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Buy-to-let Market | Extraordinary News: More Change Ahead | 2018

Buy-to-let market

Buy-to-let market

Liz Syms
Liz Syms, CEO and Founder of Connect Mortgages

In our previous publication, we had an intriguing interview with Liz Syms entitled: Buy-to-Let Interview | Amazing Business Plan For Clients Produced by Brokers | Liz Syms
As we embark on the new year, it’s essential to anticipate the challenges awaiting landlords in the ever-evolving landscape of regulations and policies in the
buy-to-let market. In 2017, brokers navigated through many changes, and the momentum doesn’t appear to be slowing down in the upcoming months. Currently, there are 15 active government consultations, each poised to influence landlord clients in various ways.

Adding to the complexity, the deduction of mortgage interest against tax is undergoing another reduction. Landlords will soon only be able to offset 50% of the total cost, with the remaining 50% applicable at the lower tax rate. This reduction is part of a continuous trend, leading to a scenario where all finance costs can only be deducted at the 20% tax rate by 2020.

Navigating this intricate tax landscape will undoubtedly require vigilance and strategic financial planning. As we look ahead, it’s evident that staying informed and adapting to these changes will be crucial for landlords to maintain financial stability and optimise their investments.

Buy-to-let Market | Upcoming changes in EPC regulations

A significant development is looming on the horizon, set to take effect on April 1, 2018, particularly in the buy-to-let market. Starting from this date, leasing a property lacking an Energy Performance Certificate (EPC) with at least an E rating will be illegal. Landlords violating this regulation may face a civil penalty of up to £4,000. This rule applies to all new leases, fresh tenancy agreements, and extensions of existing ones.

EPCThis impending change underscores the need for landlords to address their properties’ energy performance and insulation standards promptly. Landlord clients must consider taking proactive measures to ensure compliance with the minimum EPC standards.

The complexity increases for landlords who lease flats or bedsits within a building they only partially own. In the case of flats, each unit requires an individual EPC, whereas the entire building must obtain one for bedsits.

While there are no official statements from lenders mandating the submission of EPCs during buy-to-let mortgage applications, this might change. The rationale behind such a requirement could be the potential for buildings without a valid EPC to experience void periods, leaving landlords without tenants and affecting their ability to meet mortgage obligations.

Lenders, especially those dealing with portfolio landlord applications, may find it necessary to consider these factors.

It’s worth noting that an EPC remains valid for ten years. When the requirement was introduced, landlords who obtained a certificate in 2016 need not rush to obtain a new one. However, suppose the EPC indicates an F or G rating, and the property is due for re-letting.

In that case, landlords must undertake the necessary improvements and obtain a new EPC to comply with the evolving standards. This dynamic landscape in the buy-to-let market necessitates a proactive approach from landlords to stay ahead of regulatory changes and potential lender requirements.

Buy-to-let market | Communication with clients

Given the array of forthcoming modifications, there’s a considerable chance that unless your client is actively involved in managing their property, they might be oblivious to the imminent changes and the necessary steps to navigate them. This presents an ideal moment for brokers to proactively reach out to their clients early in the year, providing insights into what lies ahead and offering preparation guidance.

Seizing this opportunity establishes you as a reliable advisor. It ensures that you remain at the forefront of your clients’ minds when they contemplate refinancing or embarking on new buy-to-let ventures throughout the year.

In this era of evolving regulations and market dynamics, staying ahead of the curve is paramount. By initiating these conversations, you position yourself as a proactive and knowledgeable partner inConnect For Intermediaries your client’s financial endeavours.

Moreover, this proactive outreach establishes a foundation for a strong and enduring client-broker relationship, fostering trust and loyalty. As the year unfolds, your clients will appreciate your foresight and guidance, enhancing the likelihood of continued collaboration and business growth.

We reached the end of our publication on “Buy-to-let Market | Extraordinary News: More Change Ahead | 2018”; until next time, stay Connect!

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