2017 saw a number of changes made to regulations governing the private rented sector and a record number of government consultations held in relation to letting in the UK, meaning there is plenty for landlords to consider and act upon in the new year.
Allison Thompson, managing director at property specialist Leaders, says: “From tax relief to energy standards, there is much for landlords to factor in to their calculations for the year ahead.
“Property is still the most attractive and rewarding investment option, but staying on top of changing regulations and acting accordingly will help landlords to stay one step ahead and to realise the maximum potential of their portfolios.”
Leaders has identified five issues all landlords should be aware of and work towards in 2018:
1) Mortgage interest tax relief
Between 2017 and 2020, the amount of mortgage interest landlords can deduct from their rental income before calculating their tax liability is being reduced from 100 per cent to zero. In 2017-18, landlords can claim 75 per cent of this cost at the higher rate. It is crucial all landlords consider these changes and how they will affect profits. Taking expert advice now will pay off in the long run.
2) Minimum energy efficiency standards
From 1st April, privately rented properties must have a minimum rating of E on an Energy Performance Certificate. With very few exceptions, it will be illegal to let a home that has not achieved this and landlords could face prosecution. Taking advantage of voids and lease breaks to upgrade a property’s energy performance is a wise move.
3) Further PRA changes
The Prudential Regulation Authority (PRA) introduced new, tougher standards for landlords with four or more mortgaged properties in September 2017. These standards will aim to prevent high-risk buy-to-let lending. Landlords should create a business plan and maintain all financial records to stand the best chance of succeeding in any future mortgage applications.
4) Carbon monoxide safety
Conclusions from an ongoing government consultation into carbon monoxide safety are expected soon and could result in new requirements for landlords to take measures in this area. It is currently a landlord’s responsibility to fit a smoke alarm on every storey of a rental property and a carbon monoxide alarm in any room that contains a solid fuel burning appliance.
5) Universal Credit
The government announced changes in the Autumn Budget that will see new housing benefit claimants able to receive the benefit for an extra two weeks while transferring to Universal Credit. This is designed to reduce rent arrears at the point of moving to Universal Credit. While this should improve conditions for landlords and tenants, some are still cautious. One option for landlords is to request direct payment.
Allison adds: “It can be tough to find the time to deal with all these issues and more, but working with a knowledgeable letting agents can ease the burden and lead to ultimate peace of mind. The cost of seeking professional help will undoubtedly be significantly lower than a fine for failing to comply.”
For more information on letting a property contact your local Leaders branch.