As we near the end of Quarter 3, it’s time to have a look back at the main stories and issues to emerge in the lettings world in July, August and September.
July kicked off with the first Budget for a majority Conservative Government since 1996. And Chancellor George Osborne pricked up the ears of landlords and letting agents across the country by announcing a number of tax changes which may affect buy-to-let homebuyers.
The key change is that mortgage interest tax relief for buy-to-let landlords will be cut to the basic rate of income tax (currently 20%) from 2020. We had a closer look at all the budget changes at the time, which you can read here.
This wasn’t the only property-related measure in the Budget. There was an immediate backlash from some quarters, with agents Savills and Hunters both criticising the move, arguing that the buy-to-let sector would be adversely affected and new landlords would be put off from entering the market.
The debate continued in July, with the Institute for Fiscal Studies slamming Osborne’s buy-to-let measures and analysis from Datamonitor warning that the BTL mortgage sector had been badly damaged by the Chancellor’s move.
Opposition to the tax changes took on new meaning in August when a petition – which has now reached over 30,000 signatures – was started to reverse the planned cuts to tax relief.
July also saw the announcement of a new licensing system in Wales – Rent Smart Wales – which will require every landlord to undergo training to prove they are 'fit and proper' to hold a license. A day later it was revealed that letting agents will also have to be licensed and must also undergo (as yet unidentified) training. We've also written on this in more detail, which you can find here.
August was dominated by stories focusing on The Smoke and Carbon Monoxide Alarm (England) Regulations 2015, which came into play on October 1. Early in the month roughly 445,000 smoke alarms and 40,000 carbon monoxide alarms were issued to the 46 fire and rescue authorities in England in a bid to encourage agents and landlords to meet their safety obligations ahead of the deadline.
Nonetheless, towards the end of August it became apparent that the majority of landlords, according to a poll of tenants carried out by AXA Business Insurance, had yet to arrange a carbon monoxide alarm to be fitted in their rental property.
However, a group of estate agents in St Albans did team up with the local fire and rescue service on a scheme named 'Move Safely', in response to the forthcoming legislation surrounding smoke detectors and carbon monoxide alarms.
Perhaps the most bizarre story of the month involved a pig … During a routine inspection of a rental property in Lincolnshire, a 50-stone pig was discovered, much to the surprise and shock of the letting agent and landlord carrying out the visit. The porker had caused £7,500 of damage, with the property requiring new flooring, new turf in the garden, repairs to the patio and (unsurprisingly) a deep clean!
October 1 wasn’t just the deadline for the new smoke alarm regulations; it was also the day that changes to the Section 21 law were implemented. The regulations mean new obligations for landlords on the specific information they provide to tenants. Furthermore, it outlines the restrictions which will apply on the use of the Section 21 notice no fault possession procedure if they fail to do so.
The deadline was called into question, however, when the Residential Landlords Association voiced concerns about a possible error in the published version of the Section 21 form. The NLA also called the implementation process 'shoddy' and 'plain farcical'.
Despite this, the Government has since confirmed that the new regulations will come into force on the pre-arranged date. Amendments have been made to the wording of the legislation and a new Section 21 form has been circulated for last minute comments from the industry and consumer bodies.
As a result, landlords or letting agents will now have to provide tenants with an Energy Performance Certificate (EPC), an annual Gas Safety Certificate and a copy of the Government’s 'How to Rent' guide. If this doesn’t happen, landlords or letting agents are now unable to serve a section 21 eviction notice.
Right to Rent – the Government’s plans to require landlords or letting agents to check on the immigration status of their tenants or face a hefty fine – also featured heavily in September. Carter Jonas, a large letting agency, has argued that politicians should defer the legislation until 2016 after a summer of confusion over what exactly the new regulations mean.
With no firm date for a nationwide rollout, we should expect the conversation to continue for some time.