Thankfully, November’s Autumn Budget didn’t come with a nasty sting in the tail for landlords. But as we head into 2018, is there anything that should be on your radar?
The good news is that you can expect a strong start to 2018 given the market is largely stable.
In the third quarter of 2017, there was a stronger demand from landlords for buy-to-let
mortgages, up one per cent from the previous year. Confidence amongst mortgage lenders has also reached its highest level since 2015, according to the Financial Advisers Confidence Tracking (FACT) Index report.
What the Autumn Budget 2017 means for landlords
A guide to Self Assessment tax returns for landlords
Further detail on the tenancy fees ban
Do I need landlord insurance?
Below, we’ve compiled a list of predictions for what 2018 has in store. From energy efficiency standards to reform to encourage longer-term tenancies, these are the things you need to know about.
1. Energy efficiency will be high on the agenda
From 1 April 2018, all new tenancies will need to meet the Minimum Energy Efficiency Standard (MEES). It will be against the law to let a property with a lower Energy Performance Certificate (EPC) rating than an E. This will apply to all existing tenancies from April 2020.
Landlords with F and G rated rental properties need to take urgent action before April 2018. But with energy efficiency set to be high on the agenda from 2018 onwards, all landlords could consider how to make cost-effective energy improvements wherever possible.
2. Reform to encourage longer-term tenancies
In the Autumn Budget, Chancellor Philip Hammond announced a consultation on incentives for landlords who offer longer-term tenancies.
With some calling for tax relief for landlords prepared to offer longer tenancies, expect to hear similar suggestions for reform.
3. Rent-a-room reform
In another Autumn Budget announcement, the government called for evidence on how the rent-a-room tax relief could be better used to target long-term lettings.
Homeowners can currently earn up to £7,500 for renting out a room in their house before having to pay tax on the income. Expect to see a redesign of this relief in 2018.
4. Rent payments included in a tenant’s credit report
The Rent Recognition Challenge is a government challenge to technology firms to create tools that will help record rental payments on someone’s credit history. It opens in January 2018 and development on promising proposals will run until October 2018.
The government believes that having rental payments recorded on a credit report will help people when applying for a mortgage. It should also benefit landlords, who will be able to see whether a tenant has been reliable with rent payments. With this challenge running throughout the year, expect to see the technology arise sooner rather than later.
5. Some landlords will stop using letting agents
There is no date for when the tenancy fees ban will begin, but with a draft bill published on 1 November 2017, it shouldn’t be long before it comes into force. According to research from Paragon, almost one third of landlords may stop using letting agents if the ban goes ahead.
6. The rogue landlord database will go live
The rogue landlord and letting agent database is expected in April 2018. It was originally expected in October 2017 after being announced in 2016 but it has so far failed to materialise.
Some criticism has been levelled at the proposed database, as it will only be available to local and central government. The list will include those with criminal convictions and those who have been issued with banning orders for a range of offences.
7. The number of HMOs that need a license will skyrocket
In another effort to target rogue landlords, the government is expected to introduce tougher rules on houses in multiple occupation (HMOs). All large HMOs need a licence, but new rules are expected which remove the three-storey minimum rule currently in place.
This could mean that HMOs of five or more people and are just one or two storeys will need a licence (figures suggest the number of properties that will need a licence under the new regime will skyrocket from 60,000 to 175,000).
8. Streamlined dispute resolution
Sajid Javid, the Communities secretary, has announced plans to make it a legal requirement for landlords to belong to an ombudsman redress scheme.
Javid wants to create a single Housing Ombudsman to replace the four systems that currently operate. This would be beneficial for landlords upholding their contractual rights, as it should improve dispute resolution with tenants.
9. A further taper in mortgage interest tax relief
Under Section 24 of the Finance Act, there’s a gradual tapering down in the tax relief that allows landlords to offset the cost of mortgage interest payments against their rental income before they pay tax. In April 2018, this tapers to 50 per cent (then to 25 per cent in April 2019 and 0 per cent in April 2020).