Fran Mulhall of GFW Letting, urban property rental specialists based in Newcastle upon Tyne, discusses the 2015 UK lettings market landscape and changes that will impact landlords.
As the first month of 2015 draws to an end, the UK rental market will have grown by at least five per cent. Recent statistics show that for every one rental property out there, at least five tenants are chasing it. As the lettings market grows, increasingly complicated regulation increases also, putting greater demands on both letting agencies and landlords.
2015 will see a big change for letting agencies. Up until recently, letting agents needed no formal training or experience in order to practice. Since October last year however, all letting agents, by law, must sign up to a redress scheme. This provides greater protection to both landlords and tenants giving them an avenue to seek redress should the company’s internal complaints procedure not satisfy their complaint. For the lettings market, it will hopefully drive out the unscrupulous traders who give genuine agents a bad name and importantly raise the standards of service provided by agencies, creating better working relationships between agencies and landlords.
In other legislation, The Immigration Act 2014 introduced a requirement for landlords to conduct checks to ensure that new tenants have the right to rent in the UK. This is set to become mandatory in the first half of this year meaning landlords must check a tenant’s immigration status or face a hefty fine, creating more red tape for landlords and letting agents. Add to this the removal of the six month council tax exemption periods for landlords with unoccupied residential properties, which is increasingly forcing landlords to negotiate on asking rent in order to secure a quicker let so that they save the cost of paying council tax during void periods, it’s not surprising that the private lettings market may seem like a minefield of bureaucracy to landlords.
We also need to consider political influences such as the impact of the next general election later in the year. If Labour succeed, the new government would look to create longer tenancy terms, abolish tenant fees and bring in a national register of landlords. Their pro tenant stance will inevitably impact landlords who would likely see their fees rise to overcome the shortfall created by the lack of tenant fees.
It’s also important to point out that Interest rates are likely to increase in early 2015. This would push up rates on buy-to-let tracker mortgages for landlords which may mean the rent they charge no longer covers the repayments thus giving landlords no choice but to increase their rent level.
For the next couple of years at least, ‘Generation Rent’ is here to stay. This is why it’s vital that investor landlords use property agents that provide an effective and genuine service and actively seek to let out properties to good quality tenants quickly and efficiently. Legislation, political agendas, the tax environment and insecure interest rates are just some of the things that can be very confusing and disheartening for landlords.
Indeed, a recent UK Landlord Tax survey found that 67 per cent of landlords are feeling the strain. The role of the letting agent is even more pivotal than before – we need to guide, advise and support landlords as part of our offering and provide a quality, transparent service. Anything less will only serve to create a black hole of misunderstanding and mistrust in an already complex market.
For more information about the points raised in this discussion, please visit: www.gfwletting.co.uk