Posted On / 20.03.2018

Gain or Strain: The Truth About Buy to Lets & Second Homes

Legislative Changes Landlords Need to Know  

Whether you are buying a home to let or acquiring one for a family member, changes in the law could see you out of pocket or even facing court action if you fail to comply with new legislation.

Second Home and Property Rentals: Are They Really Worth it?

In April 2016, the government increased the rate of stamp by 3% for those buying a second home. Now the dust has settled, do the upfront costs and obligations as a landlord outweigh any potential gain? 

Pros           Cons           
Buy to let properties can provide a regular source of rental income There is a risk - property prices will always fluctuate
Buy to lets can make good long term investments New stamp duty rates make upfront costs even higher
You only incur the higher stamp duty if you have a financial interest in the property, meaning you can assist a family member in purchasing a property in their name by gifting the funds landlords must produce specific certificates and follow strict regulations relating to their property and the way it is used throughout the rental process
 Associated costs can be offset against your tax bill          

Other areas of the law are affecting new and existing landlords too.

Air BnB: Rules for You and Your Tenants

If you have a buy-to-let mortgage and the terms of your leasehold permit it, you can let your property out through AirBnB. However, if your tenant sub-lets to AirBnB, you could be in breach of your lease, which could see your lease revoked by the freeholder.  

Energy Rating Requirements

From 1st April, 2018, landlords will not be allowed to enter new tenancy agreements or replace existing ones if their property's Energy Performance Certificate (EPC) rating is F or below unless the property is exempt.  

Eviction Notice Updates

Section 21 of the Housing Act 1988 allows a landlord to serve notice to a tenant without having to give a reason; however, in order for the notice to be valid, they have to have given the tenant all of the correct prescribed information at the start of the tenancy. If they have not complied fully, eviction attempts could fail.

Dos Don'ts
Safeguard the tenants deposit in a government approved tenancy deposit scheme at the start of the tenancy and provide your tenant with all details of the scheme within 30 days Forget to respond to any written complaints about disrepair from the tenant within 14 days in writing. Retaliatory eviction could invalidate your notice
Give the tenant a valid gas safety certificate before they move in Serve notice within four months of the start of a tenancy
Provide your tenant with the latest How to Rent guide and an up to date EPC Serve your tenant with the old Section 21 notice
Serve your tenant with the new 'prescribed' Section 21, follow it carefully within the designated timeline Let the Section 21 notice expire (your Section 21 noticed expires six months after it has been served)
Give your tenant at least two months' notice of eviction  

Houses in Multiple Occupation

More changes are afoot. The scope of mandatory licensing is expanding. You may not have needed a licence previously but from 1 October 2018, if you rent a property to five or more people from two or more households, you may need a licence. Also, you will have to meet regulations that dictate the minimum square metre of space needed per person and the maximum number of people allowed to occupy each room. There is a hefty fine for anyone failing to licence their property if it falls into a licensing category.

Find out what regulations you need to follow by contacting Jacqui Swann on 01935 846254 or email jacqui.swann@battens.co.uk.

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