Help for Landlords

The government has confirmed that landlords will also be able to apply for a mortgage payment holiday.

The Prime Minister did not make the announcement in his daily press briefing this, but he confirmed that tenants would get protection against eviction.

Soon after the conference the Ministry of Housing, Communities and Local Government announced on Twitter that mortgage forbearance would be extended to landlords.

The development came after UK Finance stated earlier today that the three-month payment holiday “currently” only applied to residential borrowers.

However, Boris Johnson hinted that landlords might get protection during Prime Minister’s Questions when asked about the eviction of tenants.

He said he wanted to ensure that the problems were not pushed on to “other actors” in the economy.

2020 Brings changes for Landlords

Landlords have had to contend with a layering of changes in fiscal and regulatory policy targeting the buy-to-let market since 2015.

They used to deduct all finance costs from their rental income and profits were taxed at their marginal rate. However, starting from April 2017 and phased in over a four-year period, tax relief for finance costs are being restricted to a basic rate tax credit. The phased reduction began with claimable tax relief reduced to 75% and continued through 2019 to 2020.

In the 2020 to 2021 tax year, landlords won’t be able to claim any tax relief on mortgage interest payments. Instead, from April 2020, they will receive a 20% tax credit on interest payments. In response, landlords are adopting a range of different strategies to mitigate the impact of these changes, ranging from rent increases to portfolio resizing.

Landlords need to seek independent advice

On average, these consumers paid around £550 per year more over the introductory period compared to the cheaper product. But this poses a question: is the cheapest mortgage always the right mortgage?

With price comparison websites now well-established, some consumers have started to make important financial decisions based solely on price.

But while a decision between two retailers selling the same model of toaster, for example, is simple, such choices are far more difficult when it comes to the world of financial products. The cheapest insurance deals do not necessarily offer the best levels of cover, and the lowest mortgage rates may not be the best deal for a borrower’s circumstances

The mortgage market is both complex and diverse. While high street lenders may have the largest profiles, there is a raft of small and specialist lenders fighting for business.

Landlords looking to increase holdings

One in seven landlords intend to expand their buy-to-let portfolios in 2020, according to research, with the North West emerging as the most tempting region.

The study found more than one in five landlords (22%) plan to buy in the North West, beating the South East and Yorkshire & The Humber, which 16% of landlords are targeting for new properties.

Regions reporting a higher proportion of buyers than sellers in the next 12 months included the East and West Midlands plus the South West and North East.

More than two out of three (68%) of buyers plan to fund their next purchase with a buy to let mortgage, according to the research.

Less than a fifth (18%) will release equity from existing properties to buy more rental properties, although 23% of landlords with more than 11 properties plan to fund purchases this way.