The Government are now considering to pile further pressure on landlords by imposing a 3 year minimum tenancy agreement. However, the tenant can leave anytime by providing a short notice of intent.
Many of the existing Buy to Let mortgage agreements contain stipulations that the mortgagor cannot provide tenancy agreement in excess of 12 months. These currently include Metro Bank, NatWest and Virgin Money. Though some lenders such as Coventry, Precise, Paragon and Aldermore will allow up to 3 years. So as independent mortgage brokers specialising in investment loans, we will be able to source you the most suitable mortgage, whatever the Government throw at us.
If this happens, this is just another thing to add to the list of squeezes already in place:
April 2016: Stamp duty surcharge of 3% came into effect on purchases of buy to let properties and other second homes.
April 2017: Mortgage interest tax relief gradually phased out and replaced with a new tax credit, which in many cases is less generous.
April 2018: Fines of up to £4,000 introduced for landlords who let out properties that do meet energy efficiency rules.
May 2018: First reading in parliament of the Tenants Fees Bill, capping deposits at six weeks rent and banning fees for tenants.
July 2018: This new consultation to propose 3 year minimum tenancy agreements.
We have always stated that investing in property is for the longer term and we believe it is still a worthwhile investment, but more care and professional planning has to be taken now from the start of such investments.
We have been advocating setting up bespoke limited companies for the serious property portfolio builder and high rate tax payers. Couple this will well sourced and suitable mortgages products, then there is still money to be made in this sector.
Please contact us for further guidance and mortgage sourcing.