Keeping up with the latest news for landlords is tricky for expats, so here’s this week’s pick of important tax updates, legal changes and property news for investors letting out homes in the UK.
This week, two important law changes affecting landlords and letting agents that start within weeks are flagged, together with an insight about how some investors are looking to cut costs to counter tax hikes.
Letting agents must protect client money
Letting agents have until April 1 to set up client money protection to safeguard cash they hold for landlords and tenants.
Too many letting agents have closed owing tens of thousands of pounds collected as rents or deposits in recent years, leaving landlords unable to recover the money.
Letting agent client money protection demands agents in England join a government approved scheme that pays out if they misuse the funds or close owing customers money.
“It is not acceptable that some tenants and landlords are being put at risk of losing out financially, simply because their agent had not signed up to a scheme to protect their money,” said Housing Minister Heather Wheeler.
“While most agents act responsibly, this new law will prevent people from losing their hard-earned cash through no fault of their own. This will give tenants and landlords confidence and peace of mind that their money is in safe hands whilst with their agent.”
New law sets living standards
All private rented homes must meet a basic living standard and must maintain that level throughout a tenancy when new regulations start on April 1.
The Homes (Fitness for Human Habitation) Act 2018 sets the standard and opens the way for tenants to claim compensation if they are forced to live in poor conditions.
“There are no new obligations for landlords under this act. The legislation requires landlords to ensure that they are meeting their existing responsibilities with regards to property standards and safety,” said a government housing spokesman.
Landlords slash spending on properties
Buy to let investors are targeting spending cuts to keep their property businesses profitable as tax hikes start to bite.
Nearly half (46%) are looking at carrying out less maintenance and fewer repairs on their rental homes, while another 38% are shelving improvements or looking for cheaper ways to do the work.
Refinancing mortgages (29%) and finding less expensive letting agents (24%) are the other main expenses under review, according to a study by buy to let lender Kent Reliance.
But the bank is warning of another expense shock in June, when new laws banning letting agents from taking fees from tenants comes into force.
“Rather than see revenues fall, many letting agents may pass the costs onto landlords, who, in turn, will seek to recover their higher outlay from tenants in the form of higher rents, where demand allows,” says the report.
“It’s unlikely to make renting more affordable, simply turning an upfront cost into a higher ongoing monthly cost for many tenants.”
“It’s unlikely to make renting more affordable, simply turning an upfront cost into a higher ongoing monthly cost for many tenants.”
It’s not meant to make renting more affordable. It’s to stop agents from getting tenants to clip their ticket when it is the landlord getting the service from a letting agent.