Homeowners and landlords in the UK are facing increased mortgage rates for the first time in a long while, as the Bank of England upped its base rate to curb inflation. Interest rates are expected to keep rising, which will increase monthly mortgage payment brackets and could significantly affect the housing economy.
But why exactly are mortgage rates on the rise?
The Bank of England has raised interest rates by small percentages to their current rate of 3.5% and they are likely to go higher. Additionally, the government announced a budget with increased borrowing, causing concern among investors. This, combined with global market instability and aggressive rate hikes by the Federal Reserve, decreased the pound value and UK government debt, which led to an increase in mortgage rates!
How does the base rate affect mortgage rates?
Is it worth having your own landlord accountants?
There are multiple financial matters that a landlord of any size needs to juggle, especially in times of turmoil like the present. For instance, how much cash should one feasibly keep on hand for a rainy day? Figuring out how much rent to charge is another complex question.
Rents must rise, no doubt, given the soaring inflation rates, but by how much? And how much of the cost increase can landlords afford to take on themselves?
Having a personal landlord accountant will help them answer these questions in a manner most fitting for their business and their business goals. If you are still contemplating hiring an accountant to help you look after your rental property business, here is why you should:
1. Focus on managing your property
2. Invest surplus money profitably
The monthly cash flow you earn from rental income can be an excellent way to build cash reserves – if appropriately invested. A landlord accountant can help optimise this investment by advising you on how to maintain the property and upgrade white goods and how to pay off more of the principal balance by applying the cash from the rental income.
3. Ensure rent is received on time
Accountants run monthly rent reports, which show who has yet to pay and who has paid in advance. That way, you will always have current figures at your fingertips.
4. Account correctly for expenses
You should have a different bank account for each property you rent out and handle the taxes and expense reporting separately for each – in case you have multiple properties, which a landlord accountant can take care of expertly.
5. Take advantage of tax benefits
Running a tax-effective rental property business requires the intervention of an accountant who knows all about the rules around property allowance, offsetting mortgage interest, claiming business expenses and so on. You never have to worry about paying more than you owe or scrambling to pay them on time.
6. Get monthly reports on time
Accountants prepare a complete set of documents like income and expense statements, accounts payable/receivable, bank statement reconciliations, general ledger transactions, balance sheets, and so on so that you have a complete picture of how you are doing.