The Tenant Reform Bill - Will It Be CHAOS for South London Landlords!?

In case you missed it

The government in its infinite wisdom to make life better for everyone (but somehow worse for good landlords like your good self) has proposed quite a number of things that would have the average landlord gasp and get dialling for that ambulance quicker than you can call a tenant who's late on a rent payment!

Here's what the brainiacs in power are wanting to lumber upon us, property owners of South London:

Section 21 bye bye

They are proposing the abolition of the favoured S21 notice. This means that unless the tenant cocks up magnificently you have to wait until they serve you notice. One month of course... So you are stuck with Section 8 notices, under which of course we know there are 17 grounds you have to ask a judge for your property back (remember only a few of these are mandatory, the vast majority are discretionary grounds - 10-17).

Periodic tenancies only here

So rather than an initial fixed term the tenants will be able to stay as short as they like effectively. This is a particular pain for those that dabble in the student market, who often insist on giving notice so they can bugger off for the summer. They don't realise that it will be a royal PAIN to find new accommodation in the summer months when they return at the height of the lettings market of course, leading them to overpay for something inferior, but like with anything these kids can't be told. They'll be able to give you a month notice and if you get notice in a bad month like november it's likely you'll have a void over Christmas. No more running 12 month fixed terms from August to August or September to September, you'll be at the tenant's mercy as to when they'd like to leave, unable to plan ahead. I can't see this being a win for anyone, who in their right mind wants to move in under a year? The associated costs with moving are rising (as well as landlords' costs such as inventories, deposit paperwork and so on) so long term lettings are in everyone's best interest.

Ombudsman for Landlords

Just like agents landlords will be required to join an ombudsman scheme. Honestly I think this is super zealous, bearing in mind in 2021 the OFT and Trading Standards received a total of 21,245 complaints about landlords. The total number of landlords in the UK in 2020-2021 was 2.74 million. This means that the percentage of landlords who received a complaint was 0.78%. And this supposedly requires ombudsman membership for all! I wonder how much that's going to cost us South London landlords???

Tar and Feather

In case I hadn't outraged you enough already, do indulge in the whole white paper here. The Renters (Reform) Bill is (thankfully) still currently in its draft form. It must still go through several readings in the House of Commons and House of Lords, where the contents will be discussed and potentially amended, before receiving royal assent and becoming law. This whole process is anticipated to take around a year, with the new legislation expected to come into force in early 2024. I eagerly await... I would also hope that any fundamental changes are permitted a period of transitional implementation once the legislation is passed. This would allow landlords and tenants time to adjust to the new rules and regulations. However seen the government's past performance on this front I wouldn't bank on it. Law not followed, landlord bad, landlord fined...

There is still some way to go before the final proposals become legislation. I will of course keep you informed of the latest and if you are in doubt then do reach out to me for a no-obligation chat. Meanwhile stay on the right side of the regulations to avoid fines or taxes. Well, avoid isn't possible so let's just call it minimising liabilities and limiting risk exposure, it's a minefield!

Had enough of letting? Let me do the hard work for you. Start by getting a valuation from my valuation tool online and see how the pennies stack up for you. If you'd like to have a conversation in person then by all means reach out and let's get talking

When NOT to improve your property's energy efficiency!

There's a rule for everything, but as most entrepreneurs, I skirt around these (legally of course) to get the most out of things. An intended consequence of the governments energy efficiency drive (in particular to outlaw letting of properties that are rated F and below) was to get landlords to sell up. 

A number of landlords will have thrown in the towel upon hearing that their property can't be brought up to an E rating, and joined those who are sick of the red tape, regulation and taxation surrounding buy-to-let. Fear not, for those die-hard buy to letters like myself there is a way around having to improve your property.

The government has left the door open a crack, for those who are savvy enough to know about these things. Of course these exemptions are buried in the small print. Let's discuss when and how... There's 7 ways to get around having to improve your property you know! 

1. High cost exemption - The regulations deem it to be unreasonable to have to spend more than £3500 to bring your property up to an E rating. If the cheapest improvement will cost in excess of this you can apply for a "high cost exemption." If one or more bits can be improved for £3,500 or less, and these still fail to improve the property to EPC E, then the ‘All Improvements Made’ exemption should be registered (see number 2). This is for residential properties only.
   
   
2. 7 year payback exemption - irrelevant to residential buy to let but perhaps of interest if you do have commercial property - in a nutshell, if the cost of the energy saving measure will not pay itself back in 7 years.
   
   
3. All improvements made exemption - quite simply, there is nothing more that you can do to improve a property's energy efficiency; applies to both residential and commercial properties.
   
   
4. Wall insulation exemption - where the recommended course of action is to apply wall insulation but the measure is not appropriate for the property, as deemed by expert advice. The advice (by a suitable expert such as a chartered engineer or building surveyor) indicating that due to its potential negative impact on the fabric or structure of the property (or the building of which the property forms a part) would secure this exemption; applies to both residential and commercial units.
   
   
5. Consent exemption - the landlord may in fact be reliant on permissions to install things such as solar panels, insulation and so forth. Where the necessary consents cannot be obtained, for example planning permission is required, the property is in a conservation area, or perhaps freeholder consent is required a landlord may apply for an exemption.
   
   
6. Devaluation exemption - this is of importance for historic buildings and the such - you would be eligible for such an exemption if the value of the property were to decrease by a minimum of 5% after installing energy improvements. Applies to both.
   
   
7. New landlord exemption - whereby the property is newly acquired and there simply has not been ample time to implement any energy saving measures. This is typically in the first 6 months of becoming the landlord, after which the exemption expires. Applies to both residential and commercial properties.

So there you have it, 7 completely legal ways to avoid having to upgrade your rental property. So cancel the sale if you were planning on bailing, there are plenty of ways to keep carrying on (profitably) with buy-to-let! As always I'm happy to help you so do reach out via email. I love to help other investors old and new find their way in the myriad of strategies that are available. Are you looking for coaching, mentoring or simply after a sourced deal? Do check out my personal website to choose a package for you! Don't forget to check out my YouTube channel for more useful information on all things buy-to-let and don't forget to subscribe!

Is the end is nigh for bad landlords in Clapham!?

For those of you who managed to make it down to the Clapham Property Meet and heard my eviction talk you will know that there is plenty of regulation to comply with when renting out your property. Get caught out and it could spell disaster. Literally! If you do spell things wrong on a notice then it could mean the invalidity of an important move-out date that you sought, and/or whether a judge will throw out your request for possession, if it does get that far.

But what does all this regulation really mean for renters and landlords in Clapham? Well for starters it will increase barriers to entry. More regulation (or red tape as some people refer to this as) means that it is more difficult for the average man to just start letting out their property. They are made to comply with a myriad of safety checks, and should they not comply the penalties are severe. 

This is a good thing! The private rental sector has improved vastly over the last 50 years, what with the Protection From Eviction Act, Housing Act, and so on and so forth. There isn't a day that goes by without a newspaper reporting on yet another "beds in sheds" case where a landlord lets a property in an overcrowded state or doesn't comply with the various safety protocols that are in place for both single lets and houses in multiple occupation.

There is less and less room for bad landlords these days; one will have to comply and rent their property in a professional manner in order to get the best returns and rent to respectable tenants. Tenants that cut corners are a risk for the landlord I'm sure that you will agree. 

Legislation may not be completely obvious. It is very easy to find a tenant due to the vast demand of rental properties in London, but it is more difficult to comply with legislation and at the same time maximising your investment. Regulation costs money after all - the vast majority of professional tenants don't mind paying that little bit extra to a professional agent or landlord in order to "buy this safety" as it were. There are, of course, still landlords that cut corners, knowingly or unknowingly. For example from 2018 landlords will not be allowed to let out properties that have a Rating of E or better as I mentioned in a post some time ago: https://goo.gl/1FXHpk. 

More legislation that is not immediately obvious is the serving of the government "How to Rent" booklet. A lot of landlords are being caught out with this, because any tenancy that started after October 2015 will be subject to this legislation: if the booklet was not given to the tenant then the service of a Section 21 notice (notice for a landlord to end the tenancy) will not be valid. Can this be done retrospectively? Yes it can, but you can't serve a S21 notice until 6 months down the line.

Some say that "what you don't know won't hurt you" but I think ignorance is not bliss when it comes to renting out a property worth hundreds of thousands of pounds. It is a big risk not to be able to get possession just by not serving a pdf from the internet. Aforementioned are only some of the hidden rules of renting. I am a career property property professional and I have built portfolios for many clients. If you are interested in investing your money in the London property market then I can help you get the best returns whilst complying with all the relevant legislation so that you needn't worry about risking your capital. I offer a range of investment options such as portfolio building for high yield and maximum capital appreciation with hands-off management (armchair investing) or opportunities to invest your money into refurbishment projects for relatively quick returns on your capital. If you are interested in working with me do get in touch on jeroen@claphampropertyblog.com or come down to the Clapham Property Meet and learn more about investing in the London property market.