Smart landlords use smart technology to stay ahead
Some challenging new laws will have a major impact on landlords. Here's how to keep your property investment in line with all of the changes.
Managing a property can be time-consuming, and with a raft of new legislation on the cards for landlords, it’s not surprising that some may feel anxious when trying to manage a property portfolio.
The UK property market is huge and with more than 4.4 million households renting privately, the opportunities for landlords can be great. Buy-to-let mortgages are still at an all time low for interest rates, and rental prices continue to rise across the country. However with the recent general election and announcement of the 2015 Summer Budget, some challenging new laws will have a major impact on landlords.
Watching the Budget
In the Summer Budget, George Osborne revealed that the tax relief on mortgage interest payments will be capped at 20% from 2017. How this will work exactly is yet to be defined but what is certain is that this new legislation will certainly have an effect on landlords who are within the higher tax brackets (40%- 45%).
The 10% Wear and Tear Allowance for furnished properties is also being removed, and from April 2016, instead of receiving 10% of net rents as an annual tax relief whether the money is spent or not, landlords will pick up a pay-as-you-go allowance when furnishings are replaced.
But it’s not all doom and gloom. On the upside, landlords who rent a room to a lodger will be able to benefit from the tax free limit on income which is increasing from £4,200 - £7,500.
Keeping an eye on legislation
Making sure you are up-to-date with legislation is also vital if you want to stay on top of everything. In the first quarter of this year, the Housing Minister Brandon Lewis announced a range of measures that will place further legal obligations on landlords. Under these new changes, landlords will be obliged to run regular checks on their properties to identify potential health hazards, and from October 2015, will be required by law to install working smoke and carbon monoxide alarms in all of their rented properties.
Landlords should also be aware that the government recently published new guidelines for tenants to give them more information on what to expect from their landlord. They are encouraged to report any defects of their rented home directly to the Local Authority, who is likely to pay the property a visit, and check all meets the regulatory standards should they receive a complaint.
So how do you keep tabs on your investment?
- First of all, it’s worth reviewing your tax situation to establish which tax bracket you fall into.
- Depending on the above, you may want to speak to a regulated financial advisor who can take a look at your investment goals and advise how to get the best from what you currently have.
- Schedule periodic visits to your tenants to touch base and make sure everything is how it should be.
- Check all your properties have working smoke and carbon monoxide alarms and if any are not working properly, make sure you get them replaced as soon as possible.
The key to staying on top of everything is to be organised. By spending a little bit of time to get certain things in place, you can ensure managing your property long term is as seamless as possible, which in turn will have a positive impact on your tenants and investment.
For more information, updates on legislation, hints and tips, please visit the Knowledge Centre.