With residential lettings becoming more regulated, landlords are leaving the sector and constrained supply is leading to higher rents. This Spring, we will see further key pieces of legislation that will affect the private rental sector.
The legislative changes include:
1. Extension of the Homes (Fitness for Human Habitation) Act
The original Act - which meant landlords can be forced to carry out improvement works to properties - is being extended to include existing statutory periodic tenancies, i.e. those that are running on with the original term having expired.
2. Minimum Energy Efficiency Standards
From April 1, all existing tenancies must have an EPC rating of E or better so houses currently let with a lower rating should not be. Landlords will be expected to pay up to £3,500 towards energy efficiency improvement works and if works cost more landlords can apply for an exemption.
3. Capital Gains Tax changes
Until now, CGT has not been payable on all profits made by selling let property if the owner once lived in the home themselves. From April this is scrapped and, in addition to private residence relief for the period of occupation, landlords will only be able to claim additional letting reliefs if they share the property with their tenant.
4. Extension of the Tenant Fees Act
Letting agents have, since last June, only been able to charge tenants rents, deposits, holding deposits and charges for defaulting on contracts - but this has, until now, applied only to new tenants. From June, it applies to all existing tenancies. In addition, deposits are capped at five weeks rent’ if the annual rent is below £50,000 and, where Landlords have taken more, tenants can claim any excess back and allowing pets makes no difference!
More changes are on the way with the Government having pledged to give tenants greater security for example. Further safeguards may be welcomed but the cumulative impact of these changes could lead to less homes available to rent resulting in higher rents and pressure on local authorities to deliver more housing. Higher rents could however encourage landlords to stay in the sector but lead to financial pressures for tenants. Time will tell but the Government need to monitor the implications of these changes carefully.
Killens provide a comprehensive property letting service and can be contacted on 01749 671172 or 01275 333993.