HMO Mortgage

Buy-to-Let Property Regulations (2019)

There are many regulations that affect Buy-to-Let Property

Right to rent regulations

It has today been announced that the Right to Rent obligations will come into force from February 2016.

This date forward landlords will become an internal immigration force, not permitted to rent properties to those that have no right to live or work in the United Kingdom.

Landlords will be obligated to check the tenants status and those tenants on temporary visa's will have to be re-checked at intervals.

The Government has launched a Helpline on 03000699799.

EPC Regulations

New Energy Efficiency Regulations establish a minimum level of energy efficiency for privately rented property in England and Wales.

From April 2018 landlords must ensure that their properties reach at least an Energy Performance Certificate (EPC) rating of E.

You will not be allowed to enter new tenancy agreements to rent a property with EPC ratings of F or G from April 2018.

All rented properties (new tenancy agreements or not) must comply by April 2020.

The regulations will be enforced by Local Authorities. A civil penalty of up to £4,000 will be imposed for breaches.

Where a landlord believes that an F or G EPC rated property qualifies for an exemption it must be registered on National PRS Exemptions Register, Exemptions will only endure for 5 years..

Where someone becomes a landlord while the exemption is already registered then the new landlord must re-register the exemption.

You (tenants & local authority) can view your properties EPC online.

Mortgage Lender Criteria

It is still early but some mortgage lenders have listed there criteria. We will endeavor to update this page once more mortgage lenders announce criteria. This will give you a general view of what many mortgage lenders require.

What is certain is that all lenders mortgage conditions will mirror regulations and require a minimum EPC of E prior to letting the property.

The Mortgage Works

TMW will continue to lend on properties with an EPC rating of F or G. The costs of any works (established by valuer) to bring it up to the standard will be deducted from the valuation figure. A condition will be placed on the mortgage offer confirming the works must be undertaken within 3 months.

If the works are above £2,500 a full retention will be applicable.

On purchase applications where an EPC record isn’t available to the Valuer, they’ll be unable to recommend the property as a suitable security.

BM Solutions

"At this time there are no changes to BM Solutions criteria or process".

Foundation Home Loans

Require property to meet a minimum standard. If the property falls outside these parameters’ this then becomes a condition of the offer. Foundation will require improvements to be made to the property and a new EPC to be supplied before completion.

This process is the same for both a purchase application and a re-mortgage application.

Talk to your Buy-to-Let Mortgage Adviser

With each lender implementing the rules differently.

Some lenders making it a condition after offer, some before the offer and others reducing the purchase price to reflect the required works.

There are a variety of lenders to choose and a variety of options to look at.

If the mortgage lender lowers the value - could it be best to commit the vendor to the sale and then pay to get the works done. If unable to do so could short-term bridging finance be an option to bring it up to standard & remortgage?

Perhaps your preference is relegate those lenders and look at lenders that make it a post-offer condition.

Make sure you use a specialist mortgage adviser that does not put your case to a lender that declines all cases if the property does not already meet the minimum.


What is the "Tenant Tax" or "Clause 24"? (Removal of Mortgage Interest Relief)

Clause 24 of the Finance Bill 2015 changes how Landlords are taxed.

The change in how the income from rentals is taxed as it is now added gross to other income.

... read more on What is the "Tenant Tax" or "Clause 24"? (Removal of Mortgage Interest Relief)

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