David Alexander is joint CEO of apropos
04 February 2021 510 Views
The last year has been one which has focused attention on dealing with the immediate, the here and now, in a bid to get through these difficult months. For many landlords and property investors this may have been a period of simply trying to survive while for others it has been a time for growth. One of the largest groups to utilise the stamp duty holiday has been landlords seeking to expand their portfolio.
But for all landlords and property investors there has never been a better time for reflection, analysis, and planning to see where they go next. One thing the last few weeks and the rollout of the coronavirus vaccine have told us is that the pandemic is going to subside, in a matter of months rather than years and that the world will start to return to normal.
What that means is that landlords and investors who have, up until recently, been looking at the immediate and the short term will now have to look forward months and years. Given that there seems to be no delays predicted for the introduction of proposed legislative and regulatory changes in the market this means planning for new ways of managing your portfolio in a changing market.
More regulation can mean more cost but can also mean greater revenues. New rules are not always a negative and the customer, the tenant, is becoming pickier and, if they have options, they will vote with their feet. It is, therefore, incumbent on landlords and investors to keep ahead with the changes that are already here and for those which are coming through.
The much heralded and greatly anticipated Electrical Safety Standards regulations become applicable to existing tenancies from 1st April and the Government has given no indication that this date will be put back due to the pandemic. Having an Electrical Inspection Condition Report (EICR) is mandatory for all properties let after June 2020. There may be exceptions if access is difficult but, in general, this is a regulation that must be adhered to.
Further legislation is coming on evictions, on tenure, on notice periods all of which have the potential to penalise landlords and investors who are not on top of the regulatory and legislative changes. Ignorance is no excuse for landlords and investors who have a duty to adhere to these rules and, while many may have not thought about these things over the last year, they are all coming in the immediate future and require attendance in the next few months. For many landlords and investors this may be the tipping point which makes them seek help by using a letting agent. It simply depends on the individual and how much time and effort they are willing to give but it is clear that the legislative and regulatory issues surrounding the private rented sector are increasingly difficult and are going to become more complex in the future.
This should also be a time for reviewing all aspects of being a landlord and property investor. Financing for the private rented sector has undergone major changes in the last year and all owners should look at their borrowings, their terms, and any conditions to determine whether they are getting the best deal. Any good letting agent should be able to assist with advice and information on this aspect of the market but it is essential that all landlords regularly review their financing to ensure they are getting best value.
It is also a good time to examine the structure of your business and how it is operated. With a potential substantial increase in capital gains tax (CGT) predicted there are tax efficient ways to structure your business to limit your liability and maximise your returns. Again, a good agent will be able to help with this or the individual landlord or investor can do this themselves.
All landlord and investors should be looking at where they, and the private rental market, will be in the next five years. Despite the occasional messages of doom and gloom about the private rented sector the truth is that it is here to stay, is the second largest provider of homes in the UK and is an essential part of the property market.
Landlords and investors need to plan for the future of this market to ensure they are financially viable, compliant with the legislation and regulations, have an effective online system to keep up to date records, communicate effectively with tenants, and monitor payments, repairs, and relevant data. This can be implemented individually or through an appropriate letting agent but either way there is little doubt that despite all of the changes that have come and will be coming the private rented sector remains an important and profitable part of the UK’s housing sector now and in the future.
Time for landlords to reflect...
The case for using an...
Is this the right time...
UK Landlords need to prepare...