The new year brings with it a huge amount of opportunity for new landlords.
But it also means a whole raft of new legislation they must comply with.
So, if you’re thinking of investing in property for the first time this year, what can you expect?
The Renters Reform Bill: What it will mean for landlords
The Renters Reform Bill has actually been on the agenda for some time, first coming to the attention of landlords during the Queen’s Speech in December 2019.
However, the Bill’s pathway through parliament to become law was delayed by the coronavirus pandemic.
It’s likely the Bill will be heard this year, however, with two major changes likely to impact UK landlords.
The end of section 21
Currently, landlords can regain possession of their rental properties at the end of a fixed term tenancy agreement or during a periodic tenancy.
Those ‘no fault’ evictions, however, will no longer be available to landlords if and when the Renters Reform Bill becomes law.
The Bill will see the removal of section 21 of the Housing Act 1988, which allows landlords to take back their properties without a specific reason for doing so.
Instead, landlords will need to regain possession of their properties through the court system and a revised section 8 of the Act, which requires a specific reason for the eviction. The proposals for section 8 would see an improved court process and enable landlords to get their properties back quicker.
The introduction of lifetime deposits
Under current rules, tenants must provide a new deposit for each tenancy they take on – often having to stump up a large sum of money while waiting for their previous deposit to be returned.
Under the Renters Reform Bill, a tenant’s deposit would travel with them from tenancy to tenancy, meaning they no longer have to save for a new deposit when moving home. It remains unclear how landlords will lodge those deposits with one of three tenancy deposit protection schemes, however – something they must do within 30 days of a tenancy beginning.
Electrical safety regulations
Mandatory electrical safety certificates have been in place for landlords renting out Houses in Multiple Occupation (HMOs) for some time.
And since July 1, 2020, Electrical Installation Condition Reports (EICRs) have been a legal requirement for all new tenancies starting after that date.
Landlords must provide a copy of their property’s EICR to tenants within 28 days of it being carried out. From April 1, 2021, all tenancies in England will require a valid EICR regardless of when they started.
The stamp duty holiday deadline
If you’re looking to invest for the first time in 2021, the time to do so really is now if you want to make substantial savings through the current stamp duty ‘holiday’.
Currently, all buyers in England pay no stamp duty on the first £500,000 of a property’s purchase price.
And although landlords still have to pay a 3% additional property surcharge, savings of up to £15,000 are up for grabs if you can buy and complete your purchase before the March 31 deadline.
From April 1, the stamp duty exemption figure will revert to £125,000, plus the 3% surcharge on top for landlords.
Eviction rules during coronavirus
All eviction proceedings were paused as part of the spring 2020 coronavirus lockdown and landlords were only allowed to legally regain possession of their properties again from September. Since that date, the standard two-month notice period landlords must provide under a section 21 eviction has increased to six months, although shorter notice periods can be given if a tenant is in serious rent arrears or there are issues with anti-social behaviour or domestic abuse.
With the UK’s third lockdown under way, evictions have once again been banned, this time until February 21, 2021.
Changes to Right to Rent
As well as coronavirus, the other major dose of uncertainty to hit the property market in recent years was, of course, Brexit.
And while the UK’s exit from the European Union is now finally complete, there are still some unanswered questions for landlords.
One of those is around Right to Rent checks, where landlords are required to check the immigration status of tenants from overseas.
As part of Brexit, the UK is now operating a points-based immigration process, and this is certain to change the requirements of Right to Rent as we move through 2021.
For now, though, current landlords will need to keep checking passport and national identity card documentation when renting to foreign tenants.
What is a private landlord?
A private landlord is a property investor who chooses to rent out that property themselves, rather than through a letting agent.
While becoming a private landlord means you won’t have to pay letting agent management fees, it also means you’re responsible for ensuring your property complies with more than 160 pieces of legislation.
That’s quite a burden and it’s easy to make mistakes that could result in the health and safety of your tenants being compromised and you facing heavy fines, or even prison.
How a letting agent could help
Making sure you’re on top of those 160 pieces of lettings legislation is a key part of being a landlord – but it’s far from easy.
By using a letting agent’s management services, you can be sure that everything is taken care of, your tenants are safe, and you won’t get caught out by any new legislation that comes into force.
When deciding whether to invest in property this year, it’s essential to have an idea of how the property market might perform. We’ve rounded up what might be in store for 2021 right here.
Finding good tenants, meanwhile, is a sure-fire way to reduce costs as a new landlord. Our guide tells you everything you need to know about how and where to find them.