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Month: February 2021

How to protect revenue during the rental crisis

by Asif AliPosted on

It’s no secret that the UK is moving towards a serious supply and demand crisis. In addition to the growing cost of living and energy prices, what can landlords do to protect their revenues?

  1. Tenant Screening: One of the most effective ways for landlords to protect rental income is by carefully screening tenants by conducting credit checks, verifying employment, and checking references. By selecting tenants who have a stable income and good rental history, landlords can reduce the risk of rent arrears and therefore protect their income.
  2. Being informed: Landlords must stay up to date with all relevant regulations and guidelines. Including significant policy changes, such as The Renter’s Reform Bill. Understanding and properly preparing for policy changes will help landlords to avoid potentially large fines for non compliance.
  3. Rental insurance: Rental insurance can provide an extra layer of protection for landlords in the event of rent arrears or property damage.
  4. Re-evaluate rental prices: With rising costs, it is only reasonable for landlords to raise the monthly rent of their private lettings. Landlords are responsible for ensuring that rent increases are carried out legally by following Government guidelines and ensuring that rental increases comply with their current tenant contracts.
  5. Reviewing Investments: Landlords should schedule regular intervals to review their property portfolio and ensure that their investments are working as cost-effectively as possible. The profitability of an investment can change drastically depending on location demand and property type, landlords should continually be reviewing their existing investments and changing their strategy to meet the current market needs.

This year will be a tough period financially for UK landlords, however by staying informed and planning ahead, landlords will be able to protect their investments and consequently their profits. 

Renters’ Reform Bill: Everything you need to know before May

by Asif AliPosted on

Announced in June 2022, the Renter’s Reform Bill outlines the Government’s plans to build a fairer private rental sector in the UK. Over the past year, landlords have been following updates relating to this bill, preparing for its live date. Since we are now getting close to the bill due-date (May 2023), this article will summarise everything you need to know should the bill go ahead. 

The end of Section 21 notices

The most significant and talked about change caused by the bill is the end of Section 21 notices. 

Currently, Section 21 notices allow landlords to evict tenants without providing a reason. Under the proposed new rules, landlords will need to provide a valid reason for evicting tenants, such as rent arrears or anti-social behavior. The changes are designed to provide tenants with greater protection and reduce the number of unjust evictions.

Changes to Section 8 notices

Landlords will still be able to use Section 8 notices to evict tenants for specific reasons. However, the grounds for eviction may be limited, and the process time-consuming. For example, landlords will need to give tenants six months’ notice before they can issue a Section 8 notice for rent arrears.

Eviction reasons for a Section 8 notice must be one of the following: 

  • If a tenant has rent arrears
  • If the tenant damages the property
  • If the tenant is causing a nuisance to the neighbours

Security of tenure

The renter’s reform bill will provide tenants with greater security of tenure. As per the plans outlined in the bill, the minimum notice period for tenants to leave a property will be increased from two months to six months, giving tenants more time to find alternative accommodation. 

Additionally, landlords will need to provide tenants with a minimum of three years’ security of tenure before they can end a tenancy.

Preparing for the changes in May 

To prepare for the upcoming changes, landlords would need to review their policies and procedures to ensure they comply with the new rules. This includes ensuring that all tenancy agreements are up to date and providing tenants with the correct documentation.

Working with a letting agent can help landlords to navigate the new rules with ease and ensure that they are properly prepared for all of the new policies which will be coming out of the bill once it is live in May 2023.

Why Landlords can’t ignore Right To Rent Policies

by Asif AliPosted on

New research from the Home Office has identified that landlords without letting agents are the least likely to understand their legal obligations when onboarding new tenants through the Right to Rent Scheme (RTR).

What is the Right to Rent policy?

The right to rent policy, which has been in place since 2016 requires landlords to check that their tenants have the legal right to rent in the UK before allowing them to move into their property. Failure to comply with the policy can lead to serious consequences, both financial and legal.

When do these checks need to take place?

Right to Rent checks have to be conducted before the tenancy starts. For Tenants who are only allowed to stay in the UK for a limited time, you need to do the check in the 28 days before the start of the tenancy.

How to conduct the check:
Landlords need to check that their tenant’s photograph, name and address match and that the document hasn’t been tampered with. Landlords are responsible for taking copies of these documents and keeping them on file for at least 12 months after the end of the tenancy. 


What are the consequences of not checking your tenants right the rent? 

If a landlord fails to carry out the necessary checks, they may face a civil penalty of up to £3,000 per tenant. This penalty can be imposed on landlords who rent out a property without carrying out the necessary checks, or who knowingly rent to tenants who do not have the legal right to rent in the UK. In severe cases, this can result in a custodial sentence of up to five years.

Whilst the Right to Rent policies may seem difficult to navigate and have potentially severe consequences, working with a letting agent can provide landlords with the peace of mind that they have followed the correct procedure for ensuring that their tenants are legally allowed to stay in their property, and therefore avoiding potentially large penalties.

How to avoid EPC penalties

by Asif AliPosted on

What is an EPC?
An EPC (Energy Performance Certificate) is necessary for providing insight into the energy efficiency and emissions from a property.

The gov.uk website sets out clear rules for ordering EPC’s: 

  • When selling a property, you must order an EPC for potential buyers and tenants before you market your property to sell or rent.
  • In Scotland, you must display the EPC somewhere in the property, for example in the meter cupboard or next to the boiler.

An EPC will provide an energy efficiency rating for the reviewed property from A (most efficient) to G (least efficient), this rating will then be valid for 10 years. 

Changes to EPC policies

In April 2020 the government introduced the current rules for property EPC’s which apply to all existing tenancies. These changes prohibited letting properties which scored an F or G efficiency rating, landlords who failed to comply with these regulations were faced with fines up to £5000.

After a consultation in December 2020, the Government announced new standards for England and Wales which are set to come into law by 2025.

The change signifies a large-scale shift towards the prioritisation of environmental considerations in the UK property market. From the activation date of the new law, all rental properties will be required to have an EPC rating of between A and C. The regulations will apply to all new tenancies in 2025 and all existing tenancies by 2028.

Not complying with the new law after 2025 will result in a significantly higher penalty of £30,000. 

What can landlords do to avoid EPC charges? 

Landlords should now review the EPC ratings of the properties within their portfolios. For landlords whose properties have a rating of lower than C, it’s advised to start taking action now to prepare for the upcoming law changes in 2025.

The energy provider EDF outlines some of the most effective ways to improve the EPC rating of a property:

  • Adding/ improving loft insulation 
  • Adding/ improving wall insulation 
  • Replacing boilers 
  • Installing solar panels
  • Double glazing windows

The changes will inevitably be costly to landlords whose homes do not have existing energy efficiency measures in place. Landlords are advised to start implementing measures to improve property EPC ratings early in order to spread the cost over a longer period of time, making the home improvements more manageable. 

Landlords look forward to predicted drop in mortgage repayments

by Asif AliPosted on

Most UK landlords will be using fixed rate mortgages, but there’s good news on the horizon for those who aren’t. New analysis from wealth manager, Quilter, suggests that monthly mortgage payments could fall by around 25% by the end of 2023.

How does this affect landlords?
For affected landlords, this potential drop in mortgage costs could significantly increase cash flow, allowing them to increase profits or reinvest finances back into their rental property. For example, by using the additional income to pay for property repairs, improvements, or even to purchase additional rental properties.

Moreover, landlords may be able to consider mortgage repayment strategies to pay off their mortgages faster by making higher monthly payments or increasing their repayment frequency.


What evidence suggests the 25% drop?
Recent statistics released by the UK government’s house price index indicate that the average cost of a property in the country was £294,910 in November 2022. Mortgage rates surged to roughly 6% in the aftermath of the mini-budget, adding to the already high cost of investing in new properties. 

However, it is anticipated that house prices will fall by 8% in November 2023 as predicted by Halifax.

The director of Halifax Mortgages, Kim Kinnaird, said “We expected that the squeeze on household incomes from the rising cost of living and higher interest rates would lead to a slower housing market, particularly compared to the rapid growth of recent years,”

Halifax predicted that mortgage rates will continue to decline, potentially hitting 4%. As a result, the average UK house price could fall to £271,317, leading to an estimated 25% decrease in monthly mortgage payments compared to the previous year, with payments amounting to £1,145.

Karen Noye, mortgage expert at Quilter says:

“Rising mortgage rates have played a significant role in the affordability of buying a first home or moving home, and for many these costs were pushed to unaffordable highs. It is therefore a real positive that looking forward we can hope to see such a significant dip in monthly mortgage payments by the end of the year should house prices and mortgage rates continue to fall as expected.

The potential reduction in mortgage costs could make it easier for landlords to obtain new mortgages or refinance their existing mortgages. With lower interest rates, landlords may be able to secure more favorable loan terms or lower monthly payments. Additionally, with a lower mortgage payment, landlords may be able to increase their borrowing capacity, allowing them to expand their property portfolios.

Whilst substantial evidence points towards a fall in mortgage rates, this is still vulnerable to many different factors such as inflation, government intervention, the type of property and location. It is not impossible that mortgage rates will rise during 2023, and landlords should stay cautious and up-to-date with new developments as the year progresses.

Potential tax reform for landlords in 2023

by Asif AliPosted on

Landlords are urging a tax reform in order to combat the rental crisis sweeping the country. In the last year, mortgage prices have been steadily rising for buy-to-let landlords which for many means that selling their investment has sometimes seemed more financially viable than continuing with their rentals.

This has been bad news for tenants, with more people seeking rentals than ever before, in December 2022 Zoopla reported that tenant demand is 46 per cent above the five-year average, while total supply is 38 percent lower, highlighting a significant supply and demand challenge within the UK rental market. 

The widespread supply crisis has additional implications for renters from lower economic backgrounds. With reduced suitable affordable accommodation on the market, many renters will be forced into low quality rentals.

Tax challenges being faced by landlords

Tax changes which have been implemented over the last few years have had a significant impact on landlords. Since the introduction of Section 24 tax ruling in 2015, which means that landlords can no longer deduct their mortgage interest payments from their rental income when calculating their tax bill, landlords have faced increasing challenges and uncertainty around the profitability of their investments.

Additionally, landlords will be familiar with the additional 3% stamp duty surcharge for second residential properties and investments. Introduced in 2016, the reason for the surcharge was to combat housing and financial challenges caused by a nationwide increase in second home ownership.

Conservative MP, Andrew Lewer, made the case in the House of Commons Magazine for a tax reform for property owners, stating “Restrictions on mortgage interest relief and the imposition of a stamp duty levy on the purchase of homes to rent out have indeed made life more costly for landlords.”

In the article Lewer suggested that increasing tax and mortgage rates is contributing to landlords choosing to sell their investments which no longer seem financially viable to keep, causing significant challenges for the UK rental market.

“Marry this to the uncertainty surrounding the government’s plans for the sector, whether in energy efficiency requirements or the ending of Section 21 repossessions, and you do not exactly have an attractive market.”

Lewer wants to see a reform which scraps the 3% stamp duty surcharge for additional homes which he believes will greatly increase the number of new privately rented homes being made available across the next decade. He also suggested an unfreezing of Local Housing Allowance and better security for future rental regulations to encourage more long term investment.