2018 may now be well underway, but there are still a great deal of hurdles and reforms for buy-to-let landlords to negotiate throughout the rest of the year.
1. Energy Efficiency Changes
The measurement of energy efficiency in your property is done by an Energy Performance Certificate (EPC), currently on a scale between A and G.
However on 1 April 2018, EPC regulations are changing. The minimum rating will change to an E for both non-domestic commercial buildings and domestic residential buildings.
Initially, this will apply to all new tenancies and renewals, before being extended to all existing tenancies by 2020.
We would strongly advice any landlords to ensure you have an up to date EPC assessment carried out on any/all of your rental properties.
2. Rogue Landlords
Set to be launched in Spring, the rogue landlord and letting agents database will name and shame landlords and agents who have been banned from letting properties. The Government have promised the database will make efforts to prevent overcrowding, stamp out bad practices within the industry and improve standards for renting tenants.
Furthermore, the Government has also set out details of criminal offences which could result in convicted landlords being banned; potential landlords convicted of offences such as burglary and stalking can be added to the database of rogue landlords and be therefore barred from renting properties.
3. Ombudsman Scheme
In an additional move to raise the standards for tenants, plans are in place to make buy-to-let landlords need to sign up to a compulsory arbitration scheme, known as an ombudsman redress scheme. This follows calls for an independent method for tenants to raise issues if they are dissatisfied with their landlord.
4. New PRA rules for Portfolio Landlords
New buy-to-let mortgage rules hit portfolio begun to hit landlords from the end of September 2017. A ‘portfolio landlord’ is considered as a borrower who owns four or more distinctly buy-to-let mortgaged properties. Under the new Prudential Regulation Authority rules, if you want to make an application for a buy-to-let-mortgage on a new rental property, the lender will have to look at the whole property portfolio before deciding what mortgage deal they can offer. For example, if you have four properties generating enough rent to cover mortgage payments, but one property that isn’t, your new mortgage application may not be approved by some lenders.
Make sure you get your paperwork in order and keep your property portfolio spreadsheet up-to-date. If you are considering investing further but one of your current rental properties is under-performing, you may want to consider looking at selling the property on.
5. HMO Licensing
Landlord’s of HMO’s (House in Multiple Occupation) are expected to be targeted by the Government in a further bid to crack down on rogue landlords, with a range of tougher rules for these types of property.
At present, all large HMOs need a licence, but this could be expanded to far more HMOs if new rules are introduced to remove the three-storey minimum rule on what qualifies an HMO for the licence requirement.
This could mean that any HMO with five or more occupants will require a license regardless of the number of storeys it has. Consequentially, the number of properties needing a licence would soar from approximately 60,000 to 175,000.