What this April has done for the rental & buy-to-let markets…
April has been quite a month! Lots of new legislation has been introduced ahead of the new tax year, lead by the budget announcement. As this month draws to a close, I have identified four big changes which have impacted the rental & buy-to-let market.
1. Universal Credit
This is a new type of benefit designed to support people who are on low income or out of work and will replace outgoing benefits including housing benefit. Under Universal Credit, private landlords will benefit from improved protection against rent arrears whilst landlords in the social rented sector will receive their housing cost payments direct from the local authority.
For further details on how the changes affect you, read this FAQ sheet produced by Universal Credit.
2. Right to request energy efficient improvements
Tenants now have a new right to request energy efficient improvements to rental properties, which the landlord may not unreasonably refuse, provided that:
a) The measure is listed as an energy efficiency measure in the Schedule to the Green Deal (Qualifying Improvements) Order 2012, OR is a measure to be installed in order to connect to the gas network
b) The improvements can be financed at no cost to the landlord;
c) It can be wholly funded by the tenant themselves; OR
d) It can be wholly financed by a combination of two or more of rate financial arrangement mentioned above.
For further details download this guidance note produced by the Department of Energy & Climate Change.
3. SDLT Rates
Higher rates of Stamp Duty Land Tax for buy-to-let properties were introduced and applied from 1st April, meaning that a surcharge of 3% is now payable on all buy-to-let properties and second homes.
This additional surcharge might have quite a negative affect on the private rental sector. The rental market may see the supply of rental properties decrease whilst pushing up demand and rental prices going through the roof as landlords pass on the additional costs to tenants, meaning higher rents.
4. Wear and Tear Allowance
As of this month, landlords will only be allowed to make deductions for Wear & Tear Allowance (10%) for costs that they actually incur for replacing furnishings in their rental properties.
This is a significant change from the previous application of the Allowance, which allowed landlords to reduce their tax regardless of whether they replaced furnishings in their properties.
The ring-fencing of this Allowance coupled with higher rental costs could see less money spent by landlords on maintaining their properties and may impact the quality of the rental stock available to tenants.
It will be interesting to see the actual impact these legislative changes will have on the rental & buy-to-let markets. One thing I can say is that they certainly haven’t made being a landlord any easier….
