complete a tax return and pay any money owed directly, HMRC will provide your letting agent with an approval number once you have registered with them which they need to pay the rent to you in full.

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