The Best Ways to Save in 2023
23 Landlord Resolutions for 2023 – the best bits from The Mashroom Show
With every year comes more wisdom, and 2022 certainly could be described as character-forming. The past year chucked seemingly everything at landlords, from the cost-of-living crisis hitting property owners and tenants alike, the energy price hike threatening many of us with daunting costs, turbulent government developments and uncertainty over housing policy, and the resulting mortgage market drama causing interest rates to spike. What a ride.
It would be quite a feat for 2023 to outdo its predecessor, but with many of the aforementioned challenges still ongoing, sage advice is valuable and it is sensible to take it.
2022 saw the launch of The Mashroom Show! It’s the place to come for advice and news on everything from insurance to insulation, from tenant finding to tax planning. Each time, an expert guest joins us to share their wisdom and advice.
So, what better way to kick off 2023 than with the very best of tips so far? Not every tip is for everyone, but there’s something here for everyone, we think.
Here’s to 2023, and here’s to all landlords everywhere!
Energy efficiency upgrades with James Tanner
James, who’s an energy efficiency expert and seasoned landlord, joined us for some practical, simple advice on what landlords can do to improve energy efficiency. And – spoiler – some of it is powerfully simple stuff.
1. Don’t panic. Current proposals mean rented properties are likely to need a minimum EPC rating of C by 2025. But the average property in Britain has an EPC of D, so getting to an EPC of C isn’t a huge leap. There are lots of things landlords can do which won’t cost an arm and a leg
2. Mind the gap. This is just one example of a cheap way to boost efficiency. A lot of houses in cities have a 5mm gap under the front door. It might seem small, but a lot of heat escapes through that. In fact, you lose about 20% of heat in a building through drafts. You might as well be posting money into the street! James recommends some brush from B&Q for a fiver to close that gap.
3. Smarter heating. More expensive, but it could be worthwhile for some landlords to put in good controls for the hot water and heating systems, and you can split your home up into different zones so you only heat the parts that you use at various times of day. This is a great way to add points to your EPC.
4. Big impact. While it may come with a big price tag the biggest-impact things you can do to improve a home’s energy efficiency is to install insulation: under the floors, in the exterior walls, loft and eaves. For example, 50cm of natural, breathable loft insulation will reduce heating bills by 25%.
5. Cutting-edge tech. A very energy-efficient boiler and A+++ appliances. “It really makes a massive difference to lowering energy bills and increasing your EPC,” James says. And there’s another way to get those bills significantly lower: “You can fit solar PV [photovoltaic] panels with a battery, so it can store the electricity generated in the day and use it at night, and it can also give you hot water. That will also massively increase your EPC and reduce your energy bills.”
Want more tips from James? Watch the full episode now.
No-Fault Evictions and Section 21, with Adrian McClinton
We were lucky enough to have Adrian join us for evictions, including of course Section 21, the no-fault eviction option. The caveat here is the government has signalled it may do away with S21 soon, but while it remains, it’s a handy tool provided you’ve all your ducks in a row. Adrian explains more:
6. Know what your tenancy agreement says about evictions. What does the tenancy agreement state you must do in order to serve a S21 notice? If the contract says you have to serve a notice on a Tuesday morning before 11am then you must do that. But luckily, most tenancy agreements are pretty standard in form, so for most it’ll be a case of serving notice at the property itself. Still, it pays to make sure you know what’s required – before you need to know.
7. Know what the law says about eviction procedures. Do you know the laws brought in over the years that prevent a landlord from serving a S21? It’s a very long list and it’s certainly a lot more complicated than it used to be, when all you had to do was replicate some wording from the Housing Act 1988. We can’t cover them all here, but read on for three of the big ones…
8. Get your documents in order. To legally serve a S21 you’ll need to have provided certain documentation to the tenant, known as the ‘prescribed information’ – and ensure you have the correct licence in place. It’s a lot easier to put your documents to work when they’re stored effectively – Mashroom’s free Document Storage Tool is perfect for this.
9. Be fastidious with funds. Serving a S21 correctly means you need to have returned any fees as needed, and make sure everything’s in order with your deposit protection scheme. Lack of attention in this area could lead to snags down the line.
10. Think timings. A S21 can be too soon or too late. It can’t be served in the first four months of a tenancy agreement, but landlords need to ensure that if they’re going to issue proceedings they do so within a certain time limit, because the system operates a ‘use it or lose it’ approach.
Many landlords may think they’ll never need to deal with evictions and we wish no one did. But when it comes down to it, having the facts and knowing what you need to know ahead of time helps you to hit the ground running. And with evictions, time can be of the essence. That means it’s well worth watching Adrian’s episode for plenty more valuable insight.
Weathering the Mortgage Storms, with Stephen Smith
With 1.8 million of mortgage holders due to fall off the end of their fixed rate during 2023, we asked mortgage mogul Stephen Smith what can be done. He had some soothing advice for us.
11. Understand the past, but expect new events. This sort of turbulence has happened before, but you’ve got to bear in mind the market was very different back then. In the 1980s literally all mortgages were on variable rates, so the mortgage rises were instant. Nowadays, for most borrowers anyway, the impact is delayed. If the cost-of-living crisis is protracted, measures like extended repayment holidays, extending terms or switching to interest-only will come into play. It’s not in anyone’s interests for the housing market to crash and burn, after all.
12. Don’t rush into any new mortgage deals. You could find yourself locked into a rate with a lender that has penalties attached, and you may regret it in a couple of weeks’ time. The market is moving very fast, and until it settles again, at hopefully a lower level, you may rush in and secure something that you later regret.
13. Talk to a mortgage broker. Stephen has been in the business for over forty years, and has never seen a more complicated market than today’s. You really do need advice, and that’s where talking to a good broker will pay dividends. They’ll give you the best market view and they’ll know how to secure the best deal with the relevant lenders that they select for you.
Want more insight from Stephen? You can check out his full episode for more.
Talking Taxes, with Richard Cunningham
Richard is a chartered tax advisor and chartered accountant who is passionate about making things as easy as possible for landlords. Here’s what he wants you to know about avoiding tax slip-ups and maximising your tax efficiency.
14. Get to grips with Capital Gains versus Income Tax. A lot of mistakes with tax returns come from landlords claiming an expense against income tax when actually it counts as capital gains. The ins and out are a bit longer than that, but Richard’s Allowable Expenses episode is the perfect place to get to grips.
15. Check you’re not claiming too much mortgage relief. Once upon a time, landlords could claim the full amount of any interest paid on their mortgage, but now there’s a (less generous) relief rate, so make sure you’re not underpaying. And remember you can’t claim for any of the capital part of a mortgage repayment – this has caught some landlords out before.
16. Be mindful of uncommercial tax implications. When you rent out to a tenant, with a tenancy agreement and all the trimmings, it’s a commercial let. If you rent a property out to family on a more informal basis, this is called an uncommercial let. If you make a loss on an uncommercial let, you can’t roll that loss forward to offset it against the income in a future tax year. There are often ways around this, but first you need to know about this difference – and now you do!
17. Check you’re not missing a trick. Have you considered a limited company? It gives you numerous options surrounding shares. That means it could cut taxes significantly for some. Switching isn’t simple, but a professional can navigate you through it, while minimising any costs. It won’t be worth it for everyone, but it’s worth a brief chat with an accountant – which most will give you for free.
18. Get the tax basics right. Make sure you claim every single penny of your allowable expenses. Separate the income side from the capital side. Understand what you can and can’t deduct. Keep good records of everything Mashroom’s free Document Storage Tool and Expense Tracker are all you need!
19. Speak to an accountant! Everyone’s situation is different, and in no time at all a chartered accountant will be able to get a good grasp on your situation and will be able to present you with the best options. It’s true what they say: they often save you more than they will cost you in their fee.
Tax is such a broad subject so there are three eps on it! Catch them here:
Will legislation changes affect your insurance?
One of our insurance experts, Matthew Crawley, has joined us again to explain how the EPC legislation changes could affect your insurance.
20. Catch up with your insurer. Whether you’ve set your sights on energy efficiency improvements or are planning works for any other reason, stop and think: does my insurer need to know about this? If you’re making a small change such as swapping to an LED lightbulb there’s no need to pick up the phone. But if it’s something more structural – like putting insulation into walls – let your insurer know. If tradespeople are coming in, if works are happening, there are new risks being introduced. If your insurer doesn’t know about them, they won’t be able to pay out for any claims linked to the works. It’s in every landlord’s best interests to keep their insurer up to date – and it’s always better to be safe than sorry.
And finally, three tips coming from the latest landlord news
21. Get your Making Tax Digital sorted. New guidelines came out on 6th January 2023, with some changes:
- If your landlord income exceeds £50,000, you must meet the new requirements from 6th April 2026, or by April 2027 if your income exceeds £30,000.
- Previously the deadline was April 2024, but there’s no time like the present! So make 2023 the year you find the best software for you, make a start with digitising and creating new processes. That way, you can sit back smugly and know you’re ready!
22. Keep an eye on Mashroom.com for news.
- Smaller landlords in particular have suffered at the hands of S24, which significantly cut the amount of mortgage interest a landlord could offset against income tax. Now, a petition of over 10,000 signatures warrants] a government response.
- Propertymark is calling for the government’s new ECO+ scheme to open up access to funding, so landlords stand a better chance of making necessary energy efficiency upgrades. The warning to ministers is that without access to the support, many landlords could be stuck with an asset they can’t afford to keep up to standard.
Make sure you follow us on socials and keep an eye on the website and future shows for the latest developments on these and all other landlord matters.
23. Keep watching The Mashroom Show. We’ll be back soon with guests as interesting and helpful as those who brought you these tips. We can’t wait, and we hope you’ll join us then.In the meantime, don’t forget to join the Mashroom Landlord Community on Facebook, and you can find us on all the other socials too.