Remaining in profit

The past couple of years have seen a raft of changes within the UK’s property market, particularly across the private rented sector, but most buy-to-let property investors are riding the waves.

While the goalposts within the buy-to-let sector continually move with the changing market, and political as well as economic uncertainty surrounding Brexit rages on, the formula for success within property investment tends to stay the same. There are some key steps that all property investors can take right now to maximise their potential profits over the long-term.

1. Stay ahead of the regulations

The law is always changing, and the private rented sector has seen its fair share of new legislation of late. Most recently, the Tenant Fees Act 2019 came into play this month, preventing tenants from being charged by landlords or agents for anything other than a set list of items. Tenant deposits have also been capped, and agents can no longer charge letting fees – a huge change.

The regulation has caused ripples within the housing sector, with some speculating that while the rules are there to protect tenants, it is likely that agents will pass on their extra costs to landlords through management fees, who will in turn pass them onto tenants through rent increases.

There are also new rules surrounding the standard of rental accommodation, through the Homes (Fitness for Human Habitation) Act 2018 which came into effect in March this year. As well as this, landlords have seen changes to how much tax relief they can claim from their mortgage payments, which continues to be phased in until 2021. However, for landlords who are prepared to do their homework and stay ahead of the curve regarding the new regulations and legislation, the changes are a positive step towards improving the overall standard of the private rented sector.

2. Consider becoming a limited company

With the Section 24 tax changes meaning that less of a landlord’s mortgage interest payments can be offset against their tax bill, as well as the Prudential Regulation Authority (PRA) introducing stricter lending criteria for portfolio landlords seeking mortgages, operating as a limited company rather than an individual can lead to tax savings for some investors.

Help?

If you would like to know more about a new or re-mortgage please do make contact and one of our independent advisers will be happy to assist.