As another year draws to a close, I thought it appropriate to mention a few things which have happened this year which will have a dramatic effect on the UK property industry in the next year and in years to come.
1. Deregulation bill 2015:
The main impact of this act was on the Section 21 notice (the notice served when a landlord wishes to gain vacant possession of his or her property from a tenant).
S21 notices can now only be served after the tenant/s have occupied the property for a minimum of four months whereas previously notices could be served by an agent or landlord at the beginning of the tenancy to save them doing it later on.
Lastly if a tenant reports a landlord to their local council for not dealing with maintenance issues quick enough not only may the council issue the landlord with an improvement notice, but said landlord will not be allowed to issue a S21 notice on the tenant for six months.
Previously there was some ambiguity that landlords/agents had to re-protect the deposit at the end of the fixed term when the tenancy lapses into statutory periodic status (following the Superstrike vs Rodriguez case in 2013). The above act overturned this meaning the deposit only needs to be protected once at the beginning of the tenancy.
For further information please see below link:
2. 2015 General election:
The 2015 general election caused uncertainty specifically in the property sector. Investors and traders spent the first half of the year holding back from purchasing property pending the outcome. Post-election the expectation was a boom in the sale of properties which never came to fruition. Conversely the Royal Institute of Chartered Surveyors (RICS) reported sales plunging to their lowest levels in 37 years following a ‘shortage of stock’ which inevitably drove up house prices. They go on to mention that they expect rental prices to increase by as much as 25% over the next five years.
3. The Chancellor’s Summer budget:
One of the main features affecting landlords was the announcement of changes to HMRC wear and tear allowance and tax relief on mortgage interest. This is currently set to 40 & 45% dependent on a landlords level of income tax. From 2020 landlords will only be able to claim back 20% from their mortgage interest regarless of their income tax level..
Regarding the wear and tear allowance, currently landlords (providing fully furnished lettings) are able to claim back 10% tax from their net income. From April 2016 landlords will only be able to claim back tax on replacement of furnished items.
4. Smoke and Carbon monoxide detector legislation:
From 1st October 2015 it became a legal requirement to have smoke alarms fitted onto each floor of a tenanted property (a standard battery alarm would suffice and hard-wired alarms weren’t deemed necessary).
Furthermore, carbon monoxide detectors were required in ‘high risk’ areas i.e.where there is a solid fuel burning device in the rented property.
The government commented that the above legislation is expected to prevent in the region of 26 deaths and 670 injuries from happening each year.
Please see the below link for more information:
5. Right to rent:
It was announced that from 1st February 2016, landlords and agents will be required to perform checks on new tenants to ensure that they have immigration status to reside in the UK. Agents and landlords will need to check and retain copies of valid I.D. approved by the Home Office. A link stipulating what is deemed appropriate is as follows:
Failure to comply with the above can result in heavy sanctions of up to £3,000 per contravention. This is in an effort to clamp down on people entering and/or residing the UK illegally. This has come about following a pilot run in the West Midlands last year.
6. The Chancellor’s Autumn statement:
The main point to draw upon from the Chancellor’s Autumn statement was the additional stamp duty (3%) being implemented on buy to let landlords from April 2016. Therefore on the purchase of a property of £250,000, whereas you would currently be expected on buy to let to pay 2% i.e. (£2,500) stamp duty, from April 2016 you will be required to pay 5% (£10,000). The expectation here is that a vast proportion of investors will think twice before entering the market under these new terms.
Whatever the weather, expect 2016 to be a turbulent year in the housing sector.
If you have any queries or would like more information on any of the above please do get in touch.
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