Just when we thought we might have finally made some credible progress on Brexit, it looks as though looming uncertainty will be hanging around for a while longer. In one respect, the current state of affairs should come as no surprise given the way the government has attempted to handle Brexit over the last 12 months. Nonetheless, businesses, investors and consumers are calling for progress.
Whether it be renters, first-time buyers or landlords, one cannot but feel as though Brexit has distracted the government from addressing some pressing domestic challenges currently facing the property market. This is particularly evident when we consider the buy-to-let (BTL) market, which has become an increasingly difficult environment to navigate for landlords.
Looking beyond Brexit, there are few things the government must keep in mind to ensure it is adequately addressing the needs of landlords.
Make sure landlords are aware of changes to legislation
Over the past 12 months alone, we’ve seen a number of notable legislative and regulatory changes that have impacted the way UK landlords are able to manage their rental properties. This onset of new regulations has made it extremely important for investors to ensure they are compliant with the latest policies, or risk facing financial penalties
A survey of landlords by Market Financial Solutions this year revealed that a significant 30% do not understand the changes to House in Multiple Occupation (HMO) licensing, which came into effect in October 2018. Staying on top of new policy reforms is a difficult thing to do across any industry or sector, yet the property market has become marred with regulation in a bid to address the systematic challenges facing all parties involved. That’s why I believe the government should be offering some kind of education to landlords to ensure they are aware of the latest legislative changes.
Follow through on proposed reforms to housebuilding
The government has touted many new regulatory reforms concerning house building over the past few years, and most of them would theoretically result in better homes being built. Take the new design guidelines that were announced by the Housing Secretary Robert Jenrick at the 2019 Conservative Conference, for example. Drawn from the findings of the ‘Building Better, Building Beautiful’ government inquiry, the Housing Secretary put emphasis on creating homes that are aesthetically appealing.
Further, the relaxation of planning rules has also been suggested as one aspect of the “up, not out” initiative – wherein, developers will be able to much more easily build additional stories on their homes. Whilst businesses will be the first to benefit in early 2020, normal homeowners will be given the greenlight not long after.
Implemented in tandem, these policies have the potential to create a larger pool of more aesthetically appealing homes, helping provide the kind of stock that is needed to combat the housing crisis. Further, and crucially for those wanting to expand their buy-to-let portfolio, it could make finding and letting marketable homes much more straightforward.
Recognition that Landlords have an important role to play in the property market
With the myriad of changes to the law over the past few years, the profitability of BTL has arguably waned. New research from the Residential Landlords Association suggests more landlords are now exiting the market than buying new property. But BTL has many societal advantages – not least by helping the housing stock – that the government would be well-advised to remember should it consider new reforms. A significant change, like scrapping the additional Stamp Duty levy on second homes and buy-to-let properties, must not be ruled out.
In sum, there is a significant amount of backlogged policy work that the government should pursue once Brexit no longer dominates the agenda. Of particular importance is landlord education, new development regulation, and greater consideration of the interests of landlords. A selection of strong policy suggestions to improve the situation have been touted by the government, and one can only hope they will pursue them with vigour when the parliamentary time allows it.
Paresh Raja is the CEO of Market Financial Solutions.