Property Investors, Here are the Laws you Need to be Aware Of

Property Investors, Here are the Laws you Need to be Aware Of

August 1, 2017

With so many new regulations hitting the housing, lettings and landlord sectors, property investors may be unsure of exactly what they have to comply with or be aware of.

Award-winning Landlord Insurance provider Just Landlords has put together a helpful list of upcoming laws that all property investors must understand:

New energy efficiency standards

From April 2018, landlords will be prohibited from granting new leases on rental properties with Energy Performance Certificate (EPC) ratings of F or G – the two lowest levels. The new Minimum Energy Efficiency Standards (MEES) will still apply even if you’re signing a new agreement with existing tenants.

Property investors must also be aware that the MEES will apply to all tenancies (including existing agreements) from April 2020. The standards aim to improve the energy efficiency of properties in the private rental sector, as all homes will be legally required to be brought up to an E rating.

It’s important to take these changes into account when purchasing a property, as you don’t want to be faced with sky-high improvement costs once you’ve committed to an investment.

Letting agent fee ban

In June’s Queen’s Speech, the Government confirmed its plan to stop letting agents charging fees to tenants. At present, tenants can be charged administration fees for taking references, getting credit checks or investigating their immigration status under the Right to Rent scheme.

Industry professionals fear that the ban will lead letting agents to instead charge the fees to their landlords, which means that any investors using an agent to manage their properties may face higher costs. Some landlords may decide to self-manage instead.

If you do currently or plan to use a letting agent, you must be aware of how the ban may affect your finances.

Tenancy deposit cap

Also announced in the Queen’s Speech was a tenancy deposit cap, meaning that landlords can’t require a security deposit of more than one month’s rent from a tenant. While the restriction was designed to make the private rental sector more affordable and competitive for tenants, it may cause issues for higher-risk renters.

For example, landlords typically request higher deposit amounts from tenants with pets or those on benefits. The cap could therefore make it more difficult for these renters to find homes.

It is yet completely clear how the ban will affect landlords regarding deposit disputes at the end of a tenancy, but you must factor this into your lettings business plan.

Leasehold ban on new builds

The Government has recently proposed a crackdown on charges levied on purchases of new build homes, including a ban on leaseholds and a dramatic reduction in ground rents.

Under the plans, there will be a ban on new builds being sold as leaseholds and ground rents will be restricted to as low as zero. This is not only great news for aspiring first time buyers, who have found themselves in unfair terms, but also for investors purchasing a new build property.

Perhaps the ban will encourage you to invest in the new build market?

Investors, if you’re planning to enter the buy-to-let sector or expand your property portfolio, you must be aware of these upcoming legal changes. Make sure to find out how they will affect you.

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