More landlords selling up as buy-to-let regulation increases
More landlords are expected to sell one or more of their rental properties in the coming months, after an increase in buy-to-let regulations has left many feeling overwhelmed.
Landlords have been through a number of big changes in recent years that have seriously impacted the profitability of buy-to-let property. For many, these new regulatory changes are causing them to question their future in property.
Changes impacting buy-to-let investors:
Making tax digital
From the start of April, all VAT-registered landlords will be required to do their tax and VAT returns digitally. Businesses with a turnover of £85,000-plus are already required to do this, but the rules will now apply to businesses with a smaller turnover. This will have a big impact on investors with fewer properties who have voiced concern about the amount of extra work it will create for them and the financial impact of having to record their costs and profits quarterly rather than being able to spread it across a whole year.
Renting Home (Wales) Act 2016
From July there will be some big changes to the Welsh rental system. The notice period for ‘no fault’ evictions will now be six months and they will not be permitted in the first six months of a tenancy. Landlords will also be required to meet certain obligations in order to be able to serve a ‘no fault’ eviction.
Other considerations:
Rising inflation
Rising inflation is having a big impact on business owners around the country, and that includes buy-to-let landlords. For those who are already feeling the pinch, a further rise in inflation could impact the viability of their rental portfolio.
Removal of Section 21
The government has vowed to abolish Section 21 ‘no fault’ evictions as part of a White Paper due out later this year.
Potential of further regulation and higher council tax for short-term lets
It has been speculated that the government will impose further regulation and higher council tax rates on short-term lets in an attempt to discourage existing rental properties being converted to short-term holiday lets, which are often more profitable for buy-to-let investors.
Expected changes to energy efficiency ratings
To help the government meet it’s 2050 ‘net zero’ emissions target, many are expecting the minimum energy efficiency rating for rental properties to rise to a ‘C’ by 2030. This would have a big financial impact on a huge number of landlords.
No blanket pet bans allowed
Landlords are no longer allowed to have blanket bans on pets in their properties. If a landlord doesn’t want pets in their property, they must now send their tenants a written objection within 28 days of a request from the tenant and must provide a good reason for the objection.
Danny Luke from property company Quick Move Now said: “Landlords have had to deal with several big changes over the last five years and, not surprisingly, we are now seeing the impact of these changes in the number of landlords looking to offload less profitable properties.
“The media has widely reported a worrying shortage of rental properties. Unfortunately, if conditions continue to get more challenging and less profitable for landlords with small portfolios, I think we can expect to see more buy-to-let investors selling up and rising rents as a result.”