2022 has brought bright predictions for the rental market. Many people have returned to offices for work, while many others are still working, full time or part-time from home. Educational institutions are open, thus increasing the demand for student rentals. The retail property sector is also recovering, with more leisure spending expected. Hence, the demand for both commercial and residential properties is high. However, the flexibility in working schedules has brought the need for more systematically organised workplaces, either in the offices or at home, with improved security technology. As the Sheffield Estate Agents can clarify, there are many facts a landlord needs to know before renting a property this year.
The following are 5 of the top issues that landlords need to be aware of and understand:
Deposits and Eviction Notices:
During the pandemic, eviction reforms were made, some of which have now reverted to pre-pandemic times. It is important for a landlord to be aware of the normal eviction period, or the ones where there are rent arrears or anti-social behaviour etc. Also, rental security deposits as against lifetime deposits need to be checked out. The rogue landlord database is available to the public. Landlords should keep themselves aware of any updates to the Renters’ Reform Bill.
Taxes and tax relief:
Tax returns should be filed in time, to avoid paying the penalty – by 31 October 2022 if submitting a hard copy or by 31 January 2023 if filing online. If you make an advance payment, there may be a deadline for the second payment. This should be clarified. On the positive side, landlords are now allowed longer time to pay the capital gains tax in the event of selling a property. The time limit has been extended to 60 days instead of the previous 30 days. Also, tax relief in terms of mortgage interest payments can be claimed. These and other tax reforms need to be looked into.
Energy efficiency rules:
A major factor landlords should be aware of are the upgrades on the energy efficiency regulations and whether any funding can be made available. Every property needs an EPC (Energy performance certificate) and for existing and new lets, a minimum of Band C energy efficiency needs to be met. There is a timeframe (2026 for new lets and 2028 for existing properties) for landlords to implement the changes required to reduce energy disbursement. At present, a cap of GBP 10000 has been allowed to be spent on such requirements.
Landlords must now install carbon monoxide detectors for better protection of tenants. These detectors should be placed where there are existing or new appliances, such as gas fires or boilers. It is the landlord’s responsibility to fix or replace faulty alarm systems.
Mortgages including “green” ones:
Buy-to-let mortgage rates may increase leading to higher mortgage prices. However, in line with saving energy, many lenders are offering “green mortgage” deals with lower rates to landlords who invest in energy efficient properties. Also, some banks are offering additional borrowing facilities at reduced rates to landlords to enable them to carry out such supportable improvements.
Local licensing schemes:
These schemes are sometimes confusing for landlords, so it is wise to check with the local council and clarify the rules, fees, documents required and penalties that apply. Selective licensing allows councils to insist that landlords have a licence for every rented property. Mandatory and additional landlord licensing apply to landlords who rent HMOs (Houses in Multiple Occupation). Some councils require landlords in an area to acquire a licence before renting a property, while some landlords with other types of property are required to obtain licences in certain areas.
There are many issues that a landlord needs to be aware of, besides the 5 main ones listed above. Additional outdoor space is a priority and as one authority put it, “Outdoor spaces are a tenant must-have for 2022”. Of course, an open space for a garden or recreation would be amazing. However, even a small outdoor space such as a balcony with outdoor lighting and heating could make it attractive. New rules for tenants with pets need to be studied. Officially, pets cannot be banned by landlords. However, if the tenant requests permission for a pet, the landlord can respond with a written refusal if he can give a logical reason for the same. With the demand far beyond the supply, it is a good time for the rental market. Once a landlord is fully aware of the risks and requirements involved, it is definitely beneficial to become one or to expand the already existing investment!