In a recent video on my YouTube channel, I explain how certain government changes are screwing over smaller landlords. The rich are setting the rules so that they can control the game, and they want to kick you off the board! In the video (above) I explain exactly what they are doing and how you can use the rules to profit yourself.
I highly recommend watching the full video until the end because it contains important information that could make you a lot of money! In this article, I will briefly summarise these lessons.
1. Tax Changes
For some time now, you haven’t been able to claim mortgage interest payments as tax-deductible. This makes no sense, as paying the mortgage is a business expense. If you take in £1000 as rent and you pay £500 as a mortgage payment, why should you be taxed on the £1000 as if it is profit? This rule is designed to hurt landlords.
2. Tenants' Rights
The government is going to end so-called ‘no fault’ evictions. This means that landlords will now need to meet a very high bar before they can evict a tenant. If someone isn’t paying their rent or often pays very late, there will now be very limited options in how to deal with the situation. This will mean that you will need to be extra careful when selecting tenants.
3. EPC Certificates
By 2025 all homes will need a ‘C’ or higher on their energy efficiency certificates. This will mean that already stretched landlords will now need to spend money on improving properties that may not even be profitable in the first place!
4. Interest Rates
Interest rates are rising. This means that properties that once were making a profit may now be losing money. This is adding extra pressure on smaller landlords, some of who will be giving in and selling up. This allows the rich to come in and buy these properties up on the cheap, as they have the capital to wait the Bank of England out.
5. House Prices
On top of all this, house prices are dropping. This means that some landlords will be left with unprofitable properties that are now in negative equity, meaning their market value is less than the mortgage.
6. Solutions
The whole boom and bust business cycle is designed to help those in power and hurt those without power. The rules are set up so the super-rich and the political classes can profit. You can complain about this, or you can use the same rules to your advantage.
If you own your property via a limited company, for example, you can claim mortgage interest as a business expense. You can buy properties that don’t meet the new EPC requirements and add value to them by bringing them up to code. You can find landlords in negative equity and offer them a lease option agreement deal. You can rent your property as short-stay lets and totally bypass tenants' rights. Think and act like the poor, and you will be hurt, regardless of how good the market is. Think and act like the rich, and you will be protected, regardless of how bad the market is.
