‘Buy to Regret’ as Landlords face even more red tape
The popularity of Buy to Let may be coming to an end as new rules and regulations come in force and rental yields and property prices stagnate. Add in the increasing numbers of tenants “misbehaving” and many landlords may soon decide enough is enough.
Landlords are being forced to delay rent increases: Until recently, rents were rising by as much as 8% a year in London. But now across most parts of the country rent increases are being either reduced or postponed as achievable affordable rents have now reached a peak. However, attractive homes in areas of high demand do still command high rental yields.
Property prices rises levelling out: Recent monthly reports of property prices show that rises are slowing down. This means landlords’ easy paper profits on their property portfolios are coming to an end and may even go into reverse when (not if) the property market falls.
Large fines for not checking tenants are legally allowed to be in the country: The Immigration Bill 2014 which comes into force next month, means landlords must check that their tenants have a legal right to be in the country before giving them the keys. If they do not, landlords can face fines of up to £3,000.
Problem tenants on the increase: The number of “tenants behaving badly” is on the increase. Insurer AXA reports that a number of tenants are making life difficult for landlords. Nearly 20% of tenants admit they have kept pets in the property and broken the terms of their leases. A third regularly pay their rent late and one in ten do a moonlight flit at the end of their tenancy to skip paying any final bills. Nearly one in six tenants has had noise complaints made against them, with 10% of tenants having had the police called to the property. Landlords can even face prosecution if their tenants are producing cannabis or any other banned substances in their property under the Misuse of Drugs Act 1971.
Other regulations and red tape landlords are now required to do:
- Comply with fire prevention rules on the type and standard of furniture.
- Carry out Annual gas safety checks on boilers and gas appliances.
- Test electrical appliances.
- Supply an Energy Performance Certificate if a tenant requests one.
- Landlords must use a government-backed deposit protection scheme within 30 days of receiving it from the tenant. Failure to do so could result in a fine of up to three times the value of the deposit.
