The private rental sector is growing, there's no denying that! Over the past 4 years, it has expanded enormously and now accounts for around 18% of all households in the UK. There isn't just one specific reason for this growth, rather a combination of many, for instance, the increasing number of tenants, accidental landlords and first-time-landlords. However, with growth comes development and the need for better regulation, thus resulting in the UK Government introducing a number of new law changes to improve current practice. These changes will have wide-reaching implications for the private rental sector in 2015 and landlords - both new and experienced - should be aware of these modifications to avoid facing fines or more severe penalties.
In his autumn statement, Chancellor George Osborne announced significant changes to the stamp duty system. The reforms were implemented to help buyers achieve their goal of purchasing a property by either removing completely or reducing the amount of stamp duty. Before the reforms, stamp duty was frequently referred to as a “badly-designed tax on aspiration”, but the changes should help the private rental sector grow further as private landlords will end up paying less on buy-to-let property, thus increasing the number of landlords in the market and encouraging existing property owners to expand their portfolios.
Immigration is a hot topic today, both politically and within the rental market, but it's something landlords need to be aware of in 2015. In December 2014, the government introduced a trail “right-to-rent” policy, forcing landlords with a property in Birmingham, Walsall, Sandwell, Dudley or Wolverhampton to check whether their tenants are legally allowed to live in the UK. Buy-to-let owners who fail to check could face fines of up to £3,000.
In most cases, checking a tenant's right to rent is as easy as inspecting their passport or biometric residence permit, but in some cases where tenants are waiting for paperwork, landlords will need to check through the Home Office. If the trial is successful in the areas mentioned above, the measures could be rolled out across the country.
On 21st January 2015, the Welsh Government introduced new legislation forcing landlords who own properties serviced by Welsh Water or Dee Valley Water to share certain data about their tenants with the water company. The data required includes, name, date of birth, property address, telephone and email. Landlords must share this data within 21 days of a tenant moving into the property or face becoming jointly and severally liable for any outstanding water and sewerage charges.
In an attempt to address the impact of poor quality landlords and anti-social tenants on the rental market, the government set up a selective licensing scheme. For an area to become a selective licensing district it must have low housing demand and a 'significant and persistent' problem stemming from anti-social behaviour.
Landlords who wish to purchase or who already own a buy-to-let property in a selective licensing district will require the appropriate licensing documents. Those who fail to obtain a license could face a fine of £20,000 or see the local authority take control of their property. In Wales, it is a mandatory requirement for letting agents and landlords to register in order to let and/or manage properties. Despite fears that these selective licensing schemes will deter new landlords from entering the market, many local authorities in England have already adopted the schemes.
The final change in law that landlords need to be aware of is the introduction of Universal Credit. Universal Credit is a welfare aid introduced by the UK Government to replace six means-tested benefits: Income Support, Jobseeker's Allowance, Working Tax Credit, Child Tax Credit, Housing Benefit and Employment & Support Allowance. The majority of landlords won't notice a difference as most working age tenants receive their housing benefit directly and pay their rent as required. In some cases Housing Benefit is paid straight to a landlord and in these situations, Universal Credit will continue to do so.
Even though most private landlords won't notice any difference as a result of Universal Credit, they should still be aware of the changes and make strategies for the foreseeable future. Landlords should also speak with their tenants to assess their needs and assist them with the requirements of Universal Credit.
Here at CPS Homes we're excited for the year ahead and can't wait to see the private rental sector develop. If you're a landlord who owns a property with us or a new landlord looking to put your buy-to-let property on the market, we can help you with everything from sourcing tenants, right through to explaining the complex renting regulations. Drop our team an email on firstname.lastname@example.org or give us a call on 02920 668585.