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15 Things Buy-to-Let Landlords Need To Know For 2020

January 15, 2020

There’s some important things landlords should be aware going into 2020, from rent and rental yield forecasts to mortgage rates, licensing and landlord legislation. And while 2020 may still be a challenging one for landlords in some respects, many areas are seeing good capital growth and rising rents, ensuring buy-to-let remains a solid investment path.

Here are the key dates to know for 2020, as well as our top tips on how to maximise profits and stay successful. 

1. Rents are set to rise

Let’s start with the positive. Landlords will be pleased to hear that rents are expected to continue to rise next year. It’s strong tenant demand combined with diminishing supply, (probably to the tune of about 25-30%) that will push up prices - and we expect tenant demand to increase as the economy strengthens, too. 

RICS forecasted rents to rocket 15 per cent between 2018 and 2023 due to a reduction in new rental property being put on the market in the wake of tax changes. This is in line with most other predictions. 

Note: Mansion Global reported that “Across the entire U.K, rents grew 3.5% in December (2019) compared to the same time in 2018, leaving the average monthly rent across the nation at £953. In London, where the average rent of £1,630 is close to double the national average, monthly letting costs increased 2.1%.”

2. Rental yields

More good news: Rental yields have been gradually improving since 2017, with the majority of London boroughs now achieving average yields of 4-5%. If you look at the two charts below, one shows rental yields across the London boroughs in 2017, the other shows rental yields across the boroughs in 2019. As you can see, as of last year there were only two dark grey boroughs achieving sub 3.5% rental yields - expensive Westminster and Kensington and Chelsea. 

It’s impossible to predict exactly what will happen as the coming year unfolds, however more than half of landlords (52 per cent) are hopeful that rental yields will increase next year. Meanwhile, over a quarter (27 per cent) take a less optimistic view, believing that a decrease is in store. 

Why not try our interactive London rental yield map for yourself? The data is live and updated daily, and you’ll be able to drill down into specific boroughs to find the highest yields and best performing streets.

Read: Portico’s Property Market Forecast 2020

3. Mortgage interest relief

Next up, changes to the way landlords are taxed. An end to tax relief for landlords’ mortgage interest payments has been on the horizon for quite some time now. This April marks an end to the 2018-19 financial year, as well as the completion of the landlords’ mortgage interest phaseout.

Beginning in April 2020, landlords will no longer be able to deduct mortgage interest costs. Instead, they will be entitled to a 20% tax reduction on just one of the following areas. The reduction will be applied to whichever is lowest:

  • Finance costs
  • Property profits after accounting for losses from the previous year
  • Total income minus all savings income, any dividends and any personal allowance

It’s worth noting that if finance costs don’t land in the lowest position, landlords will be allowed to carry the difference forward into a future tax year.  

Small business accountants, Accounts and Legal, state “There is likely to be an uptick in limited companies investing in properties. Additionally, we foresee more landlords transferring properties into limited companies. The reason for this is that with limited companies, investors are able to deduct 100 per cent of interest payments.”

Read: How To Survive The Mortgage Tax Relief Changes

4. Brexit

Unfortunately, landlords should prepare themselves for an uncertain property market in 2020. Until questions surrounding Brexit are resolved, we can expect continued economic uncertainty, meaning that the slower property market trend is likely to continue through 2020 and perhaps beyond.

However, when political unrest and the resulting uncertainty concerning Brexit is finally removed and economic health improves, transactional activity should increase and the property market should improve overall.  

David Cox, chief executive of ARLA Propertymark, said: “Looking ahead to 2020, we hope the government recognises the importance of increasing supply for tenants and uses it as an opportunity to make the market more attractive for landlords.

“This will encourage more landlords back into the market as well as ensure that tenants, including those who are most vulnerable, are not at a disadvantage in being able to find a suitable and affordable home to rent.”

Read: Tips For Letting A Property During The Brexit Uncertainty

5. Mortgage rates 

Brexit’s outcome will be far-reaching. Another way it may impact landlords is by causing the Bank of England base rate to shift lower or higher. Either way, a base rate shift will affect mortgage rates.

The current trend in buy-to-let mortgage rate decline progressed steadily throughout 2019, reaching an average of just 3% in December. With buy-to-let lenders engaged in an ongoing price war that’s likely to last well into the early part of 2020, now is an excellent time for landlords to think about refinancing their portfolios and locking in low rates while they last. 

We recommend cutting your interest costs by remortgaging and getting an up to date rental valuation on your property. Your lender will therefore need to recalculate your LTV, and a lower LTV generally ensures a better interest rate and a larger selection of lenders. 

If you still have more questions speak to Portico Finance who can help you with all your options, drop them an email at or give them a call on 020 7731 9680.!!!! 

Read: A New Buy-to-let Refurbishment Mortgage And The Benefits Of Renovate To Rent

Read: What Do Interest Rate Changes Mean For You

6. Property price rises on the horizon

House prices are stable for now, but that could change according to a recent housing report issued by former Prime Minister Tony Blair. His report predicts a whopping 26 per cent increase in property prices by 2030 in the event Conservative manifesto proposals are carried out and at least 200,000 new homes are built. 

This would be excellent news for property investors hoping to reap the rewards that come with capital growth. Additionally, a potentially massive increase in property prices is further incentive for those considering property investments to get in on lower prices while they last.

Related: Investment Opportunities In Liverpool

Read: Investment Property Tips 2019-2020

7. Stamp duty

Landlords have been feeling the sting of stamp duty since the government targeted property investors with a 3% buy-to-let stamp duty surcharge in 2016. Rumour has it that foreign buyers could be the next targets, with potential for a new stamp duty surcharge aimed squarely overseas buyers who want to invest in UK properties. Landlords from the UK as well as those from abroad should keep a close eye on developments in this area - and of course we’ll keep you updated when more information is released. 

8. Energy efficiency & electrical safety checks

New regulations concerning energy efficiency are among the legal changes affecting landlords in 2020. Beginning 1st of April 2020, landlords will no longer be permitted to let out private rental properties (including those with existing tenants) with substandard energy efficiency ratings. The minimum E rating must be met; if it is not, then the landlord could face fines amounting to £5,000.

If you have a property rated F or G, then you’re running out of time to make the necessary improvements, get a new certificate, and send it to your tenants. Give us a call on 0207 099 4000!!!!!!!!!!!!!!!! if you’d like us to help you assess the potential impact of this new legislation, arrange for an EPC assessment, or if you need any maintenance work.

Similarly, in July of 2018, the government announced that it planned to require all landlords to conduct electrical safety checks on all rental properties at five-year intervals. The start date for electrical safety checks hasn’t been announced, but it’s possible that the new regulation could be implemented beginning in 2020. 

9. Section 21 evictions

It’s possible that an end to ‘no fault’ evictions is on the horizon, as pledged by the Conservative manifesto. This follows last April’s Government’s pledge to eliminate Section 21 evictions. It’s quite likely that tenure reforms will pass in 2020 as the new parliament enters its first year. At the same time, full implementation of new regulations concerning ‘no fault’ evictions could be years in the making. 

Find out more about Section 21 evictions and how eliminating these evictions will affect landlords here.

10. Local licensing

A flashback to October of 2018 comes in the form of local licensing rules concerning Houses in Multiple Occupation (HMOs). Landlords currently operating HMOs are likely to be well-informed and in compliance with these licensing rules, but other local licensing regulations might lead to confusion. 

Over sixty councils in England operate under various schemes including ‘additional’ ones with added stipulations to mandatory HMOs, and ‘selective’ rules concerning individual landlords. Keeping updated on local licensing rules may seem like a headache for landlords, but is absolutely essential. If you’d like us to help with this process and keeping you compliant, get in touch.

11. Unwelcome changes to private residence relief 

Currently, landlords can claim as much as £40,000 in capital gains tax relief when letting properties that either are or have been their main home, even when they haven’t lived in it for a long time. 

Starting in April 2020, this loophole will snap shut and landlords will have to live in the property at the time of sale if they want to claim the property residence relief. Those who don’t live in homes they sell are likely to be hit with higher capital gains tax costs when selling properties. 

12. An end to Right to Rent checks

In March of 2019, the High Court ruled that right to rent checks were “discriminatory” and in breach of human rights law. The Government began its own evaluation of the scheme last September. The tenant referencing checks must still be performed before landlords let to tenants but that’s likely to change this year. It’s anticipated that landlords will be able to stop the practise sometime in 2020.

13. Airbnb updates

In the UK, a staggering 64% of new landlords now count a holiday let property as part of their portfolio, representing a major growth area.

Landlords throughout Greater London are required to secure planning permission for change of use if they intend to use their properties primarily for Airbnb. Otherwise, they are only allowed to let their properties out to Airbnb guests for 90 days per calendar year. 

This allowance does make Airbnb an excellent short-term solution for landlords who are in search of long-term tenants as well as for those with properties on the market. Letting your property to Airbnb guests is an outstanding method for bringing in greater revenue while simultaneously avoiding void periods. Find out more about how we can help increase your returns with our London Airbnb management service, Portico Host. 

Note: Those who own properties across the remainder of England and Scotland should be aware that regulations deem that any property let out for 140 days per year or more is self-catering. This means that income from these properties is subject to business tax rates. Thanks to the fact that landlords are permitted to offer their properties to short-term renters for a higher number of days in these areas, Airbnb makes an excellent alternative to long-term rent in cities just outside the capital. 

Landlords around Liverpool, Manchester, and the surrounding area have the opportunity to enjoy better returns. Our research shows that landlords in Fairfield, Liverpool saw the most impressive yields, coming in at 27.2 per cent compared with an average yield of 13.6 per cent for long term rentals. Eight of the study’s ten best performing postcodes were located in Liverpool.

Find out more: Liverpool Airbnb Management 

14. Moving up North

Landlords hoping for a combination of higher rental yields and lower property prices would do well to consider properties in the North of England. Manchester and Liverpool are becoming hotspots for landlords searching for higher rental yields than they can achieve in London and the South East. These areas are hot with first-time investors who appreciate opportunities to purchase houses below the £200,000 mark. 

Demand for rental properties is likely to remain high for years to come, translating to steady income for investors who do their homework. All told, 2020 is an excellent time for new investors to enter the market and it’s the ideal time for landlords to increase their property portfolios, particularly with such great potential for positive long-term yields.

15. Property hotspots for 2020

In 2019, we pinpointed Croydon and East Ham as London hotspots for landlords. Today, both areas continue to generate good yields, with Croydon averaging 4.7% and East Ham offering an average of 5.5%. 

So, what areas are we looking at for 2020 and beyond? Check out our article, ‘Where To Buy Property in London in 2020

If you're thinking about renting out or selling your property, please call into one of our 15 London estate agency branches or give us a ring to find out more on 020 7099 4000!. Or, get a 2020 sales or rental valuation in less than 60 seconds.

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