In the past few years, many changes to property legislation have come into force and, in many ways, affecting the UK property market. Some affected renters, others affected landlords, but in the grand scheme of things, some of them involve every side of the dice.
Stamp Duty
Changes to the stamp duty regulations meant that landlords (anyone buying a second, third or fifth property and not their first) would need to pay an extra 3% stamp duty on their purchase.
The idea behind this was to make it harder for landlords and investors to buy. It would then free up properties for first-time buyers. If those landlords or investors decided to sell due to diminishing profits, the influx of new properties on the market would, in turn, push prices down; this has, to some extent, happened.
However, the unintended consequence is that with more properties being snapped up by first-time buyers, the supply of rental properties has fallen. With the limited supply, rental prices of these properties have started to increase.
If you believe you are entitled to a Stamp Duty refund, please contact the Stamp Duty Rebate Support team.
Right to Rent
Tenants need to have the right to rent when a new tenancy is granted; this is the government outsourcing’ immigration checks’ to landlords regarding the tenancies they are granting to their future tenants.
Landlords and/or their agents need to check the tenant’s passport or government-issued ID and, if applicable, their VISA in person. These documents must be valid at the time the tenancy is granted.
Not checking could result in fines as well as imprisonment. Check new regulations in UK in respect of property management services and ensure that all future tenant IDs are checked as per regulations.
Section 24
What is Section 24? Landlords were previously able to offset their mortgage interest as a cost to their ‘business.’ However, this will now be replaced by a fixed 20% deduction. The effect is that many properties suddenly became loss-making. Landlords effectively started being taxed on the gross (minus 20% interest rate relief) rather than the net (rent minus mortgage interest, wear and tear, and other costs of running the property).
A previously profitable property suddenly had a very different-looking profit & loss spreadsheet with a final annual value in the red. Estate agent fees can, however, still be offset as a cost. Therefore, the 10-12% you would pay us to manage your property would be deductible as an expense fully.
Wear & Tear Allowance
Simultaneous with Section 24, the Government announced that the 10% annual wear and tear allowance would be scrapped. Fewer deductibles at the end of the year, thus increasing losses further.
Energy Performance Certificate
Probably the most beneficial in practical terms to tenants have been the changes to the EPC regs. A property doesn’t meet a minimum EPC of E; it cannot be rented out anymore.
The better insulated your property is the lower the energy bills each month and the higher EPC.
Surveyors not only advise on making your property more energy-efficient, but they can also arrange for the work to be done. Once compliant, a new EPC should be issued for your property.
Contact us today and one of our friendly team members will be on hand to talk you through how you could be helped with property management.
Agent Fees Ban
The latest change of them all is the agent fee ban.
From proposal to implementation, a couple of years went by. The background to this was that many agents (a small percentage but many nevertheless) were charging tenants ridiculous amounts for inevitable items.
Examples include contract drafting, reference checks, end-of-tenancy cleaning, end-of-tenancy check-out reports, renewal of the contract, etc.
Each of the above items added up and with some extremely overpriced, which would add up to a considerable cost to tenants, who argued that they would not be able to save up to buy their place when all their savings went to covering agent fees.
So, it was arguably a good move made to benefit the tenants. The question that remains is where agents will get their fees. For some agencies, this would have resulted in the closure or cutting down of staff and branches.
The panel are chartered surveyors first and foremost and never rely on agent fees to stay afloat. Therefore, they have been able to concentrate on building up a delighted clientele through work as a chartered building consultancy.
Thankfully, a lot of current business also comes from referrals, which is a testament to client satisfaction.
Section 21
The latest announcement regarding changes in regulations has been the potential abolishment of section 21 – no-fault eviction.
Until now, the only way to guarantee that a tenant would vacate your property was to serve them with a section 21 notice. No reason needs to be given here, but it can only be done two months before the end of the tenancy’s fixed term. So, on a six-month tenancy, this would mean month four – with the notice expiring on month six.
If the tenant has not vacated, the landlord would then start court proceedings to have them evicted. Landlords need to safeguard their position too. Imagine if the property has been vandalized or the tenant hasn’t been paying rent every month.
According to the Government, many landlords across the country were serving s.21 notices in retaliation for tenants asking for repaired things.
Why fix something when the next person takes the property in its existing condition?
Hence, new proposed changes to abolish s21.
To compensate for this abolishment, there are proposals to speed up section 8 notices, which have thus far been much slower to implement and have not guaranteed eviction. Whether this is the right thing to do or not is debatable.
However, these are fast-changing times, where it is very risky for landlords to manage their properties while adhering to the over 150 plus regulations agents adhere to daily. That’s why having a property management company to manage your property is crucial in the current times. There are just too many things that could go wrong otherwise.
We can source tenants for you, make sure they are all fully referenced, etc. We work with insurers who could provide you with a rent guarantee insurance, and this would cover each tenant who is referenced and living in your property.
We would also conduct regular checks on the property, arrange for repairs, and are even able to advise you if you decide to sell up one day and take early retirement.
Our packages are hands-free for our landlords and investors, where we take on the day-to-day pressure of dealing with calls, repairs, paperwork,, and all the new regulations. Allowing you to focus on sitting back and doing what you do best: looking for the next opportunity and enjoying the rent coming in each month without the hassle.
Learn more about property management packages, or alternatively please contact us anytime and we will help organise initial FREE expert advice for you!
