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April 1 – Deadline day for the UK's landlords

  1. 01 April 2016
  2. By Rosie Rogers

April 1 might be best known for pranks, larks and amusing made-up stories in the newspapers, but for landlords it has taken on a rather more serious bent.

From this Friday, April 1, there are a number of changes to the law that landlords will have to be aware of and abide by. 

Plenty has been made of the additional 3% stamp duty surcharge that was confirmed in the most recent Budget – and we'll discuss that more in a minute – but this news might have slightly overshadowed another piece of equally important legislation, namely tenants being given the rights to insist on energy efficiency upgrades on the rental properties they live in.

Put simply, tenants will be able to request consent from their landlords to conduct energy efficiency improvements on the home they rent. 

Landlords won't be able to refuse consent unless there is reasonable grounds with which to do so. 

Nonetheless, it is down to the tenants to fund the upgrades and it is also their responsibility to ensure that landlords are faced with no upfront costs, unless the landlord has specifically said they are willing to contribute.

This new legislation shouldn't be confused with the regulations, coming into play in April 2018, which will compel all rental properties to be brought up to an Energy Performance Certificate (EPC) rating of at least an E-. 

Private rented sector tenants can bid for improvements in England and Wales from this Friday, with properties 'let under an assured tenancy, or a tenancy or shorthold that is a regulated tenancy for the purpose of the Rent Act 1977' all covered by these new regulations.

More details about the ins and outs and the nitty-gritty of the new regulations can be found here.

As we mentioned before, April 1 is also an important date in the diary for landlords, buy-to-let investors and second home buyers up and down the country for another reason. 

The extra 3% stamp duty surcharge for all buy-to-let properties and second homes will come into force, something which has sparked a predictable rush to get deals done and completed before the deadline. 

It's been that way since the start of the year, but things have really accelerated in the last few weeks, especially since George Osborne's confirmation that the changes would indeed be introduced.  

There has been a huge surge in buy-to-lending in the last few months, with landlords and investors desperate to complete on properties before the deadline. 

This scramble for deals helped to push the number of mortgages approved in February up to nearly 80,000, a massive 20% rise on the same month last year. 

Gross mortgage lending, according to the Council of Mortgage Lenders, reached £17.6 billion last month, the highest lending total for a February since 2008 (just before the global financial crisis took hold). 

In addition, The Association of Residential Letting Agents reported that over half (52%) of its letting agent members witnessed a jump in interest in February from buyers seeking to invest in buy-to-let properties before the stamp duty changes came into being.

While there has been a massive spike in demand for a buy-to-let properties and a growth in the number of rental properties coming onto the market, there are concerns that the new changes could lead to landlords selling off their stock in huge numbers once the stamp duty charges start to bite. 

There is a fear that the tax hits and increasing amount of regulation landlords face could lead to them becoming disenchanted, in turn sparking a mass exodus from the PRS. 

This, of course, would lead to an even bigger shortage of rental properties, at a time when demand is still massively outstripping supply.

It is also widely expected that rents will rise as a result of the stamp duty changes and tenants will suffer as a result, with landlords passing the additional costs onto those who rent their homes.   

All in all, it will be a busy few weeks for landlords and investors. So, while many people will be doing their best to spot the numerous April Fools' jokes in their morning newspapers or online, many in the property industry will be facing up to a landscape that looks totally different from the day before.

 

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