5 law changes that might affect your rental property business this year
Through 2018, buy-to-let landlords had a lot of new legislation to accommodate in their planning and strategy. While the government hasn’t flooded the private rented sector with quite so much legislative change in recent months, there are still more adjustments that landlords will probably need to make in 2019. Here’s what is either happening or may be, and how it may affect you.
1. Elimination of tenant fees
The Tenant Fees Bill will probably become law in Spring 2019 or shortly afterwards, depending on any Brexit-induced delays. If and when it does pass into law, then letting agents won’t be able to charge certain fees to tenants (such as referencing and tenancy renewal fees).
For landlords, this means that the cost of using agents will rise because letting agents will simply pass these costs to the landlord. There are a number of possible outcomes, including:
- You could decide to manage the property yourself, but you’d need to carefully consider the true cost of being a DIY landlord
- You could increase the rent you charge to compensate for your increased costs
The industry is expecting that most landlords will increase rents – with the policy’s intentions backfiring on government and making renting more expensive.
2. A cap on damage deposits
Also included in the Tenant Fees Bill is a cap on the amount that tenants should pay for damage deposits. The government has announced that the cap will be set at five weeks’ rent (if the rent does not exceed £50,000 per year). This is unlikely to cause too much aggravation to buy-to-let landlords whose property managers conduct regular property inspections.
Of more concern may be the possibility that default fees will be outlawed. These fees are set at the beginning of the tenancy and are charged according to a list of minor indiscretions against the tenancy agreement. We’ll be able to give more insight into this when the government decides what it wishes to do.
3. Changes to client money protection
All property agents must register with an approved client money protection scheme before the new tax year starts in April. This is good news for landlords – it means that if your letting agent goes into administration, then any money of yours that it holds is protected. This includes tenancy deposits (which should be held in a tenancy deposit scheme), rent, or other funds that you have deposited with the agent. Our clients’ money has been protected for several years.
4. You may have to sign longer tenancy agreements
The government has been prevaricating about longer tenancy agreements for some while now, and may well make a decision this year whether or not to introduce a minimum three-year tenancy agreement. If longer tenancy terms do become the norm, landlords should ensure that their tenancy agreement covers all possible eventualities. The need for regular property inspections will become more acute.
As we explained in our article published in April last year, asking “What do you think about three-year tenancies?”, there are pros and cons of longer tenancies. There may also be some exemptions allowed. Once more, we wait to see what changes, if any, will actually be put in place.
5. Will London landlords have their rents capped?
Mayor of London Sadiq Khan has proposed rent controls should be introduced in the capital. If he gets his way, it is likely that some landlords will reconsider their London-based investments. He clearly hasn’t considered the experiences in many other parts of the world, where rent controls have failed their objectives miserably.
Take Berlin as an example. Rents had been rising at around 2% per year when rent controls were introduced in the city in 2015. In the two years after the cap was introduced, rents rose by around 10%!
There is already plenty for buy-to-let landlords to consider this year, on top of the normal business planning such as taxes, financing, cash flows, and so on. By using Ezytrac as your investment property manager, you could benefit from our commitment to making your life easier with effortless property management.
We’ll help you to maximise your profits by getting the best tenants, keeping void periods to a minimum, ensuring your rents are regularly reviewed in line with the local market. All this while our legal team keeps on top of the ceaseless changes to property and landlord laws, rules and regulations. All you need to do is contact one of our team today at +44 0 1522 503 717.
Live with passion,