So much has changed in the buy-to-let market over the last year, that whether you’re a seasoned investor or a first-time landlord, it can be tricky to keep up.
Here’s part one of our handy guide to the 10 key things you’ll need to know in 2018, as the government continues to disrupt the property investment market.
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A New Centralised Ombudsman Redress Scheme Is Coming
Soon, landlords will have to register with a scheme designed to resolve tenancy disputes. In October 2017, the communities’ secretary announced the government’s plans for all landlords to join a scheme that will offer legally mandated resolutions to landlord/tenant disputes.
We don’t know yet whether the government plans to extend an existing body to become this ombudsman, or whether they will launch a new one. Their aim is to improve standards for both tenants and landlords in the private rental sector. The government wants renters to have greater powers to challenge what they consider unreasonable landlord behaviour. Existing and potential investors should keep an eye on this.
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Changes To Energy Efficiency Performance Standards
At the moment, all landlords are obliged to provide an Energy Performance Certificate (EPC) showing exactly how energy efficient the property is. The EPC grades range from A (most efficient) to G (least efficient). From April 2018, all rental properties must achieve a minimum of an E rating.
To start with this will only apply to new tenancies and renewals, before expanding to encompass all existing tenancies by 2020. Any breaches by landlords, such as giving incorrect information or not complying to the new regulations will mean cumulative fines of up to £5,000. Fines are as follows:
- Providing false information to the register – £1,000.
- Failing to stick to a local authority compliance notice – £2,000.
- Renting out a property that doesn’t meet the E grade for less than three months (£2,000) or more than three months £4,000.
This effectively means that more than 300,000 existing landlords could be fined if they don’t improve their energy efficiency scores now. Stats show 330,000 rented homes have EPCs of F or G that don’t match these requirements and time is running out for landlords to rectify it.
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Implementation Of Proposed Ban On Letting Fees
In November 2017 the government laid out a draft bill to ban letting agents from charging fees in England. It seems this will be implemented sometime this year. It proposes stopping letting agents from charging fees to tenants to rent out a property, capping security deposits at no more than six week’s rent and capping holding deposits at no more than one week’s rent.
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Launch Of ‘Rogue Landlord Database’
Rogue landlords will find it more difficult to hide from April 2018, with the introduction of a new database. It will include details of landlords and letting agents who fail to protect tenants. The database will list landlords that are banned from renting out a property, or who have been convicted of an offence that prevents them from managing one. The kinds of breaches named by the Department for Local Communities and Government (DLCG) include:
- Harassing or illegally evicting a tenant.
- Using violence to get in to a property.
- Failing to adhere to an overcrowding notice.
- Providing false information.
- Failing to comply with an improvement notice.
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Complying With The Right To Rent
Legislation surrounding Right to Rent has been around since February 2016, and it’s absolutely vital that new landlords or potential investors comply with it. If you are using a managing agent, then they should carry out the checks for you. The legislation means that landlords must check whether their tenants have the right to live and work in the UK.
In 2016, 106 landlords were fined for breaching this legislation and collectively fined £30,000. It applies to all tenants, including British citizens and there’s a step by step guide on the government’s website.
Check out part two of our guide next week.