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. Jacqui Swann from the Property Dispute Resolution team and Ross Siviter from the Residential Property team at Battens Solicitors are hosting a special seminar on the 19th April at 5.30pm at the Yeovil office, Mansion House, Princes Street to outline all you need to know, including:
- Return on investment versus second home stamp duty rates
- Updates affecting eviction notices
- Tighter energy efficiency requirements for rented properties
- Changes to HMO licensing
- The GDPR and landlords
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?
|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.
|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.