New buy to let stamp duty – there’s still hope!

New buy to let stamp duty – there’s still hope!

If you are, or have ever thought about becoming a buy to let landlord you can’t have missed the introduction in the 2015 Autumn Statement of an additional 3% Stamp Duty levy on buy to let and second home purchases. This extra 3% which comes into force in April 2016 applies on any value property and has been quite a bombshell for landlords who are still reeling from the tax changes announced in the Budget resulting  in mortgage interest relief being slashed. Surrey but to let

So what next?

If you haven’t completed on your purchase (or sale) yet, you really need to do everything you can to do so before the new tax comes into force in April. Apart from the additional cost, after April, sales of buy to let properties are also certainly initially going to be far harder.

A different approach 

There’s also still the possibility of organising your portfolio via a limited company as currently there are no plans to increase the tax burden on residential let properties owned that way. And if that’s something you’re considering or think might be an option for you, you really need to seek professional advice about it now rather than abandon your plans to buy.

It’s not the end for buy to let

Despite the bad news, buy to let is still an exciting and lucrative way to invest and you really shouldn’t rule it out in light of recent developments. With less investors in the field and a little careful planning, there is still the potential to make some really successful purchases and enjoy the benefits of the buy to let lifestyle. Of course the key to success as always is in the detail and in the next few months, we’ll be blogging about how to make sure that you do it right.

Our 5 point beginners guide to buy to let: 

But in the meantime, if you’ve got your sights set on a buy to let property, take a moment now to make sure you’ve put in the preparation and planning required:

  1. Know your objectives and have a clear idea of finance. Are you investing for capital growth, cash flow, or both? What’s the time frame for achieving either and how much exactly have you got by way of a starting or an ongoing budget?
  2. Research your market and the local demographic carefully before you buy. Knowing what rents well in your area is key in your buying decision. Big houses should be avoided as it can be difficult to find a large family with the right budget.  Three bedrooms plus are preferable for multiple occupation houses (HMO). HMOs are great if it’s cash flow you’re after but they are also heavily regulated and can be a minefield so that’s something you need to weigh into the balance.
  3. Work out in advance of purchase potential income and expenditure. You may need to take advice here as it’s not always easy to know what potential expenses you’re letting yourself in for. For example leasehold property like flats may include a service charge and ground rents.
  4. Don’t just buy any nice looking property and hope to rent it. Research which properties would rent all day long (i.e. very popular locations and type of property) and then buy one in that road.
  5. Take advice from someone you trust. A little time and money spent in advance on getting advice can make a huge difference to the success of your buy to let and utlimately to your bottom line and how smoothly your project runs.

www.ewemove.com/dorkingGraham Faulkner is Branch Director of EweMove Dorking and he’s also a portfolio landlord himself, as well as specialising in helping other landlords. So if you have any questions, why not give him a call. Apart from his own experience and expertise, he can also recommend the right professionals, as tried and tested by him, to advise you.

Award winning www.EweMove.com/dorking are a residential property sales and lettings agency who pride themselves on being refreshingly different and standing out from the crowd. EweMove Dorking covers from Ockley to Oxshott.

Enquiries to 01306 406 506 / 01372 701 702, or via email to dorking@ewemove.com

 

Did you know that as a landlord your legal responsibilities changed on the 1st February 2016?

Did you know that as a landlord your legal responsibilities changed on the 1st February 2016?

 

Because if you don’t know and you haven’t complied with your new obligations, it could cost you £3,000 in fines!

Do your tenants have the Right To Rent?

From February 1st 2016 landlords will have to conduct appropriate checks to ensure that their prospective tenants have the right to rent property in the UK. And the new rules apply to everyone, even if you only have one property.

How to make sure you comply with the Right to Rent rules. www.ewemove.com/dorking

As a landlord you now need to check all prospective occupiers’ right to rent before granting a residential tenancy agreement. The legislation applies to tenancies issued on or after the 1st February 2016 and there are 4 basic steps to conducting a Right To Rent check.

Step 1: Establish that the adults who will live in the property, will live there as their only/main home.

Step 2: Obtain original documents from the “acceptable document list”. The documents are categorised, in the most basic sense, according to whether the applicant has a time limited right to be in the UK or not.

Step 3: Check the documents in the presence of the holder of the documents.

Step 4: Finally, make copies of the documents and retain them, recording the date of the check. You are not entitled to keep the original document provided by the prospective tenant. But don’t forget, you do have to comply with the Data Protection Act.

Full details of the “acceptable document list” and any other query relating to Right To Rent can be found in the Code of Practice at www.gov.uk/government/publications/right-to-rent-landlords-code-of-practice.

The penalties and how to avoid them

Landlords found to be in breach of the Right To Rent rules face a penalty of up to £3,000. With increasing legislation to comply with, it’s never been more important to ensure you’re up to date with what’s required, and so it’s no wonder more and more landlords are seeking competent letting agencies to help manage their lettings.

Don’t get caught out. If you’re in any doubt about your responsibilities and how to comply or if you need help, call us here at EweMove. Graham Faulkner is Branch Director of EweMove Dorking and he’s a landlord himself, as well as specialising in helping other landlords.

www.EweMove.com/dorking are a residential property sales and lettings agency who pride themselves on being refreshingly different and standing out from the crowd. EweMove Dorking covers from Ockley to Oxshott.

Enquiries to 01306 406 506 / 01372 701 702, or via email to dorking@ewemove.com