Following three years of pandemic disorder in the buy-to-let (BTL) sector, 2023 is shaping up to be another eventful year for landlords. With several major legislative reforms due to come into force this year, what can landlords do to prepare?
So, what’s changing?
The Renters’ Reform Bill, which is set to be voted on before May 2023, includes many significant changes. If passed in full, the act will:
- Scrap section 21 ‘no fault’ evictions
- Create a register of landlords
- Introduce a private rented ombudsman to help enforce renters’ rights
- Make it illegal for landlords and agents to refuse to rent properties to people who receive benefits
- Give local authorities more power to enforce and protect renters’ rights.
From ‘E’ to ‘C’
Another significant change that is fast approaching is an update to the rules on Minimum Energy Efficiency Standard (MEES) for privately rented homes in England and Wales.
Currently, the MEES is an Energy Performance Certificate (EPC) rating of ‘E’. From 2025, though, the bar is due to be raised to a minimum of a ‘C’, with new tenancies affected immediately and the rules applying to all tenancies from 2028.
Before now, landlord licensing has mostly only applied to Houses in Multiple Occupation (HMOs). More recently, some local authorities have been broadening their rules to include standard, single-tenancy buy-to-lets. It could be a good time to check whether you need a licence now or may do in the future.
What do landlords think?
Despite the impact it could have on their portfolios, more than two in five BTL landlords are not aware of the proposed Renters’ Reform Bill, a new study1 has claimed.
The survey also found that close to half of landlords are ‘Strongly Concerned’ or ‘Concerned’ about not being able to refuse to rent properties to people who receive benefits. Similarly, landlords are worried about changes to section 21 evictions (45.45%), property registration (42.65%) and the right to request a pet in their house (41.45%).
Capital Gains Tax
Increased requirements to remain compliant will add to the pressures placed on landlords and could lead to some selling up, the study suggests. For those seeking to escape the new legislation, Capital Gains Tax (CGT) is something else to think about.
Generally, you need to pay CGT if you sell a rental property for more than you paid for it. From April 2023, the annual CGT allowance is £6,000 and is set to fall to £3,000 from April 2024.
Talk to us
With so much happening (and scheduled to happen) in the BTL sector, it can be difficult to know the best course of action to take. Whatever your plans, we’re here to help you make sense of it all and ensure your BTL portfolio is well prepared for everything that is to come.
1 Finbri, 2023