For the vast majority of landlords, letting a home is generally a satisfying and beneficial experience. There is, however, no escaping the fact that the rental sector’s been changing at a rapid pace in recent times.
Due to continued expansion of the landlord population and ever-increasing demand for rental property, the sector’s become a lot more regulated and landlords are required to carry out a higher number of checks and administration tasks to remain compliant.
Now remains as good a time as any to be a private landlord, although changes to the Private Rented Sector mean some may harbour more concerns about the future than in years gone by.
As a landlord, it's always interesting to find out what your peers are thinking and what issues are affecting them. We recently surveyed almost 4,000 landlords and here's what we found when it comes to their concerns for 2017...
Landlords’ biggest concerns
More potential changes to legislation
It may come as no surprise that the potential for more changes in legislation clocked in as the biggest concern of the landlords we surveyed – cited by 31% of respondents. As much as the actual content of new legislation introduced in recent years, it’s likely to be the unexpected nature and sheer volume of new policies introduced that’s leaving landlords concerned about what lies ahead.
Certain policies, like the ban on upfront letting agent fees charged to tenants and the 3% stamp duty surcharge, may have caught some landlords by surprise and left them feeling unprepared.
According to the Association of Residential Letting Agents, landlords are now required to comply with over 100 pieces of legislation. With this in mind, it's understandable that the prospect of more red tape and administration is a daunting one for almost a third of the landlords we spoke to.
Restrictions of buy-to-let mortgage lending and interest tax relief
These two issues – which have implications for landlords’ finances - are closely linked and were cited as a concern by 29% of participants. The restriction of buy-to-let mortgage interest tax relief could have a significant impact on annual returns for higher tax rate paying landlords, while the buy-to-let lending restrictions could make it harder for some investors to expand their portfolios.
Over half of the landlords we spoke to currently have a buy-to-let mortgage and so both these issues are of crucial importance. We recently put together some pointers on how to prepare for the changes to mortgage interest tax relief, which you can read here.
Potential implications of Brexit
We recently found out that Prime Minister Theresa May will trigger Article 50 on March 29, an act which will formally mark the beginning of the UK's negotiations to leave the European Union. Some 19% of landlords taking part in our survey said they consider the implications of Brexit to be a concern and as the process moves closer, this figure could increase.
Landlords' concerns regarding Brexit are likely to revolve around demand and supply of rental properties. It's likely that a higher proportion of London landlords are worried about Brexit as a large section of the capital's tenant population is made up by EU migrants - with many people feeling that EU citizens may be less inclined, or able, to come and live in the UK post-Brexit.
House price values
House prices and average property values are of continual interest to those working and investing in the UK property market. It may come as a slight surprise that 14% of landlords we surveyed said they’re concerned about house prices in 2017. However, while landlords may be most concerned with rental values, house prices are still important when it comes to capital appreciation and the overall value of a property portfolio.
Most predictions and forecasts for 2017 suggest that average house prices will continue to grow this year, but perhaps at a slightly slower pace than we've seen over the last few years.
As far as up to the minute data goes, Rightmove recently reported that average asking prices increased by 1.3% between February and March. However, the portal says that annual asking price growth is currently only at 2.3% - a third of the level witnessed this time last year.
Tenants who don’t pay rent regularly and on time can pose one of the biggest headaches for landlords – considering so many have buy-to-let mortgage payments to make each month.
Some 52% of the landlords we surveyed said they’d dealt with a problem tenant. The most common issue that these landlords had was late payment or non-payment of rent, cited by 68% of respondents.
Rent arrears will always be a concern for landlords as it's not something that can easily be controlled. There are, however, certain steps landlords can take to minimise their chances of being affected by rent arrears. One of the most effective is comprehensive tenant referencing.
Other issues affecting landlords
The landlords we spoke to also indicated several other issues which they consider to be concerning, although not in the same numbers to the topics outlined above. The proposed ban on upfront fees charged to tenants was cited as a concern by 12%, while the Renters' Rights Bill - which also incorporates the fee ban - was indicated as a concern by 9.5% of respondents.
Right to Rent checks were raised as a concern by 4.4% of landlords, while 4.7% of those taking part said they were concerned about 'other' issues.
Interestingly, some 34% of the landlords we spoke to said they currently have no immediate concerns as a landlord.
Concerns for 2018 and beyond
It may seem too early to be talking about 2018, but there are already issues on the horizon that landlords need to be thinking about...
The Minimum Energy Efficiency Standards regulations come into full force from next year. These require landlords to make sure their rental properties have an Energy Performance Certificate rating of at least E-.
Meanwhile, some landlords will continue to have concerns over the 3% stamp duty surcharge as it leaves them with additional costs to find, if they want to expand their rental portfolio.
More longer term landlord worries may include the impact of the fledgling, but rapidly expanding, Build to Rent and short-term lets sectors - both of which are alternatives to the traditional letting model and could have an effect on the average buy-to-let landlord.