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Latest Newsletter inc BTL, Right to Rent and Tax Changes
BELVOIR! YORK NEWSLETTER
Giving you the latest legal updates, information for landlords and general letting agency advice.
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Is it still worth investing in property in York?
Overall YES! Property is always going to be a worthwhile investment, as long as you can remember the basic rules. As a landlord you should be able to weather any void periods without it causing too much strain, this also means being able to cover any repair costs a rental property is your investment and needs to be kept in tip top condition, not only to protect it, but to attract the best tenants who in turn will look after it.
In the last year house prices rose by half a percent, and according to RightMove there are 6% more available properties this year compared with others, making it the best year since 2007. RightMove has also had 21% more visitors to the website meaning demand has also peaked.
When choosing which property to buy, you need to decide what your overall aim is, do you want high Capital Growth? Or a High Yield? It is rare to find both, and perhaps your situation will change over the years, a clever landlord can make the most of this by maximising yields in the first few years, and then selling to acquire a higher, more desirable property later. In order to work out yield, here is a handy online calculator http://www.btlexperts.co.uk/calculators/ - again this is only a guide for research purposes, and your FA will be able to help more. For information on which areas and types of property to buy, do call Claire or Charlotte and they will be happy to research for you and give further advice (we don't sell properties so we are completely unbiased).
Can you get around the new Tax Changes?
With major tax changes hitting landlords it is essential that all options are reviewed before making any decisions. As the 3% increase in stamp duty takes hold from 1st April (at the time of writing there is still a consultation paper which will be published after the 1st Feb) Landlords are being penalised for owning more than one property. A way round this is to become an Ltd Company and this may provide a loop hole for landlords allowing them to claim the interest as a business expense although you will then incur corporation tax on profits. The Capital Gains Tax is also changing for landlords which will mean it will have to be paid immediately after the sale.
Always discuss your individual requirements with a qualified financial adviser. For more information we find Martin’s money saving blog very helpful: http://www.thisismoney.co.uk/money/index.html
Tenants who can't pay?
No matter how well referenced the tenants were at the beginning of the tenancy, there is always a possibility that their situation could change, redundancy, marriage break downs, illness etc. can all affect their ability to pay the rent. Don't worry, there are a couple of things you can do. Firstly you should consider a rent guarantee insurance. This will pay the rent after the first month, then ongoing (check each policy carefully though as some have a limited time for this) there should also be a legal cover element that will enable you to gain possession of the property and cover all associated costs. Secondly, the tenant may well be entitled to Housing Benefit, whilst this is unlikely to pay the full amount of the rent, it is not common knowledge that there is a 'pot' of money within local authorities to assist with preventing homelessness. This can be claimed as a 'top up' amount to cover the remainder of the rent whilst the tenant works with the landlord to find somewhere else to live. Claire has more information on this and can advise and signpost tenants in the relevant direction should they ever hit trouble with their rent payments.
Right to Rent: From 1st Feb new laws
Further to our last newsletter this is the latest legislation to be introduced to the Lettings Industry. As you use Belvoir York as your letting agent, you can be assured that we have taken all the relevant steps to ensure that all your future tenants have the legal right to reside in the UK. In brief that means we can assume the responsibility and absolve you of any liability.
For advice on these and other relevant news items, please visit our website: www.belvoir.co.uk