• Funding your • Getting the lenders • Buy to let Followed by portfolio expansion Canapés & update and on your side (White (White Oak drinks the impact of Oak Finance) Finance) foreign buyers • Don’t get caught in a on the London • Shield your yield! legal trap (Sherrards market (Home (Rouse Partners) Solicitors) Fusion) • Location, Location, Taxation (Rouse Partners)
Mortgage and Insurance Specialists
Getting the lenders on your side What is a Buy to Let Mortgage? Things to consider - Deposit - Rental Income - Single Title or House of Multiple Occupancy (HMO’s) Availability and Criteria for Buy to Let Mortgages - First Time Landlords/Buyers and Experience Landlords - Personal Financial Position - Types of Property i.e. New Builds/Flats/Houses Buy to Let Regulation 0845 222 11 77 customer@whiteoakfinance.com 0845 222 11 77 customer@whiteoakfinance.com
Mortgage Market Review (MMR) A comprehensive analysis of the mortgage market, implemented on the 26th of April, which aimed to reform the market to ensure continued recovery. What does this mean for applicants? - Increase affordability checks - Stress Testing - Non-advised sales are now not allowed - Thorough checking of expenditure - The way that bank deals with their customers directly What does this mean for brokers? - No real change in terms of qualifications - Positive and greater opportunities in terms of assisting and helping clients to speed up and complete mortgage process - More competitive with banks process as banks now have to use the same process. 0845 222 11 77 customer@whiteoakfinance.com 0845 222 11 77 customer@whiteoakfinance.com
Latest Trends and Statistics - The buy-to-let mortgage market has expanded considerably over the last 12 months and there are now more lenders and products for landlords to choose from. - Another trend is that landlords are able to access larger sized loans. A recent survey from Property Hawk Mortgages reveals that the average Loan To Value (LTV) continues to increase as higher LTV buy-to-let mortgages become more generally available. Rent by Region (per month) £520- £ 545 £563 - £608 £655 - £1162 Rents in nine out of ten regions of England & Wales are higher than a year ago. Leading all other regions, the East of England has seen rents rise by 4.9% in the last twelve months, followed by A graph to show increasing rental income from Buy to annual rises of 3.6% in the Let properties in recent years. neighbouring East Midlands, and 3.1% in the North West. 0845 222 11 77 customer@whiteoakfinance.com 0845 222 11 77 customer@whiteoakfinance.com
INTRODUCTION • Bricks and mortar - always a safe bet? • What we are going to cover • Your risk profile as a landlord
MORTGAGE • Appropriate mortgage • Full disclosure
LANDLORD RESPONSIBILITIES As a landlord beware you have a number of landlord responsibilities for the properties you let which include: • Repairs to the structure and exterior of the property you let • Maintenance of heating and water systems • Maintenance of bathroom installations • Gas safety check of all gas appliances carried out each year. This must be done Gas Safe registered engineer. • Ensuring electrics and all electrical appliances are safe. • Ensuring furniture meets fire safety regulations • Provision of an EPC • In reality tenant’s responsibility limited to damage • Liability to other people- ensuring the property is safe
MANAGING AGENTS • A necessary evil? • Not all agents are the same • Written Agreement • Vetting the tenant (but you have a part to play too!) • Preparing the AST? • Tenancy deposit Scheme • Check in/out inventories
TENANCY AGREEMENT • Who should prepare it? • What should it contain?
THE TENANCY DEPOSIT SCHEME • Legal requirement • Designed to protect landlord and tenant
INSURANCE • Specialist policy • Good broker • Don’t forget carpets, curtains, kitchen equipment etc.
ENDING THE TENANCY • At least two months’ notice • In “prescribed form” • You can’t just change the locks! • Possession proceedings • Early termination
CURVE BALL- FLATS • Added layer of responsibility- your own landlord! • Responsibility for your tenant’s behaviour • Avoid consent to let • Formalities if consent is required • Types of properties to avoid
HMO • Bedsits, shared homes, student - type accommodation • Mandatory licensing - At least 3 floors -At least 5 tenants in more than one household -Shared facilities • Discretionary licensing
The tax essentials Rental 10% wear Rental income and tear - profits furnished less: taxable properties • Agents fees • Mortgage interest only • Insurance • Repairs
Reclaiming your expenses: Capital expenditure vs Revenue expenditure Capital expenditure vs Revenue expenditure Capital expenditure Revenue expenditure • Not allowable • ‘Wholly & exclusively’ • Deductible on sale Replacement usually revenue expenditure Improvements usually capital expenditure
Selling your rental property Capital Gains Tax • 18% / 28% • Capital expenditure / improvements • Legal fees • Stamp Duty Land Tax (SDLT) Principal Private Residence Relief (PPR) • 36 reduced to 18 months • Letting relief • Intention • HMRC’s current attitude
Foreign Investment is transforming London
Economics 101: Constrained supply means increased pricing
Market Overview 25% PRS £2M £2M - £1M £1M
Who are the foreign buyers? • Two types of overseas investor – Owner occupier – will use the property at least part of the year (buy to leave) Investor – is looking for a return on their money and will let out their properties (buy to let) • Russians, Chinese, Emirates (Qatar), Nigeria, Europeans
Who is buying – Offshore vs. Local buyers
Where are foreign investors focusing? Looking for solid growth in established and up and coming parts of London Source: Knight Frank
What are they buying and why?
Market Summary – looking forward • The market is expected to be flat in 2015 but continue to grow over the next five years • Growth forecasts suggest a 30% increase in capital values by 2019 • Demand for good quality flats will continue to outstrip supply • Greater regulation of PRS by local authorities and government • It will always be about “ the holy trinity ” - Where is it, How big it is and how much is it? • Do your research and search out expertise
In Summary
Mortgage and Insurance Specialists
Funding the expansion of your portfolio Our access to the Market of both High-Street and Specialist Lenders Offsetting Mortgages Using a Mortgage Advisor - Expertise – Guidance through the many options available - Efficiency – Saving your time - Education – Helping you to understand the process 0845 222 11 77 customer@whiteoakfinance.com 0845 222 11 77 customer@whiteoakfinance.com
How we can help you? Mortgage Services We can source from a comphrensive panel of lenders including high street and private banks sourced best to suit your needs. Protection Services We can offer insurances to help your protect yourself and the commitment you have taken out. Landlords Insurance Insurance to cover your new investment, content and rent guarantees. 0845 222 11 77 customer@whiteoakfinance.com 0845 222 11 77 customer@whiteoakfinance.com
How to structure? Company or personal? Compliance costs 20% v’s 40/45% Incorporation New legislation Profit extraction
Furnished Holiday Lets Treated as a trade – tax advantages • Capital allowances on furniture and plant & machinery • Capital gains tax relief – entrepreneurs‘ relief, gift relief etc • Profits count as earnings for pension purposes • Inheritance Tax? • VAT Conditions • Situated in UK or EEA • Commercially let • Furnished • Tests • Available to the public at least 210 days per year • Let for at least 105 days • Pattern of occupation – 31 days / 155 days
Recent / anticipated changes • Capital Gains Tax non-residents • ATED • Stamp Duty Land Tax (SDLT) • ‘Mansion Tax’
Annual Tax on Enveloped Dwellings (ATED) Current Budget 2014 • Introduced • 15% SDLT on properties over 1 April 2013 £500k (20 March 2014) • Properties >£2m • Annual SDLT valued • Held by companies >£1m - £7,000 (01 April 2015) >£500k - £3,500 (01 April 2016) • SDLT 15% on acquisition • CGT introduced for disposals • Annual SDLT £15k - £140k in line with above. • Disposal CGT at 28%
How can we help you? Local, award winning chartered accountants, tax and business advisors. Our services for landlords: Preparing and submitting landlord tax returns Advising on: • Structuring your property portfolio • Various tax reliefs , allowable expenses & tax planning • Company secretarial requirements, if you structure as a limited company • Capital gains tax issues before you sell a property • Inheritance tax planning to pass on your property • Tax implications from property held abroad
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