Legal advice for professional property investors
Changing policy and tax regulations are making the profitability of the buy-to-let sector more challenging. National statistics show that there has been a huge number of investors selling their buy-to-let property within the past twelve months.
Significantly reduced numbers of buy-to-let mortgage products are being taken out with landlords facing higher tax bills and increased scrutiny in obtaining finance for their new and existing investments.
However, with good professional advice and guidance, this changing market could represent an opportunity for professional buy-to-let landlords. Experts believe the market will consolidate in the next few years and we could see rents rise by up to 15%.
In these challenging times, our property experts can help you to maximise your assets and continue to grow your property portfolio. Working alongside our business partners and tax advisers we will be able to assess your needs and assist you in implementing the right business structure.
Zainab Dakhil Senior Associate
Zainab specialises in dealing with complex residential property transactions for high net worth individuals and corporate bodies, mostly in central London.Contact Zainab
Who we have helped recently
- We worked with a partnership of three property investors to separate property assets by carrying out simultaneous transfers of equity and remortgages. We then helped the two remaining partners on setting up a company with the long-term aim of incorporating the existing property portfolio and transferring the assets into the company name. Our team advised on the stamp duty and capital gains tax implications, correct company structure, directors’ loans and succession planning to ensure longevity for the business in the most tax and cost-efficient way.
It is important to understand that the tax changes to mortgage interest relief only affect landlords who hold their properties privately than through limited companies. Many private landlords are taking advantage of the tax benefits available to limited companies by transferring their existing properties into a limited company.
Whether this is right for your portfolio will depend on your circumstances and long term plans. This is not a one size fits all solution and should be given careful consideration before any decisions are made. Our experts will be able to advise and help implement the best option.
Declarations of trust
If incorporation isn’t the best solution for you, you may wish to consider using a declaration of trust to alter the beneficial ownership. You may have a non-earning or low-earning partner and could consider transferring property assets to them. Consideration should be given to the most appropriate ownership split but can range from 0% – 100% without affecting the legal title and any mortgages secured on the property.
We can advise and prepare the declaration of trust and liaise with your tax advisers to ensure that registration of the declaration of trust is noted with HMRC to enable the tax savings to take effect.
Houses in multiple occupation (HMO)
Changes have been made to the types of properties which require a HMO licence. Until recently properties could be classified as houses in multiple occupation, but not need a HMO licence.
Currently, a property requires a mandatory licence if all of the following apply:
• the property is a house in multiple occupation (occupied by individuals who are not all related to one another)
• the property is occupied by five or more individuals
• the property has three storeys or more*
In addition to mandatory licensing, a local authority can designate specified areas as being subject to additional licensing (where any HMO requires a licence regardless of occupiers and storeys) or selective licensing (where any rented property requires a licence).
*From 1 October 2018 in England, mandatory licensing changed and The Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 replaced the 2006 order of the same name. The three storeys element is being removed meaning that any HMO occupied by five or more individuals (not all related to one another) will require an HMO licence.
Landlord and tenant issues
Our property disputes team can offer assistance with all aspects of property issues, including landlord/tenant matters and drafting of tenancy agreements. Landlord regulations are tightening, and our team can be on hand to ensure you do not fall foul of the requirements. Whether matters can be dealt with by advice and negotiation, or require court hearings to regain possession of the property, our specialist team is able to provide the assistance you need.