If you are involved in the property business, you’ll be aware of the new buy-to-let measures that have plagued the market over the past year. But are you acquainted with the imminent landlord law changes that will affect buy to let investors this year?
Tax Relief reductions:
In 2016 the Government announced that it was reducing the tax relief landlords can claim. In fact from 6th of April 2017, the amount of tax relief that landlords can claim on their finance costs (such as mortgage interest) will be gradually replaced with a basic 20 per cent tax credit.
These reductions may result into profit losses for a number of landlords, prompting many to suggest that they will look to recuperate their losses by charging higher rents.
Not every landlord will necessarily be affected: some landlords are setting up limited companies, which are exempt from the changes.
While many landlords will benefit from this change, some may ingenuously believe that it is the right option for them, without considering that there are fewer mortgages available to this type of investor with much higher rates of interest, and various tax implications to ponder when moving to a limited company structure.
New penalties for property mismanagement:
In April 2017 the Government also introduced penalties of up to £30,000 for a variety of housing regulation infringements committed by landlords, such as a failure to provide authorities with an HMO licence and for overcrowding a property.
Local authorities can also make rent reimbursement orders against landlords who have mistreated tenants or let properties in a poor condition.
The benefit of the new legislation for local authorities is that it allows them to fine landlords without having to go through complicated, time-consuming and expensive legal proceedings.
Letting agent fee ban
While no specific date has been set for the introduction of the Government’s letting agent fee ban for tenants, the Housing Minister did confirm that ministers would begin discussing details for the plan in April 2017.
It is believed that letting agent costs will be passed onto landlords, which could greatly increase the charges they incur.
All landlords that use letting agents to manage their properties should be aware of all the options available to them in order to cut costs where possible. For example, they may choose to go for a cheaper option on offer from the same agent, which could balance out the increased costs, or they might decide to start self-managing their portfolio.
Blacklist of rogue landlords:
The Government’s blacklist of rogue landlords and letting agents has been in operation since October 2017. This database will be available to local and central government, which will ensure that those landlords and agents that have been served banning orders or have breached the law are included on the blacklist.
If a landlord is placed on the list, they will be banned from letting property for a minimum of 12 months, meaning it could greatly affect their businesses.
Effective management practices are vital especially in times where landlords’ conduct is being carefully scrutinised by the public, and Arthur will enable you to achieve this. Arthur’s property management software enables you to have complete control over all aspects of your portfolio and it’s accessible from your computer, tablet or mobile phone. Arthur brings your landlords, tenants, contractors, agents and owners all under the same interface, making problem solving a breeze. With our system, you can manage your portfolio from anywhere in the world, which is guaranteed to give you a peace of mind as the buy-to-let market undergoes so many radical changes. Arthur provides you with complete flexibility and is excellent for multi-unit properties (no matter what size) such as: student accommodation, blocks of flats and HMOs.
Article Courtesy of: Arthur Online