Let’s take a look at what the new regulations mean for landlords and how you can still make a healthy profit with this highly desirable asset class…
First of all, we need to acknowledge that the buy to let sector has certainly changed in recent times. Stamp duty has increased and, by 2020, landlords will no longer be able to claim tax relief on their mortgage interest.
Under the Tenant Fee Bills Report, landlords will also see the wear and tear allowance scrapped. Previously, a landlord could claim 10% of the net annual rent of a property for the wear and tear of furnishings regardless of whether there were any repairs required.
Now, however, new regulations will see a default fee provision where a landlord or agent will only be able to recover reasonable incurred costs, and must provide evidence before they can do so. These changes are designed to filter out unscrupulous landlords to create a fairer, more even landscape for good landlords and their tenants.
Harnessing the Potential
There will be more stringent mortgage checks introduced for landlords with four or more properties. Energy efficiency regulations will also be more stringent whereby properties with an Energy Performance Certificate (EPC) in the lowest two categories will no longer be eligible for lettings from 2020.
It may be a lot to take in but it is our responsibility to let property investors know exactly what they are dealing with so that new and existing landlords are fully informed.
As a potential or current buy to let landlord, it’s only natural that you may feel concerned about all these changes. However, this type of investment remains a solid and highly profitable channel for those willing to adapt to the new regulations.
Indeed, research shows that 56% of landlords want to keep or buy more rental properties. There are many ways to continue to harness the profits of buy to let without impacting on your bottom line. For example, most new properties will meet the EPC grade automatically which instantly erases this concern.
The Strength of New Builds
New builds will also answer the questions of those landlords concerned about the amended wear and tear rules. With many landlords citing ongoing maintenance as a key concern when it comes to buy to let, new builds are once again a good answer.
Concern over cooling house prices can also be easily solved by choosing the right property in the right location where demand is high and average annual returns are predicted to remain strong.
For more information on buy to let investments and the current market as well as the new build buy to let properties we would highly recommend, contact Alesco today on 0203 281 7433 or email [email protected]