Have you looked at your mortgage requirements recently? Do you own investment properties? Do you know about the upcoming changes to EPCs? Are you prepared for the changes to mortgage interest tax relief?
The Buy to Let sector has been through some interesting times and it always seems to be this area that is targeted when it comes to tax and regulatory changes. That is why I always stipulate that any property investor should have a good set of experienced property professionals around them when it comes to advice and recommendations.
For the tax year 2019/2020, landlords will only be able to offset 25% of their mortgage interest for tax purposes. In 2020/2021, all of a landlord’s gross rental income will be taxable and they will instead be given a reduction in their tax liability equivalent to 20% of their mortgage interest.
This has led to an increase in landlords transferring their portfolios in to a limited company structure with all future purchases being bought in the limited company name. This should be carefully considered, and professional tax advice taken.
In addition, minimum energy efficiency standards (MEES) were introduced in April 2018. The standards affected all new lets and tenancy renewals in the private rented sector to have a minimum energy performance rating of E. From April 2020, this will also cover existing tenancies. Landlords will be unable to rent properties until any works are done and the minimum rating is achieved. It will be illegal to rent out a failing property and landlords can be fined up to £4,000 (unless the property is a listed building or holiday accommodation rented out for less than 4 months a year or let under a licence to occupy).
On the upside, the availability of Buy to Let mortgages is at it’s highest for some time with loans available up to 85% of the property value and five year fixed rate deals, with only three year redemption penalties recently being launched. Terms and conditions obviously apply.
Taking in to account all of the above, it is more important than ever, to seek specialist Buy to Let mortgage advice along with the relevant tax advice from a property tax adviser. This really is an area you can’t afford to get wrong as it could be very costly to rectify later on.