How the 2015 General Election result will affect your buy-to-let
PUBLISHED: 15:20 31 July 2015 | UPDATED: 15:20 31 July 2015
For landlords, the outcome of the election was mostly good news. Unlike Labour and the Greens’ plans to ban tenant fees and cap rents, the Conservatives were, prior to the election at least, relatively happy with the way the Private Rented Sector (PRS) worked.
Some changes made before the election are still working their way through parliament however, so there is more legislation on its way, says Greg May, Director of Romans Mortgage Services.
“Just a few months ago, all letting agents were made to join a property ombudsman scheme. Although 60% of agents were already part of such a scheme, regulation now means that both landlords and tenants can complain to an independent third party free of charge if they are unhappy with the service,” he adds.
Letting experts are expecting a national rollout of the requirement for landlords (or your agent) to carry out immigration checks on tenants, making sure they are in the country legally. This is currently being tested in the West Midlands. And by October all landlords will need to have working smoke and carbon monoxide alarms in England, and new rules are coming in which may make evicting a tenant easier if the property is being let legally and in good condition.
Greg adds: “The one rule that the final outcome is yet to be decided upon is whether or not landlords can continue to include a clause in their tenancy agreement that prevents the tenant from subletting a property. It is likely that most of the industry will be against this rule, as it could potentially cause unnecessary conflict for landlords who refuse tenants permission to sublet, especially if it is to their friends or family. “
Another potential issue for individual private landlords is the Conservative policy to attract and support large scale institutional investment sites with a minimum of 100 new build rental properties.
Institutional investment is where landlords, often using funds from major pension providers, purchase residential properties which they let for the long term. Whilst this is very normal in Europe, particularly Germany and the Netherlands, in the UK many properties let in the PRS are provided by individual buy-to-let investors. These investment sites are likely to be absorbed into the private sector as demand grows, possibly dampening demand and rental growth if such a site is near a landlord’s property.
Greg also has a word of caution for those who let home to students or other young people: “With the Conservatives planning to abolish housing benefit to those under the age of 21, landlords may be adversely impacted if they have a property which is a House in Multiple Occupation (HMO) and rent to young tenants who are funded through these benefits, and this could be the case throughout areas where unemployment is high, causing a serious blow to demand in the PRS.”
However, with the current private rental market experiencing increased nationwide demand, it is expected that over the next five years most landlords can look forward to a healthy rental market, despite increased legislation and competition, he concludes.
“Political certainty is also likely to ensure an increase in house building, as planning policies put in place prior to the election gain further traction. However, there remains a pressing need for substantially increased new build supply and a far more co-ordinated long term housing strategy for the UK.”
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