Investment Mortgage Laws
Staying On The Right Side Of UK Investment Mortgage Laws
As a landlord, it is wise to take note of investment mortgage laws - these are the laws that will affect the success of your buy to let investment. There are several mortgage laws to consider. One recent change to investment mortgage laws relates to tenants' deposits and it is due to take effect from April 2007. These rules are intended to give more security to tenants' deposits and landlords need to comply by signing up to one of a number of assured short hold tenancy schemes which will safeguard the deposits paid by tenants.
Under these new laws the administrators of an assured shorthold tenancy scheme act as mediators between landlords and tenants so that disputes over rents and tenancy can be resolved. This change to investment mortgage laws is related to complaints from tennants due to the fact that some only had part of their deposits returned and others had their deposits withheld completely.
Laws on HMOs
While the new system should not affect landlords' profits, failure to comply with these laws will result in large fines. The same is also true of mortgage laws relating to houses of multiple occupancy (HMOs). There are new laws governing how investors must manage these properties. Typical HMOs and large student residences, but they can be any similar building where toilet and cooking facilities are shared. There are now investment mortgage guidelines relating to the standard of facilities within the building. The introduction of these investment mortgage laws into the Housing Act has seen many landlords get rid of their HMOs in favour of other types of property, though there have also been many who have seen this as an opportunity to invest.
Other investment mortgage laws that affect buy to let landlords relate to taxation on their investment properties. Under the current investment mortgage laws, the rental income from buy to let properties is subject to taxation. Our understanding of buy to let tax issues are that standard rate taxpayers pay tax at the normal 22 per cent rate, while higher rate taxpayers are in the 40 per cent tax band, but we recommend you check this out with a tax expert. However, there are many forms of tax relief which may make these investment mortgage legalities less onerous for landlords.
When complying with investment mortgage rules on tax, landlords will be pleased to know that there are some benefits. Landlords can claim for maintenance costs on their property, as well as the interest they pay on a BTL mortgage loan, so they will get some welcome tax relief.
There are many ways that landlords can find out about laws on investment mortgages. One key source is a buy to let mortgage specialist who will be able to identify suitable investment mortgage deals and provide guidance on the mortgage laws that landlords will have to think about. There is also online information on investment mortgage laws and other information useful to landlords. Check out the website of the Association of Residential Letting Agents for useful information on buy to let in general. Wherever landlords choose to source their information, it is essential to stay on the right side of investment mortgage laws.
