Forewarned will be forearmed for landlords in 2018.
There will be undoubtedly increasing regulation coming into force, as well as other factors that landlords should be aware of.
Energy efficiency
From April 1st, the Minimum Energy Efficiency Standards will come into effect for properties in the private rented sector. This will make it illegal to let a property on a new tenancy with an EPC rating of F or below.
It would be prudent to check your EPC now and find out the energy rating of your property. If it is F or below, then you will need to undertake some up-grades to make it more energy efficient.
The improvements that could save you the most energy depend on your property, but typical examples include:
- insulation, eg solid wall, cavity wall or loft insulation
- heating
- draught-proofing
- double glazing
- renewable energy generation, eg solar panels or heat pumps.
Landlords can also do simple inexpensive things, like changing lightbulbs and down-lighters for LEDs.
For further details, visit the Government website.
Interest rate rises
Late 2017 saw the first base rate rise for over a decade when the Bank of England raised the base rate from 0.25% to 0.5%.
Many property commentators believe that there will be further base rate rises in 2018.
Despite this, buy to let mortgage rates remain highly competitive, and, if your mortgage is on a tracker or SVR rate, you would be well advised to seek professional mortgage advice as to whether a long term fixed rate might be a better option for you.
Tenant fees ban
A new draft bill will was introduced to Parliament on 1st November 2017 to ban letting fees.
The draft Tenant Fees Bill will:
- Cap holding deposits at no more than one week’s rent and security deposits at no more than 6 weeks’ rent. The draft bill also sets out the proposed requirements on landlords and agents to return a holding deposit to a tenant.
- Create a civil offence with a fine of £5,000 for an initial breach of the ban on letting agent fees and creating a criminal offence where a person has been fined or convicted of the same offence within the last 5 years. Civil penalties of up to £30,000 can be issued as an alternative to prosecution.
- Require Trading Standards to enforce the ban and to make provision for tenants to be able to recover unlawfully charged fees.
- Appoint a lead enforcement authority in the lettings sector.
- Amend the Consumer Rights Act 2015 to specify that the letting agent transparency requirements should apply to property portals such as Rightmove and Zoopla.
Northwood Managing Director, Eric Walker, has been part of the ‘Fair Fees Forum’ which works with Government and stakeholder bodies on it’s implementation.
He comments:
‘Whilst it is pretty clear that this ban is inevitable, implementation may be delayed. Whilst it is likely there will be an outright ban, some reasonable allowable charges may be excluded from the ban provided that these charges are for the benefit of the tenants. As a business, Northwood has been an advocate of both landlords & tenants having the right to expect professional standards preferably through proper regulation of the industry‘.
It is not clear when the fees ban will come into effect, although some say it could be October 2018, or more likely 2019.
Landlord law solicitor, Tessa Shepperson has this advice:
“Moving to cheaper agents is probably not a good answer as there is a danger that they will be less competent. An incompetent agent can end up costing you thousands, for example by breaching the deposit rules or letting in poor tenants due to inadequate referencing”.
Northwood will be making sure that our landlords receive the best advice on how to deal with the fees ban, and our legal and compliance teams will continue to ensure that our fully managed landlord clients are completely compliant to any new legislation that may be introduced in 2018.
Paul Shamplina, Founder of Landlord Action, has some top tips for landlords heading into 2018:
Get your accounts in good order: Landlords with mortgages need to understand what impact changes to mortgage interest tax relief will have on their profits so being organised and understanding what is coming in against what expenses you have is essential.
Create a business plan: Following the introduction of stricter affordability tests imposed by lenders this year, landlords need to have all financial records relating to their portfolio documented in a business plan for any new mortgage application.
Put a price on your time: If you are struggling to keep on top of changing legislation and your obligations as a landlord, seek professional help. The cost of having your asset taken care of will be far less than a fine for non-compliance.”
You can view a huge raft of property predictions from experts >>> here.
We take this opportunity to wish our landlord clients a very happy new year!
Northwood is one of the largest and most recognised estate agents in the U.K. and the leading supplier of Guaranteed Rent to give landlords complete peace of mind.
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