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Buy to Let

Buy-to-let landlords to avoid major regulation

Adam Williams
Written By:
Adam Williams
Posted:
Updated:
11/05/2015

Buy-to-let landlords do not face significant changes to the market following the general election last week.

David Cameron’s Conservatives swept to power last week and are expected to make few changes to the market from this point.

However two changes already on the horizon will see the Housing Act altered to make it easier to evict a tenant. While tenants will be given the ability to sub-let a property.

Brian Murphy, head of lending at Mortgage Advice Bureau, said the latter could pose problems for some property investors.

“The biggest concern for landlords is that this will make it easier for tenants to re-rent the property or rooms to other renters,” he said.

“This also increases the risk of rent-to-rent scams, whereby a middle man poses as a normal tenant, converts shared living spaces into extra rooms and then charges rent for on an individual basis at a much higher price than they are paying the landlord.

The Conservatives have shown little appetite for further regulation in the market, unlike Labour which proposed rent controls and the creation of a landlords’ register.

“This means there is little being done to stop landlords who are acting unlawfully and providing poor quality accommodation, possibly illegally,” Murphy warned.

“Rogue landlords are able to compete on price rather than abiding by the law, undercutting good landlords who have higher costs to ensure everything is above board.”

He said buy-to-let mortgages were available at historically low levels and landlords may wish to fix rates for a longer period.

“As a buy-to-let investor, mortgaging a property gives better returns, as it cuts down the initial investment needed. However, this also means it is absolutely vital that landlords regularly review their mortgage deal.

“Landlords can protect themselves from future rate rises by locking into a fixed-rate deal, which may come with a higher interest rate but will guarantee the same rate for a fixed period of time regardless of what happens to the Bank of England or lenders’ rates.

“Putting aside money each month will also provide a safety cushion if your monthly costs begin to exceed rental income. Even if not needed to cover mortgage repayments, having a ‘rainy day’ fund is good practice: this can prove invaluable should any unexpected expenses or repairs arise, such as a broken boiler.”


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