The new tax year is underway and the first stage of changes to landlord’s income and tax regimes are now in effect. As a reminder below these are the changes that have been implemented so far :-
April 2016 – 3% Stamp Duty Land Tax surcharge on additional properties – paid by anyone with more than one property
January 2017 – Lenders tightened their criteria for Buy To Let properties which included minimum interest coverage ratios and higher affordability stress tests
April 2017 – Phasing out of tax relief so landlords will no longer be able to claim finance costs as a deduction from rental income to calculate the taxable rental profit (to be restricted to basic rate by April 2020)
Still to come in September of this year, lenders will be required to apply specialist underwriting to landlords with 4 or more mortgaged buy to let properties. This means more paperwork and a slower mortgage process.
As a result, there has been a move from many landlords to purchase properties in a Limited Company name and it is important for all landlords looking to increase their portfolios to take proper tax advice as well as speak to a professional broker, such as us of course, with experience in this field who can help them to make the best choices and avoid some of the obstacles.
There is still a wealth of choice around for landlords and mortgage rates themselves have never been so low, with products available from Buy to Let rates are now available from just 1.44% (4.06% APRC), hence we would recommend all landlords review their mortgage requirements now.