Thankfully not. Well, not in the typical post-budget breakdown sense (of which there are many articles available). Here, we’re narrowing down on a specific sector of the property market – the rental market and the Renters’ Rights Bill.
By now, you’ve probably read and digested how the recently announced budget might affect you. But if you’re a landlord, are you fully up to speed with the Renters’ Rights Bill? As a Surrey lettings agent, we are. So, let’s take a quick look here.
What is the Renters’ Rights Bill?
Introduced to Parliament in September, the legislation has been designed to reform the rental market through a series of measures that aim to provide added security for tenants.
This will see the ending of no-fault evictions – something that Davies Property Partners fully supports – amongst other aspects that claim to protect tenants whilst balancing the rights of landlords.
However, as a Surrey estate agent that is responsible for helping its clients continue to successfully let their properties, it’s the issue of balance that we’re concerned about when it comes to ensuring that our clients’ own property-related businesses remain healthy.
Feeling the squeeze
We appreciate that balancing the interests of landlords and tenants isn’t an easy task. However, the issue is that the business of being a landlord has been squeezed by successive governments for some years now.
Pre-2017, being a landlord was a relatively straightforward investment vehicle amongst mortgaged property owners. Then, following measures introduced by George Osborne under a Conservative government, it became less attractive as mortgage interest could no longer be classed as tax deductible.
In today’s market, and in the wake of higher borrowing costs, if you have a buy-to-let property on a 60 per cent loan-to-value mortgage, then there’s a chance that it’s actually going to cost you money to retain its ownership rather than earn you money.
There are other elements that have impacted landlords’ profits, too. Having to demonstrate a property’s sustainability performance via Energy Performance Certificates and meeting Gas Safe standards are all important – but they all bear a cost, which the landlord is required to meet.
“If you’re a landlord, then you’re essentially running a business. Just as businesses in every sector face ongoing challenges, with rising costs typically being the main variable, landlords are finding the business of being a landlord harder to navigate. As lettings agents, it’s our job to apply and leverage our knowledge of the property lettings space in order to help landlords mitigate the impact of an ever-changing legislative landscape.”
James Dodds, Cobham Lettings Director at Davies Property Partners
As it stands
It is fair to say that the government – both Conservative and Labour – has been chipping away at a landlord’s ability to generate an income via buy-to-let property ownership for some time. Consequently, a larger number of landlords have sold up and left the buy-to-let property market altogether.
However, it’s important to note that the UK is still very much in the midst of a housing crisis. Not only that, but it’s faced with a growing population that includes people who either can’t afford to buy, or who simply choose not to out of preference. So, the question of where are people going to live if the private rental contracts is a pertinent one.
As the Renters’ Rights Bill gathers momentum, our advice is twofold. First of all, landlords that hold their nerve and stay in the buy-to-let market will reap the rewards. Why? Because a shorter supply of private rental stock is likely to push up yields in the long-term. Supply and demand always dictate market value, and the way things are going, those who hold on to buy-to-let properties are likely to succeed.
Secondly, in a marketplace that’s increasingly becoming littered with legislation, there really never has been a better time to take advantage of an estate agent’s fully managed services. After all, time spent grappling with an ever-changing legislative landscape in order to make sure that your property – or properties – remain compliant can soon add up.
Furthermore, can you afford not to lean on an expert when the consequences of falling short of a regulatory framework can have severe implications.
“There’s often a misconception that lettings agents simply find a tenant or, if a managed services deal has been agreed, ensure that a property is in good order at all times. Of course, these are fundamental aspects of being a lettings agent. However, understanding and responding to changes in legislation has become an increasingly important factor. For landlords who don’t want to carry out the legwork involved in managing this process, or who want to ensure that they remain compliant at all times, leaning on a lettings agent makes property management a much easier proposition.”
Samantha Young, Claygate Lettings Manager at Davies Property Partners
We’re the experts
Unlike the fallout of measures set out by Osborne in 2017, estate agents’ managed services fees are tax deductible, which means that they can be used to write down a landlord’s tax liability, the savings from which can be reinvested into the property.
Davies Property Partners not only offers a fully managed property service, but our recently launched home works service, in which we also project manage home improvement works, means that every aspect of property management is covered.
Those who either invest now or remain invested in the private rental sector will undoubtedly benefit as the number of buy-to-let properties entering the market continues to shrink.
However, it’s important that the entire process is managed in a way that simultaneously meets the changes coming down the line via the Renters’ Rights Bill and enables landlords to make money and run a profitable buy to let property business.
As a Surrey property expert that’s been helping landlords do that since 2002, we can certainly help.
Interested in finding out how the Renters’ Rights Bill could impact your plans?
Contact your local Davies Property Partners office to discuss how we can help you navigate current lettings legislation.
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Cobham
01932 588288 -
Claygate
01372 462323 -
Hinchley Wood
0208 3980265