Why the Government Must Stop Scapegoating the Landlords?
Why the Government Must Stop Scapegoating the Landlords:
Regulations and Landlords
The government introduced the Tenant Fee Ban this month.
This came after so much fanfare from the government.
Nevertheless, there are other regulations and policy changes.
These changes will influence the landlord market as the year goes on.
The Tenant Fee Ban is just one of the several restrictive government policies.
Other policies are HMO requirements and tax changes. Furthermore, the government announced plans to ban ‘no-fault evictions’. Undoubtedly, the ban would have an effect on the landlord market. The effect will be sustained and significant.
From indications, the government tends to forget who the landlords are. These homeowners are usually ordinary and well-informed investors. Also, they are hardworking individuals. Most of them saved to purchase an extra property to make more money.
Recently, the Institute of Economic Affairs (IEA) released a related report. The report criticised the approach of the Government. It noted that the government discriminated landlords for the rental housing crisis.
Basically, the government is reducing the profit margin of the landlords. Therefore, it forces many of them to leave the market. In general, the government will begin to sabotage the rental sector in the UK.
Factually, there is a growth in the rental market. Notably, the landlords are doing their parts by offering vital property stock. But the government is establishing more restrictive rules. Resultantly, it is becoming more difficult for landlords to make profits. However, the government should rather help and motivate the sector.
Currently, it is very essential to make appropriate plans. This prevents practical, legal, and financial effects of any new and upcoming rules. Therefore, as an investor, what are your plans? In other words, how do you protect your assets from the new regulations?
Generally, Tenant Fee Ban has lots of implications. Foremost, landlords or agents can only charge their tenants for a few fees. These fees are rent, default fees, and dilapidation deposits. Moreover, the deposit limit is now 5 weeks. Notably, it used to 6 weeks. However, these are not the biggest problem for homeowners. The biggest problem is that agents cannot collect fees for tasks such as reference checks.
Bad renters can make landlords lose their profits through owing rent or damaging property. So, it is important for agents to make them pay for reference checks and a rent guarantee. These payments will protect all parties involved in the deal. As an alternative, landlords should only hire a trustworthy agent. Such an agent will execute these tasks appropriately. The agent will likely ensure this by utilizing deposit replacement schemes.
Changes in the HMO licenses
HMO licenses also experienced another important change. Traditionally, HMO license is needed where five or more individuals stay above three floors but are of different families. There is a wide range of penalties for non-compliance. The penalties include unlimited fines and a criminal record. Also, the person may not be allowed to act as a landlord in the future.
Nonetheless, many do not understand the differences in the HMO regulations. Primarily, different boroughs can have different HMO rules. Similarly, enforcement of the laws is getting stricter in many councils. This is due to the profits they now make from the fines. For instance, Camden in London has some of the strictest rules. Firstly, if three unrelated individuals live in a property, HMOs are needed. In addition, the council requires HMOs for apartments on a single floor.
Furthermore, the government says renters should report non-compliance. Non-compliance may require the landlord to return all rent to renters for the duration of lease. Therefore, the tenants are motivated to report non-compliance. In the last five years, 1,200 prosecutions of landlords and agents took place in the London boroughs. These prosecutions are due to HMO breaches. Hence, landlords must ensure their HMOs comply with their borough’s regulations.
The effects of the Home Act 2018
The Homes Act of 2018 became effective this March. This act is also known as ‘Fitness for Human Habitation Act’. Simply put, this act is not entirely new. It is more like a clarification of existing rules. However, the act is harsher in many aspects. The landlords now take responsibilities for 29 hazards. These include cold, heat, mould, damp, radiation, and asbestos.
Any landlords may fail to keep the standards in any of these aspects. In such a case, the renters can sue them. Nevertheless, the independent landlords are at risks in this situation. This is because it can be difficult for them to understand all these matters. Even if they understand, it may be difficult to comply. Resultantly, you should hire a trustworthy and seasoned agent or advisor. If you need help, Reneza is your best option. We offer several solutions that can help independent landlords.
Ban of No-fault evictions
Conclusively, the government revealed its plan to stop ‘no-fault evictions’. The plan involves getting rid of Section 21 notice. Currently, the government’s proposals do not have any further information. However, the plan will make things difficult for landlords. They will have difficulties with removing nightmare tenants.
It was proposed that they should rather use Section 8 notices. This requires them to justify evictions with reasons. The reasons may include non-payment of rent. However, Section 8 notices are not good enough. This is because it is time-consuming. Averagely, court hearings take about three to four months. Since the plan lacks details, this law might still be adjustable. Therefore, landlords might gain from lobbying MP’s and Parliament members.
There are improvements in rental yields. Also, buy-to-let is still profitable for lots of investors. As a consequence, do not let these legislative changes discourage you. Nevertheless, do not forget that you must be proactive. Implement essential precautions. The precautions will safeguard your rental income and property.
Furthermore, you need to be in tune with the latest information. Therefore, Reneza is here to offer you all sets of the required information. Just get in touch with us and get long-lasting solutions.