300 North Road, Cardiff, CF143BN 300 North Road, Cardiff, CF143BN. Kevin Rodgers - Tel: 02920 614343 – kevin@cardiffmortgagecentre.co.uk What’s changing for landlords? Aggressive new taxes have recently targeted buy-to-let properties higher rates of stamp duty and the removal of tax relief on mortgage interest. 

As a result You have already seen lenders change their Interest Coverage Ratio (ICR) and stress rate requirements, Meaning landlords with lower rental yields may find it more challenging to refinance or purchase new BTL property. In addition Lenders are expected to adopt specialist underwriting approaches for landlords with four or more mortgaged BTL properties, defined as portfolio landlords

BTL Tax Change The fundamental calculation has changed Maximum tax relief limited to 20% Some landlords will see an increase in tax liability Lenders have to consider new tax rules in calculation •

PRA Statement Portfolio Landlords Stress rates 4 or more mortgaged properties Different underwriting treatment Consider whole portfolio Who will remain in this market? Stress rates All lenders must use 5.5% to stress BTL 5 year fixed can use lower rate Need to consider any increased tax liability

There are still opportunities Customers need advice Yes BTL is getting harder Some customers may need LTD co Serious landlords are still buying Thousands need re-mortgaging Understand the rules Understand the customer Guide not advise BTL is here to stay

Limited company registered in England or Wales LIMITED COMPANY TYPES Limited company registered in England or Wales SIC codes -68100 Buying and selling of own real estate -68209 Other letting and operating of own or leased rental estate -68320 Management of real estate on a fee or contract basis

The emergence of BTL Ltd Company Lending Driven by two events: For landlords: 8th July 2015: announcement to progressively restrict tax relief on mortgage interest and other finance costs to the basic rate of tax (20%) For lenders: 28thSeptember 2016: PRA announces SS13/16 and PS 28/16 for Underwriting standards for buy-to-let mortgage contracts •Change of stress tests on or before 2ndJanuary 2017 •Implementation of new underwriting for portfolio landlords

Pros and Cons of a Ltd Company Corporation Tax NOT Income Tax - now 20% reducing to 17% in April ‘20 Interest relief remains a fully allowable expense Ltd Companies not subject to the new ICR/stress test changes so landlords will be able to borrow more Lots of product choice (240+ products available) & same rates as for personal borrowers offered by most lenders Cons Exit strategies may be more expensive than CGT

What changes have we seen recently? Policy developments Minimum affordability standards Specialist underwriting for portfolio landlords Landlord strategies Rent increases Maximising attractiveness of your property Houses in multiple occupation (HMOs) Limited company structures Criteria highlights Let to buy

Questions?

MARKET OVERVIEW The number of buy-to-let mortgages has grown from 835,900 mortgages outstanding with a total balance of £93.2 billion at the end of 2006, to nearly 1.9 million mortgages at the end of 2016, with an aggregate balance of £229 billion* Renters are on the rise, with analysis from PwC suggesting that by 2025, 7.2m households will be in rented accommodation, compared with 5.4m in 2015 and 2.3m in 2001