Funding your Getting the lenders Buy to let Followed by - - PowerPoint PPT Presentation

• Getting the lenders
• n your side (White

Oak Finance)

• Don’t get caught in a

legal trap (Sherrards Solicitors)

• Location, Location,

Taxation (Rouse Partners)

• Buy to let

update and the impact of foreign buyers

• n the London

market (Home Fusion)

• Funding your

portfolio expansion (White Oak Finance)

• Shield your yield!

(Rouse Partners) Followed by Canapés & drinks

Mortgage and Insurance Specialists

0845 222 11 77 customer@whiteoakfinance.com

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

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.

Mortgage Market Review (MMR)

0845 222 11 77 customer@whiteoakfinance.com

0845 222 11 77 customer@whiteoakfinance.com

• 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.

Latest Trends and Statistics

A graph to show increasing rental income from Buy to Let properties in recent years.

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 annual rises of 3.6% in the neighbouring East Midlands, and 3.1% in the North West. 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

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

LANDLORD RESPONSIBILITIES

• 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

MANAGING AGENTS

TENANCY AGREEMENT

• Who should prepare it?
• What should it contain?

THE TENANCY DEPOSIT SCHEME

• Legal requirement
• Designed to protect

landlord and tenant

• Specialist policy
• Good broker
• Don’t forget carpets, curtains,

kitchen equipment etc.

INSURANCE

• At least two months’ notice
• In “prescribed form”
• You can’t just change the locks!
• Possession proceedings
• Early termination

ENDING THE TENANCY

• 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

CURVE BALL- FLATS

• 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

HMO

The tax essentials

Rental profits taxable 10% wear and tear - furnished properties

• nly

Rental income less:

• Agents fees
• Mortgage interest
• Insurance
• Repairs

Capital expenditure vs Revenue expenditure Reclaiming your expenses:

Capital expenditure vs Revenue expenditure

Capital expenditure

• Not allowable
• Deductible on sale

Improvements usually capital expenditure

Revenue expenditure

• ‘Wholly & exclusively’

Replacement usually revenue 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

• 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 are the foreign buyers?

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?

• 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

Market Summary – looking forward

In Summary

Mortgage and Insurance Specialists

0845 222 11 77 customer@whiteoakfinance.com

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
• ptions 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

How to structure?

Company or personal? Profit extraction Compliance costs 20% v’s 40/45% New legislation Incorporation

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

• Introduced

1 April 2013

• Properties

valued >£2m

• Held by companies
• SDLT

15% on acquisition

• Annual SDLT

£15k - £140k

• Disposal

CGT at 28%

Budget 2014

• 15% SDLT on properties over

£500k (20 March 2014)

• Annual SDLT

>£1m - £7,000 (01 April 2015) >£500k - £3,500 (01 April 2016)

• CGT introduced for disposals

in line with above.

How can we help you?

Our services for landlords:

Local, award winning chartered accountants, tax and business advisors.

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

Preparing and submitting landlord tax returns

For more information and enquiries:

HomeFusion - nicholas@home-fusion.co.uk Rouse Partners - info@rousepartners.co.uk Sherrards Solicitors - map@sherrards.com White Oak Finance - customer@whiteoakfinance.com

These presentation slides have been collectively produced by Rouse Partners, Sherrards Solicitors, HomeFusion and White Oak Finance on 27 November 2014 for general interest. No responsibility for loss occasioned to any person acting

• r refraining from action as a result of this information is accepted by the participating firms. In all cases appropriate

professional advice should be sought before making a decision.