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Landlord’s Guide

investment property salford

Being a landlord in 2018 isn’t the same as it was ten years ago, or even two years ago! With ever- changing buy-to-let legislation, whether you are an existing or first-time landlord, there are many recent changes that you need to be aware of.

2016 – Stamp Duty Land Tax (SDLT)

The raise in stamp duty implemented in April 2016 on buy-to-let properties and second homes is by far the biggest change to landlord regulation in recent years, and one you are no doubt already aware of. The rules on this are straightforward; if you are already a property owner (i.e. are currently paying or have finished paying a mortgage of a residential property in the UK), and you purchase an additional property, whether it be a second home or a buy-to-let investment, you are subject to a higher rate of stamp duty.

Property Value Property Value Standard rate SDLT New additional property rate SDLT
£0* – £125k 0% 3%
£125k – £250k 2% 5%
£250k – £925k 5% 8%
£925k – £1.5m 10% 13%
£1.5m+ 12% 15%


2017 – Tax changes

In addition to higher stamp duty, landlords should also be aware of changes to tax relief. The change only affects those paying a higher rate of tax, who will see a substantial drop in income from their investment property.

Previously, interest on your mortgage and other costs associated with buy-to-let property have been deducted from rental income before any tax is due. However, effective April 2017, landlords are only able to claim tax relief at the basic tax rate of 20%, meaning basic rate tax payers will be unaffected.

This is the one to look out for as the impact won’t be felt until you receive your 2019 tax bill, however it’s vital you evaluate your portfolio now to ensure your investment(s) remains profitable.

It’s also worth noting that this a reduction in tax liability as opposed to a reduction to taxable income. The new rates will be introduced gradually at 25% per year from April 2017, meaning it will be the 2020/21 tax year before they come into full effect.

Tax Year Percentage of finance costs deductible from rental income Percentage of basic rate tax reduction
2017/18 75% 25%
2018/19 50% 50%
2019/20 25% 75%
2020/21 0% 100%


2018 – Minimum Energy Efficiency Standards (MEES)

As of 1st April 2018 the MEES makes it unlawful to let out a property in the private rented sector with an Energy Performance Certificate (EPC) rating of F or G (unless exemptions apply). From this date landlords cannot renew or grant new tenancies on a residential property if it does not meet the MEES regulations.

Beyond April 2020, the continued private rental of all buildings failing to meet the minimum standard will be outlawed entirely.

Local councils will have the power to enforce compliance of the MEES, with penalties of up to £5,000, so it’s important landlords carry out the necessary remedial and maintenance work on their buy-to-let properties now to avoid prosecution.

For clarity, this information should be treated as a guide, and is in no way financial or legal advice. Should you require financial or tax assistance in relation to your buy-to-let property or position as a landlord, please speak to our partner company MMC Accountants Ltd.

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Introduction of Article 4 in Salford : “Small houses” in multiple occupation (HMO)

Planning regulations as you will know set at many “Use Classes” for how all building types may be used. This is to ensure that if you want to change from say a domestic dwelling for a family to another use, you can only do so under the council’s guidelines.

HMO houses in Salford previously allowed single household (C3) properties to be turned into “small” HMOs (C4), that is for properties housing three to six unrelated people, without the need for planning permission.

From 25th November 2018 this will no longer be the case in the central Salford boroughs of Broughton, Claremont, Irwell Riverside, Kersal, Ordsall, Langworthy, Weaste and Seedley and the wards of Barton and Eccles.

Following a debate last year it was decided that small family dwellings that were to be turned into HMOs for students or professional to rent together, would now require the council’s planning permission.

Houses in multiple occupation (HMOs) can be defined in a number of different ways, but broadly speaking they are considered to be properties occupied by unrelated individuals who share basic amenities such as a kitchen or bathroom. The traditional source of HMOs tends to be larger, older family dwelling houses. In cities such as Salford and Liverpool these properties are very popular with students who often prefer them over lage student halls.

They generally provide a cost-effective option for student accommodation and allow for simple letting agreements that last for 12 months and that can then either be renewed or the person can leave the property.

Mandatory licensing of larger HMOs was introduced in 2004 for those with 5 or more tenants and 3 or more stories, so you cannot simply turn your own property into a HMO rental property without properly complying with the wide range of legislation that landlords need to be cover.

Each council can have its own set of rules and for Salford all HMOs must adhere to the council’s HMO standards. These standards cover things like minimum room sizes, amenity standards and fire safety requirements.

Landlords themselves who manage HMOs are also covered by legislation and this legislation places certain duties on the individuals managing the property and no compliance with these regulations may result in a prosecution and/or fine (including a civil penalty).

If you are considering an HMO investment property either to source, renovate or to manage then Mistoria Group can assist you. We are the North West HMO experts with over 1200 rooms currently under HMO rental agreements. Cash yields can be high as 13% (both rental and capital) so please call 0800 500 3015 or email us at info@mistoriagroup.com as your next step.

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Minimum Energy Efficiency Standards landlord advice

minimum energy efficiency standards landlord advice

The buy-to-let (BTL) market saw lots of changes in 2017 (taxation of BTL investments and portfolio landlord rules, etc) and there’s yet more regulation coming in 2018.

An Energy Performance Certificate (EPC ) tells you how energy efficient a property is and is rated from A (very good) to G (very poor). It goes without saying that the more energy efficient your property, the lower the energy bills and (usually) the better the overall condition of the house. A high EPC rating also restricts the amount of rent you can charge so keeping up to date with property maintenance work is a good incentive if you want to command the highest yields possible.

Furthermore, EPCs have been a mandatory document for any property rental or sale since 2007 and have a validity of 10 years. As the first of these certificates are coming up for renewal, even stricter energy regulations are being forced upon buy-to-let landlords.

As of 1st April 2018 the Minimum Energy Efficiency Standard (MEES) makes it unlawful to let out a residential property with an EPC rating of F or G (unless exemptions apply). From this date landlords cannot renew or grant tenancies on a property if it does not meet the MEES regulations. Beyond April 2023, the continued private rental of all buildings failing to meet the minimum standard will be outlawed entirely. Local councils will have the power to enforce compliance of the MEES, with penalties of up to £5,000.

The potential risk to landlords (if the property fails to meet MEES) is financial losses and the need to borrow more money to make necessary improvements.

You can view individual EPCs by just entering the property’s postcode here (England & Wales).

There are exemptions to the Minimum Energy Efficiency Standards for landlords, details of which (along with further information about the scheme) can be found on the Government website.

If you are a landlord and would like to explore energy improvements for your rental property, we’d be happy to help you. If you would like to discuss ongoing management of your property (portfolio), we would also be delighted to help. Please call us on 0800 500 3015 or email info@mistoria.co.uk.

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UK student property investment is booming

liverpool student property investment

As a result of a weak pound post Brexit and the superior yields and occupancy offered by student accommodation in UK university towns and cities, investment in student property has seen a sharp increase during 2017.

Analysis from Savills has revealed investment in student property will reach £5.3bn by the end of 2017, up 17% increase on 2016. Brexit may have intensified appetite for UK student housing as Savills saw £2.1bn transacted after the referendum, compared to £1.9bn earlier in the year.

The appetite for student housing assets has outgrown the supply of available stock. Of the £4.5bn traded by Savills last year, £1.1bn (25%) involved forward funding developments while £223m (5%) were development sites. Existing stock made up 69% of trades, the lowest proportion on record.

These growth figures are supported by Mistoria Group, which has seen demand for student property in the North West rise by 38% year on year. The largest increase in investment came from Turkey which accounted for 20% of the growth, followed by UAE (9%) and Hong Kong (5%).

Mish Liyanage, Managing Director of The Mistoria Group comments: “We have seen a large increase in international investors’ appetite for student accommodation. They are attracted to the UK because of the relatively low-cost student property on offer and the excellent net yields that range between 12% and 15% in the North West. Investors have a wide choice of accommodation to chose from, such as HMOs to purpose-built accommodation.

There is a general shortage of student accommodation across the UK and especially in university cities such as Liverpool and Plymouth. In Liverpool, there are now 21,700 PBSA units, meaning 2.1 students for each unit. With supply of a further 12,400 units either under construction or with planning permission, this ratio just 1.4.

Liverpool is a great university city to invest in. An HMO property with a superior spec can deliver investors an average gross rental yield of 13%, leveraged return on investment of 35% plus, before any charges and voids. A three bed HMO which houses three students, can be bought from £120,000 upwards in Liverpool. The return on investment is very attractive too, with 13% (8% cash rental and 5% capital growth). The gross rent on the property will exceed £1,235 pcm, as each room is rented out.”

This story was featured in Property Reporter on 1st December 2017

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Tenant demand is outstripping supply in Liverpool

A new report from The Mistoria Group, specialists in high yielding investment property in the North West, shows a surge of tenant demand across Liverpool up 19% year on year, with an average of 6.6 tenants now chasing every shared room of a new rental property compared with 5.5 in 2016.

With one of the largest universities in the UK and an increasing student population, combined with rising graduate job opportunities, Liverpool is experiencing a booming BTL market, with demand for high-end, quality rental accommodation outstripping supply.

Liverpool boasts a student population of around 60,000 and 60% of them require accommodation.  There is high demand for new and renovated property for the sole purpose of the university students, many of which are looking for affordable, shared accommodation. According to The Mistoria Group, over the last 12 months, student rents in the city have risen by 23% and now sit at an average of £128 per week as at May 2017.

Mish Liyanage, Managing Director of The Mistoria Group comments: “Our lettings office in Liverpool has been operating for two years and during this period, we have seen a surge in demand for rental property from student and professional tenants.  Liverpool is a vibrant city with a buoyant job market and unsurprisingly, many young people want to work and live here.

“Liverpool is booming.  A multi-million pound investment in economic regeneration is transforming the city and over the last decade, the it has attracted more than £5 billion of investment in property, infrastructure and services.  According to Knight Knox, these regeneration projects have seen Liverpool become home to some of Britain’s most ambitious residential, commercial and leisure developments, spearheaded by the widely successful Liverpool ONE project, the shopping and leisure destination, which has refocused the whole city centre towards the waterfront.

“There is no doubt that buy-to-let investment in Liverpool has gone from strength to strength, with landlords enjoying yields of over 10%.  Many property investors are clamoring to snap up HMO properties in the city’s BTL hotspots, such as the L6, L7, L8 and L15 postcodes. With savings earning very little, many investors are recognising that BTL property can give them much better returns.

“Rental yields within one mile radius from the Universities/City are excellent.  Our research shows that student house share rents start at around £85 per week per room, including bills.  However, ensuites can be as high as £115 per week.  Investors can acquire a high quality three bed,

fully-let HMO near a university, which will house students from £120,000 upwards.  The return on investment is very attractive too, with an average of 13% per annum (8% cash rental and 5% capital growth). We have seen almost 32% increase in the sale of our arm chair HMO deals over the last 12 months compared to 2015-2016”

“Our Liverpool Lettings and Sales branch is located at Wavertree and is managed by the local property expert, Ms Tanya Jackson. The branch which completed 2 years now lets over 300 student rooms and has recorded a 95% occupancy rate across the student accommodation it manages, with the summer still to come. Mistoria Liverpool branch plans to expand the services it offer to residential and commercial sales over the next 12 months with the recruitment of highly experienced Sean Casey.”

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Liverpool Named the Top Buy-to-Let Spot for Rental Yields

Liverpool has been named the top buy-to-let spot, delivering landlords average rental yields of 8%, once mortgage costs have been taken into account, found new research from Private Finance.

Liverpool Named the Top Buy-to-Let Spot for Rental Yields

Liverpool Named the Top Buy-to-Let Spot for Rental Yields

As house prices and mortgage costs have the greatest influence on rental yields, Liverpool takes the top spot as it has a combination of a low average price (£122,283) and high rent (£1,021 per month).

Nottingham came in second, with a rental yield of 5.6%, followed by Coventry at 5.4%, Greater Manchester at 4.3% and Portsmouth at 4.2%. Cardiff, Blackpool and Lincoln are next, with rental yields of 3.9% each. Bournemouth and Southampton complete the top ten, with rental yields of 3.8% and 3.7% respectively.

According to the study, which calculated rental yields in the top 50 UK towns and cities with the highest proportion of private rental housing stock, six of the top ten areas with the lowest house prices are also in the top ten list for best rental yields.

Within the top ten buy-to-let spots, average annual interest-only mortgage costs vary significantly, from £5,940 in Blackpool to £13,548 in Bournemouth.

The Managing Director of The Mistoria Group, Mish Liyanage, comments: “Faced with increased taxation and tougher mortgage lending criteria, it’s so important for landlords to ensure they invest in properties that will maximise rental income and minimise void periods.

“Student property gives good returns on investment, as it delivers high yields and full occupancy. There is huge demand for shared student accommodation near the four universities and, with a student population of around 60,000 and 60% of them requiring accommodation, Liverpool is great place to invest.”

He advises: “Increasingly, investors are looking for new and renovated property for the sole purpose of the university students, many of whom want to live in affordable, shared accommodation. Over the last 12 months, student rents in the city have risen by 23% and now sit at an average of £128 per month, as of May 2017.

“HMO [house in multiple occupation] student accommodation gives landlords much higher yields than a three-bed, single-bed property or a student pod. HMO properties can generate this significant increase in revenue because they are rented out to individuals on a room-by-room basis. HMOs often provide between four and ten rooms, rented to individual tenants. Rent will typically include the internet, general utility bills and Council Tax.”

Have you been tempted to invest in Liverpool?

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Liverpool attracts HMO attention due to surge in student demand

If you are thinking of investing in a house to let you may want to consider purchasing a house of multiple occupancy (HMO). In the right area, you could see a 12-15% return on investment, compared to an average of 7% return on a standard buy to let property.

The North West, particularly Liverpool, is becoming a choice location for such investments.

A recent report from the Mistoria Group notes that although the initial investment on a HMO is usually higher than a standard buy to let house, the returns have been considerably higher over the past five years. Mish Liyanage, Managing Director of The Mistoria Group, claims that buying in the right location and market in the North West, much higher yields will be seen compared to a standard buy-to-let in the Midlands or South East.  If you are looking to supplement your monthly income, a HMO provides a secure and excellent performing passive investment. Caution is needed, as is good research, since return on investments can vary drastically by postcode.

If a HMO is close to a University they will usually have a higher return due to the ability to ask for higher rents in these more desirable locations. Students and young professionals will pay the higher rent for a HMO if they are close to their school or work. To further the attractiveness of investing in a HMO in Liverpool and Salford, Article 4 is not in operation, allowing conversion of a family home into a HMO of up to six unrelated people without needing planning permission.

Liyanage explained: For example, investors can acquire a high quality, three bed HMO which houses three students, from £120,000 upwards in Liverpool.  The return on investment is very attractive too, with 13 per cent (8 per cent cash rental and 5 per cent capital growth). The gross rent on the property will exceed £1,235 pcm, as each room is rented out. Larger rooms, open plan living and kitchen areas, ensuites, TVs, unlimited broadband, premium kitchen appliances and furnishings are the type of features that help to generate a high yielding HMO.