This article provides a breakdown of key Buy-To-Let regulations and considerations that landlords need to keep in mind over the coming months, especially while navigating changes in the market.
As a landlord or BTL investor, it’s crucial to be prepared for changes in the rental market – including new policies. While landlords hope to see interest rates drop in the near future, its well-known that evaluating existing costs will help investors maximise their investment potential.
The Renters’ (Reform) Bill:
On 17 May 2023, delivered to Parliament was the government’s 2019 manifesto commitment to abolish Section 21 ‘no fault’ evictions which will entitle renters to challenge inattentive landlords without fear of losing their home.
An end to fixed-term tenancies and a move to periodic tenancies; limits on security deposits; new safety requirements; and energy efficiency ratings (EPCs) are a few of many policy changes landlords should familiarise themselves with.
How do these changes affect BTL owners?
The end of no-fault evictions will mean landlords now need clear reason to evict unwanted tenants. The aim of this is to protect tenants from unwarranted evictions, while maintaining the strength of landlords’ other rights of possession.
What additional costs should I be aware of?
It may seem like overkill to perform a seemingly unending list of required certifications, but it’s a must! Not only from a compliance point of view, but an investment one too. Obtaining certification is also inexpensive to carry out and will give you longer term peace of mind.
Even though an initial capital injection may be required, the suggested rectifications are likely to reduce your risk of accidental damage, energy wastage, and tenant complaints. It’s become standard practice for any forward-thinking property owner to build these certifications and improvements into their investment.
Certifications such as:
- Energy Performance Certificates (EPCs)
- Checks on Insulation; Single-glazed windows, heating & hot water systems.
- Portable Appliance Testing (PAT)
- Damage checks such as cracks, tears, or exposed wires, plus polarity testing.
- Gas Safety Certificates
- Pressure and leak testing, along with combustion analysis.
- Boiler replacement provisions, where necessary
- Faults, Corrosion and Hard Water checks.
- Fire Risk Assessment
- Inspecting alarms, sprinkler systems, potential hazards, extinguishers, and exits.
- Asbestos Survey
- Usually found in tiling, flooring, piping, and insulation.
- Electrical Installation Condition Report (EICR)
- Checking electrical wiring, sockets, switches, and other electrical components for damage, wear and tear, and other potential hazards.
What will this cost me, though?
As mentioned, the certification are inexpensive. You’ll be able to complete the listed ones for approximately £600 in total – depending on the size and location of the property.
Once all checks have been completed, you’ll be able to make a more informed decision on the work that needs doing. And depending on the level of investment needed, you can use a bridging loan to finance the improvements before refinancing to a longer-term mortgage – which will also be far quicker than going the route of a more traditional loan.
Having this mindset will not only provide peace of mind, but it’ll attract better tenants who will show greater appreciation for the rental unit. To add to that peace-of-mind, Provide Finance will always analyse ways to reduce these costs to landlord investors.
Should I evaluate my current tenant selection?
In short, yes.
With more stringent eviction policies, landlords may face challenges in removing problem tenants, potentially affecting rental income. Moreover, landlords must prioritise thorough tenant screening processes to reduce the risk of problematic tenants.
Establishing clear lines of communication and proactive conflict resolution measures will be crucial to maintain positive landlord-tenant relationships and prevent potential disputes.
Additional Considerations
Landlords must also stay aware of deadlines for renewing licenses, ‘Making Tax Digital’ returns, and complying with safety regulations to avoid penalties.
Likewise, landlords should assess their rental rates to ensure they remain competitive and reflective of the changing market conditions.
Key Takeaways
While waiting for interest rates to drop, landlords must proactively adapt to the changing rental market to protect existing investment, and equally so, take advantages of opportunities where others are fearful.
Staying informed, proactive, and adaptable will be key to achieving success as a landlord in the years to come.
At Provide Finance, we are committed to staying on the pulse of ongoing changes in the rental market, and we believe in empowering our buy-to-let investors with the critical information they need to make informed decisions.
We simplify the process of accessing specialist financing, so that maximising your investment returns doesn’t have to be complicated.
Together, we go far!