Last week the chancellor George Osborne announced the plans for the Government’s spending over the next year.
There are changes afoot for everyone, but for anybody thinking of investing in a buy- to-let property you must be aware of the changes in store from April 2016.
In a move that is sure to upset many would-be landlords, Osborne announced that properties which are bought to let will be subject to a 3% increase in Stamp Duty Land Tax.
This may sound like a small increase, but it means that if you buy a property for £250,000 with the intention of renting it out, your stamp duty will increase from £2,500 to £8,800.
Buying a new property is always a drain on your finances, and this is another significant expense for new landlords to consider.
This is not the first time Osborne has showed a lack of support for landlords – back in the summer it was announced that landlords would only be entitled to minimum tax relief on mortgage interest payments.
With the Government making life harder for those buying to let, it’s now even more important to make sure that you have everything in order.
Housing law is complicated, and landlords should seek professional advice on tenancy agreements, deposits and your repairing obligations to make sure that you avoid any costly legal disputes with your tenants.
My advice is always to meet with a specialist housing solicitor who can protect your interests and help you get things in order in the most cost effective way possible.
Although the new rules are aimed at landlords, it’s likely that private sector tenants will be effected too.
New landlords will be subject to additional cost, and they are likely to pass this on to their tenants in order to make sure their buy-to-let is a viable and profitable investment.
Sadly, this could mean that tenants may see rental increases over the next few years as landlords struggle with extra financial pressures.
However, landlords cannot suddenly start demanding more money.
There is a strict legal procedure the landlords must follow if they want to increase rent, and they may even have to end your current tenancy agreement in order to give you a new one.
If your landlord tells you they are ending or changing your tenancy agreement, get advice straight away about your rights.
There are different types of tenancy, and the rules vary depending on which tenancy you have.
Therefore, it’s essential to get professional legal advice from a specialist housing solicitor.
You may even get their services for free under the Legal Aid scheme if you are on benefits or are in receipt of a low income. Alternatively, the Citizens Advice Bureau and the charity Shelter are both great sources of advice.
It remains to be seen what effect these changes will have on the rental market, but it’s more important than ever for both landlords and tenants to know their rights and responsibilities.
Contact David Gray Solicitors LLP at www.davidgray.co.uk/