In the seemingly everchanging regulatory landscape of the PRS it has never been so important for those taking their first steps as landlords to know the letter of the law and be aware of any recent changes to legislation.
In this article, Neil Woodhead, founder of Ready Rentals, covers five changes that have recently taken place which are set to drastically impact upon the private rented sector this year.
1. Right-to-Rent
“As of 1st December 2014, landlords in Birmingham, Walsall, Sandwell, Dudley and Wolverhampton can now face fines of up to £3,000 if they fail to determine whether their tenants legally have the right to live in the UK before granting a tenancy. The new legislation deems that they carry out the appropriate immigration checks, or 'right-to-rent' checks first or risk receiving a fine of up to £3,000.
If these trials are successful, the new measures could be rolled out across the rest of the country as early as March/April this year. With the 2011 census records showing that over 1.5 million people living in private rented housing have no passport, campaigners not only fear that this added bureaucracy could drive up illegal tenancies, poor housing conditions and discrimination, but it could also mean that tenants lose access to housing, simply by not having the proper identification. It is, however, imperative that all private landlords follow these rules and we wait with baited breath to see if the scheme becomes law throughout the entire country.”
2. Stamp Duty
“In his autumn statement, George Osborne unveiled a major overhaul of the stamp duty system. These changes should, in theory, mean that private landlords are paying lower costs when purchasing investment property in 2015. Hopefully this move will attract more landlords to the market and, in turn, encourage existing landlords to expand their portfolios too.”
3. Selective Licensing
“Selective Licensing is intended to address the impact that poor quality private landlords and anti-social tenants have on the market. Areas covered by such schemes require landlords to obtain a licence and those that fail to do so could face a fine of up to £20,000 and sometimes even the authorities taking control of the property.
Though a 2013 poll by Paragon Mortgages found that 74% of landlords thought that selective licensing would deter new landlords to the industry, this was overlooked by the Government and the scheme was first introduced by Newham council. Whilst there have been instances of the scheme failing - in December 2014 a High Court judge quashed a selective licensing scheme that Enfield Council was seeking to apply to the whole borough, ruling that the local authority had failed to consult those outside the area who were likely to be affected and failing to consult for a sufficiently long period – many local authorities have adopted the scheme.
Sheffield, Croydon, Rotherham, Brent, Waltham Forest, Liverpool, and the Wirral will all go ahead with selective licensing schemes in the first half of 2015 and with the passing of the Housing (Wales) Act 2014 making it a mandatory requirement for landlords and letting agents in Wales to register in order to let and/or manage property, it is important that landlords check their local council's website to find out whether a selective licensing scheme is in place or if a HMO licence (House in Multiple Occupation) and what type is needed.”
4. Water Debt
“There is now a legal obligation on all landlords with properties in the Welsh Water (Dwr Cymru) and Dee Valley Water areas to share certain data about their tenants with their water company. After 21st January 2015 if landlords within these areas fail to supply the relevant information for their existing tenants they could find themselves jointly liable for their tenants' water debt. One to watch out for anyone owning and renting out a property in Wales this year and going forwards.”
5. Universal Credit
“Affecting 1.6 million tenancies, Universal Credit is now a feature of almost 100 Jobcentres across the UK and is set to be in one in three by Spring 2015. Bringing together six benefits and tax credits into a single monthly payment, this welfare reform aims to provide a simplified means-tested benefit system, providing an income to those out of work, as well as those on low incomes.
Critics argue that the benefit cap could harm larger families, force people to move to poorer areas (increasing 'low-income ghettos'), make it much harder for benefit tenants to enter the private rented sector and penalise those who do not have access to and/or the skills to pursue an online application, thus creating more debt and homelessness in the process. Only time will tell whether the reformed welfare system is working or not along with whether there will be further delays, felt previously due to the new IT systems involved.”
Subscribing to a system such as Ready Rentals will support private landlords with all these legislative changes and more, including: main portal marketing, automated creation of all the documentation needed to successfully manage a property, advice on all procedures, notifying utility companies of changes, notification of anniversary dates, an income and expenditure log, as well as a legal and financial helpline and a weekly newsletter rounding up weekly news in the industry, Ready Rentals provides everything needed for private landlords.
