The tax relief on mortgage interest, which landlords were eligible for, began to be phased out in April 2017 and will be fully gone by April 2020.
After this, landlords will no longer be able to reduce their tax bill by deducting mortgage expenses.
This will result in landlords paying more tax on their rental income and according to the National Landlords Association will affect 400,000 landlords.
“The restriction of taxes on finance costs – namely mortgage interest – is still being phased in, so landlords have yet to feel the full impact. But the measure has arguably caused the most controversy,” BM Solutions said.
More support needed
The guide said the number of changes seen in the last few years had resulted in “closer” broker-client relationships because advice was sought more frequently.
Other changes expected in the coming year include the Energy performance Certificate (EPC) minimum standards, which will require all tenancies to be rated ‘E’ or above. This will be effective from 1 April 2020.
The proposal to scrap Section 21 evictions in favour of Section 8, and a suggested national landlord registration scheme, could also affect landlords in the coming year.
The guide therefore advised brokers to see their landlord clients at least twice a year in case landlords had questions or needed a mortgage review.
Paula John, editor-in-chief of Mortgage Solutions, said: “Business is robust, not rocketing, but it remains important for many brokers, not just those who specialise in buy to let.
“Your landlord clients need your support now more than ever, having faced a slew of new rules over the last 10 years that increase the admin of letting a property privately and could dent their profits significantly.”
The Broker’s Guide to Buy to Let is available to read here: https://secure.viewer.zmags.com/publication/746f29e3#/746f29e3/1
