Thoughts from our Property Experts

 

The new Labour government, and the housing minister, are plotting a significant crackdown on landlords. This is causing many landlords to consider selling their property portfolios. What could the future look like for landlords and should you consider selling your rental properties?

Why are private landlords selling up? 

There is a movement towards landlords selling properties over fears that new rules will leave them worse off, and most notably, unable to evict tenants if needed. Property investors are nervous about forthcoming regulations. It has already become hard to operate as a landlord in recent years, but things are about to get tougher.  

 

There could be stricter rules on tenant eviction coming soon, and landlords may now need to find money for costly eco refurbishment legal stipulations. The current Section 21 tenant and the no-fault eviction rule may be scrapped. So, should you sell before new law impacts the landlord sector?

 

Ministers are considering hardship tests for tenants before a landlord can remove them – evictions could be banned. A new ‘Renters Rights Bill’ was announced in the King’s Speech in July, which will further protect people renting their homes in the UK. The labour government believes the rental sector is in need of reform and tenants need to be more empowered. 

 

Furthermore, new energy efficiency requirements are also being considered. Costly green upgrades may come into force for landlords. Labour’s energy minister has confirmed Energy Performance Certificates require a ‘C’ grading requirement to pass for property letting suitability from 2030.

 

Landlords have already lost tax breaks on buy-to-let mortgage interest and encountered stamp duty surcharges in recent years. The Interest rates increases over previous years have not helped, although we have now had a welcome interest rate cut in 2024. Capital Gains Tax rule changes are also on the agenda.

Obviously, one option for landlords is to push all these potential future costs on to the tenant, but will this make rental charges acceptable to tenants and make renting out your property competitive? Could the government introduce rent caps too? 

 

In the case of period properties, landlords may feel they just cannot make their investment property compliant with forthcoming new rules: and thus, their only option is to sell up. However, it is likely that there may be exemptions  on certain types of property eg. Listed buildings. 

 

Finally, private landlords in London should be aware that there is some talk noting the government may ban them from selling their property during the first two years of a tenancy - extending the current limit by 18 months – a further constraint to freedom of operating as a landlord. This is by no means verified at present.

 

All these potential changes combined are mobilising some landlords into action before the forthcoming Budget this Autumn. If you are a landlord, and considering your future position, YOUhome recommends a first step of undertaking a property valuation in preparation for any sale.  We are currently receiving many calls for sale guidance in this area. Call the team at YOUhome, London to assist with your next steps.

 

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