Landlords are bracing themselves for a tough year ahead, especially those involved in the buy-to-let market.
There is the much-publicised hike in stamp duty for those investing in buy to lets, coupled with the scrapping of tax relief at the higher rates. And landlords may also find it more difficult to borrow money in the first place, with the possibility that The Bank of England could be given the power to clamp down on lending that it deems to be risky.
At present, the buy-to-let sector is booming for a number of reasons.
Many landlords will be rushing to invest before the new stamp duty rates come into effect. Some pension schemes and individuals who have had their pension funds released are also looking into the rental property market as a good place to put their money.
So now, the chancellor George Osborne is launching a consultation as to whether to give the Bank of England powers to crack down on risky lending. At the moment, the bank does not have the same level of control over buy-to-lets as it does with residential mortgages.
Ministers are deciding whether to allow the bank to impose restrictions on lending to landlords.
Bank of England figures show buy-to-let lending represents 14.5 per cent of all mortgages, which is the highest level since it started collating the figures in 2007. This is big business and new loans to landlords are expected to reach £38 billion this year.
The chancellor’s move has angered landlords who feel that they are being unfairly targeted. The financial restrictions could mean some landlords get out of the market or will not invest in any further properties.
They could also pass on increased operational costs to their renters, meaning that tenants will be worse off too.
However, the Bank of England feels that buy-to-let mortgages have been treated more leniently than their residential counterparts. According to figures by the data firm Moneyfacts, the number of loans taken out with a deposit of only 20 per cent has more than doubled in the past two years.
Lenders also decide if home owners can afford a loan calculated on an interest rate of 7 per cent but for landlords the interest rate is lower at 5 or 6 per cent.
So it could be argued that the chancellor’s move brings landlords into line with home owners.
Although times may look tougher for landlords, as with any sector, there are still some operational efficiencies, the introduction of which can ensure that a property portfolio continues to deliver a decent return.
One area in which landlords and their agents can optimise their processes is through the use of professional property inventory and inspection software such as InventoryBase. This helps them to maximise efficiency in managing inventory reports, check ins, check outs and interim inspections.
The reports can be updated instantly on a smartphone or tablet, complete with photos.
Not only does this ensure adherence to legislative requirements but it simplifies an otherwise time-consuming process, further reducing the associated time and cost.
Other apps are available which can help landlords to schedule utility bills, rents and other payments, in addition to assisting in finding new tenants.