Assess your portfolio before you add to it

Published by the Property Reporter this week, Connect Mortgages CEO, Liz Syms explains the importance of
making sure landlords’ properties are in the order they need to be before looking to buy additional
housing or remortgaging.

2017 has been a tumultuous year for landlords. In April the amount of mortgage interest you can
offset against your rental income dropped to 75% of the interest charged; the Chancellor announced
that you could no longer offset all wear and tear costs of furnished properties against profits and
then on the 30 th September rules were changed for everyone with more than four properties in their

And it’s not stopping there, there are currently 15 government consultations underway that may
affect landlords in some way. 2018 will see the amount of mortgage interest you can offset drop still
further, while in April, every property will need a minimum energy performance rating of E on an
Energy Performance Certificate (EPC).

Many people are still getting their heads around these latest changes – lenders as well as landlords.
Fortunately, experienced buy-to- let brokers have been staying on top of the rules, and also on top of
who is doing what and how it might affect the unsuspecting landlord. A good broker will take away
the worry guiding you the landlord, through everything you need to do.

The portfolio landlord rules in particular have changed the shape of the market. Some lenders who
offered a lot of buy-to- let mortgages have pulled out of the portfolio landlord market, only lending
to people with four or fewer properties, while others, sometimes lesser known lenders, have seen it
as an opportunity and are making it as easy as possible for landlords.

The challenge is that, if you do have more than four properties, when you come to remortgage even
one of them, or if you go to buy another, the lender now needs to look at the value and risk of every
single property that you own. If there is even one property in the background that doesn’t fit the risk
criteria then you stand a risk of not getting the mortgage – even though that’s not the property you
want the mortgage on.

As a result, it has become essential to list every property that you have, with its valuation and the
amount of money you have borrowed against it. It is important the valuations are up to date and
the rental income is correct so that you portray the portfolio in its best possible light. The good news
is that when this is done once and the properties pass the lender’s stress test, then each mortgage
after that will be easier as long as things stay broadly the same.

For this reason, it can be worth working with a mortgage adviser early, to make sure that all of your
properties are in the order that they need to be – even before you look to buy that additional house
or take out that remortgage. This means making sure that no property is too highly leveraged, that
you know what repairs you may need to do on each property and have accounted for them. It is also
important to make sure that each property has the right energy performance rating and an up-to-
date certificate that reflects this, before the 1 st April 2018 comes round.

No landlord wants to find that they miss out on snapping up a new property because one of their
other houses isn’t in order. By making it your New Year’s Resolution to work with a broker now,
when you do want to make that next transaction, the refinance part will go through quickly and as
smoothly as possible.

Talk to one of our specialist advisers who can help to guide you through this process and answer any
questions you have by clicking the contact us panel below.


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