Another eventful month in the world of the private rented sector (PRS), with a long promised government Housing White Paper published in early February – see our lead article in this issue – not that it brings much that is really beneficial for buy-to-let landlords, apart from underlining existing challenges.
The government is to continue its efforts to bring up safety standards in the private rented sector, and to drive out rogue landlords. The measures introduced in the Housing and Planning Act 2016 will soon bring in banning orders to remove the worst landlords or agents from operating, and enable local councils to issue, in effect, on-the-spot fines, as well as prosecute. But the effectiveness of these measures still depends on someone taking action; councils don’t have a great track record when it comes to sorting out bad landlords.
On that point, shame on Cardiff City Council for releasing private details of hundreds of landlords who were going through the process but were not yet fully registered on the “Rent Smart Wales” scheme. Their details were release in a mass an e-mailing message sent out by an administrator.
Rent Smart Wales is a Wales-wide scheme aimed at registering all landlords and agents in Wales in an attempt to raise standards of renting. One of the main arguments against landlord registration is that private landlords’ personal details would be available to all. Cardiff City Council commenting on the serious breach of confidentiality and data protection rules said: “Rent Smart Wales and the City of Cardiff Council take data protection seriously. The matter is currently being investigated in line with the council’s data protection policies.” Full story here
The new energy efficiency regulations setting out minimum energy efficiency standards (MEES) for England and Wales will apply to buy-to-lets from April next year (2018), meaning a property cannot be let with an EPC rating below E.
There are plans to extend mandatory licensing of Houses in Multiple Occupation from the current 5 unrelated occupiers over 3 stories, to all HMOs, namely smaller shared houses, and there are also ongoing consultations regarding the introduction of mandatory electrical safety checks for rented properties, banning letting fees for tenants and mandatory client money protection for letting agents.
So there’s plenty to think about on top of all the other new regulations that came in for Section 21 and other regulations over the last 18 months or so.
What I find so disappointing about the White Paper is the seeming lack of support and recognition for the smaller buy-to-let landlord, the backbone of the UK’s private rented sector. The government appears to be pinning its hopes on institutional investment (build-to-rent) to help fill the gap in housing supply, but so far previous initiatives on this have been slow to take off.
Landlords are still reeling from the prospect of higher taxes, chiefly the removal of mortgage interest relief, which commences on a sliding scale over 4 years from the current tax year 2017-2018. But sadly there is no indication yet from government that there will be a re-think on this “landlord tax” introduced by the previous Chancellor, though with the budget coming next month – we live in hopes.
A recent report: “The impact of recent tax changes on the private rented sector” By David Miles, Professor of Financial Economics at Imperial College London, is scathing on the tax, concluding that: “It is hard to see any rationale for the tax changes announced in 2015. Evidence from Paragon suggests those changes are beginning to have a dampening effect on the supply of private rented property. They should be abandoned.” Access the report here
The Residential Landlords’ Association (RLA) is organising a final drive, a pre-budget campaign to get Mortgage Interest Relief (MIR) restored for buy-to-let landlords – #FightingMIRChanges
The RLA are urging all landlords to contact their own MP to point out to them the consequences to both tenants and landlords of the imposition of this “unfair and unprecedented tax”. As a landlord your voice can make a difference, which is why the RLA think you should speak to your MP about how you will be affected by the changes. Contact your MP here
Tom Entwistle, Editor