[x close]

Look out for a change in the appearance of your YBS website soon. We are redesigning the site and will be launching the new website in the next few weeks.

Help & Support

Renting out your home?

Here's some things you need to know

You have to let us know if you're letting your property

Already renting out your home or thinking about it? If you are renting out your home or are thinking about doing so you need to apply for our Consent to Let. You must not proceed with letting out your property without first obtaining the Society’s written consent. In order for the Society to provide Consent to Let, you would need to complete an application form (61 KB) which would ensure you had agreed to the following conditions of letting:

  • A Tenancy Agreement being in place – you must ensure that only an Assured Shorthold Tenancy is created (England & Wales) or a Private Residential Tenancy (Scotland).
  • Relevant Statutory Notice(s) (where required) being served on the tenants.

The Government has made some changes to taxation affecting landlords

Whether you are an existing or first time landlord you need to be aware of a number of recent tax changes impacting landlords. You should consider seeking expert advice from a tax expert or accountant.

The following information is provided purely as a guide and is not to be taken as financial or tax advice.

Tax changes

Many landlords will be aware of the uplift in Stamp Duty Land Tax on buy-to-let and second homes, but fewer may be ready for the changes to tax relief that were introduced in April 2017. While landlords won’t see the impact until they get their tax bill in 2019, it would be prudent not to be complacent, and landlords should assess their portfolio as soon as possible in order to keep their investments sustainable.

What are the changes?

Stamp Duty Land Tax (SDLT)

The government announced that from April 2016 higher rates of SDLT would apply to second property purchases. Landlords looking to purchase an additional property, where they already own either a residential property or a buy-to-let property, are now liable to higher rates of SDLT.

The table below details the rates currently applicable:

Band

Existing residential SDLT rates

New additional property SDLT rates

£0* - £125k

0%

3%

£125k - £250k

2%

5%

£250k - £925k

5%

8%

£925k - £1.5m

10%

13%

£1.5m +

12%

15%

 

Taxation changes to treatment of mortgage interest and finance costs

Previously landlords could deduct both mortgage interest and other allowable costs associated with a let property from their rental income before calculating how much tax is due. However, from April 2017 this changed and landlords are now only able to claim tax relief at the basic rate of tax (20%).  So higher rate tax payers will see a significant reduction in profitability from a let property. Basic rate tax payers are unaffected.

Furthermore, tax relief will be given as a reduction in tax liability rather than a reduction to taxable income. The changes are being phased in at the rate of 25% per annum, so it will be the tax year 2020/21 before the new tax rules are fully integrated.

This means that with effect from April 2017 the following applies:

Tax year

% finance costs deductible from rental income

% basic rate tax reduction

2017/18

75%

25%

2018/19

50%

50%

2019/20

25%

75%

2020/21

0

100%

For instance, a landlord who previously paid tax at 40% with a rental income of £15,000 and £10,000 of mortgage interest will pay £2,500 in tax in the year 2017/2018 compared to £2,000 in the previous year.

This means they will see a £500 reduction in net profit year-on-year, and a £2,000 reduction in net profit overall from the 2017/2018 to 2020/2021 tax years.

Energy Efficiency Ratings

As from the 1st April 2018 it is a requirement for any properties rented out by a private landlord to have a minimum energy performance rating of E on an Energy Performance Certificate (EPC).

The Energy efficiency regulations apply to any new let and whenever tenancies are renewed after 1st April 2018 and for all existing tenancies on 1st April 2020.

It will be unlawful to rent a property which breaches the requirement for a minimum E rating, unless an exemption as set out in the regulations applies. The following link provides additional useful information.

www.gov.uk/government/news/renters-and-landlords-to-enjoy-warmer-properties-and-cheaper-bills

Get in touch

Visit a branch or agency

Enter a town, city or postcode to find your nearest branch.

Call us

  • 8am - 8pm: Mon to Fri
  • 9am - 1pm: Sat
0345 1200 100*

Online security
Report an online security issue using our form


Report a lost/stolen card

Call our helpline 24 hours a day, 7 days a week

0345 9 10 11 12*

*When our office is closed this is an automated service. A colleague will be in touch when we reopen.

Alternatively you can visit your nearest branch or report it online

 

back to top
The embedded asset does not exist:
Asset Type: YBS_Snippet_C
Asset Id: 1394658781091
PAGENAME: YBS_VI/YBS_Snippet_C/Detail