Right to rent and terms and phrases used in property listings are the latest compliance updates - while rent and sales data highlight the current market trends.
New data about the rental and sales markets in recent months paints a picture of the cost of being a landlord in the current economic climate. Plus, new guidance around the terms agents and landlords use in property listings is now available, increased fines for non-compliance with right to rent checks are on the horizon, and landlords in London that illegally evict tenants may face arrest under new rules.
New information published on the terms to use when advertising a property
In August 2023, the National Trading Standards Estate & Letting Agency Team issued new guidance on the common terms used in property listings. This aims to “reduce unnecessary confusion for property agents, consumers, and other organisations in the property industry” .
Using these terms is not a legal requirement, but are simply the "preferred" terms. This update is in line with the standards around marketing and advertising properties as providing "an accurate description of the product or service, while being legal, decent, truthful, honest, and socially responsible.
You can read more about property listing terms in our blog.
Fines will increase for right to rent compliance missteps
Right to rent checks in England are a required step in the rental process.
Landlords and letting agents are currently required to check that their tenants have the right to rent their property according to their immigration status. This can be undertaken in a number of ways, both digitally and manually.
Recent government research found that 53% of landlords surveyed considered themselves to be well or quite well informed about right to rent checks.
However, fines for non-compliance will increase to up to £5,000 per lodger and £10,000 per occupier, with fines for repeat offences reaching up to £10,000 per lodger and £20,000 per occupier.
These new fines will come into play at the start of 2024.
New guidance for police around illegal evictions in London to be shared
Police in the capital may soon receive new guidance around when to arrest landlords if they illegally evict their tenants, according to the Guardian. The paper reports that they will be told to “arrest where necessary”.
If the police catch a landlord "changing locks, forcibly throwing a tenant out, cutting off the gas and electricity, and using threatening and bullying behaviour" then those could be taken as signs of an illegal eviction.
This new guidance coincides with a 41% increase in "no fault" section 21 evictions.
Renting is now cheaper than buying a property
Rising mortgage rates mean that the average cost of buying a property in the UK has surpassed renting for the first time since 2010, according to Zoopla's figures.
The average buy-to-let mortgage rate for a two-year fixed deal now sits at 6.76%, while a five-year fixed mortgage deal is 6.73%.
"Around the country the picture varies as in areas with lower house prices buying is still cheaper than renting," says Richard Donnell, Head of Insights at Zoopla. "In southern England where prices are higher, access to home ownership is most out of reach and rents are high as well."
Richard also shares that he expects this trend to reverse in the coming months, as mortgage rates drop and rents continue to grow.
Lenders are starting to cut mortgage rates
In line with Richard's prediction, lenders are acting to help ease the pressures on homeowners.
Barclays dropped their mortgage rates for existing buy-to-let borrowers by 0.1 or 0.2%. Halifax reduced rates in August by up to 0.71 percentage points.
Natwest has also adjusted its stress rates on buy-to-let mortgages, dropping its two-year fixed rates from 8.6% to 8.15% and its five-year deals from 7% to 6.78%.
"More lenders are likely to follow this trend, and we may even see further rate reductions from those lenders who have already lowered rates,” says Chris Sykes, Technical Director at Private Finance.
A recap of the past three months
- What you needed to know in August 2023
- What you needed to know in July 2023
- What you needed to know in June 2023
Things to know from August 2023
The government plans to push back the EPC upgrade deadline
The government is expected to delay its plans to increase Minimum Energy Efficiency Standards. Housing Secretary Michael Gove originally shared this in an interview with the Sunday Telegraph, saying that "we're asking too much too quickly" of landlords.
With over half of privately rented homes estimated to not yet meet the required EPC C rating, this will take some pressure off landlords and give more time to plan - and budget - for any necessary upgrades.
Rishi Sunak has also hinted that the EPC system may also face reform - so the industry will have to wait to see what this could entail.
You can read more about what's proposed in our guide.
More guarantors being requested than ever before
More landlords and agents are asking for guarantors for high earning tenants, according to Goodlord data, in response to the uncertainties caused by the cost of living crisis and rapidly increasing rents.
In 2020, 3.7% of tenants earning between £25,000 and £49,999 were asked for guarantors. This rose to 5.84% in 2023. However, the disparity is greater for tenants earning between £50,000 and £74,999, with 1.35% asked in 2020 but 1.92% in 2022.
You can read more in our press release.
New planning system proposals to boost housing supply
The government has announced its long-term plan for housing, including proposals to relax planning permission rules to allow more conversions on retail premises, warehouses, lofts, and more. Some industry representatives remain sceptical around whether this will help.
“To provide the homes the country needs, plans need to be more ambitious and the government must go faster and further to achieve this," says Nathan Emerson, CEO of Propertymark.
Read more about whether this will have a positive effect on the housing crisis.
Consultation on relaxing planned council tax rules for landlords
The government plans to give councils the power to charge a higher rate of council tax on properties that are left empty for longer than a year, rather than two years as is the case now.
However, the government is currently consulting on proposals to give landlords an extra six months before becoming eligible for the higher rate.
You can find the consultation on the government's site, and read more about the planned changes for short-term lets and second homes in our blog.
Delay to the second reading of the Renters (Reform) Bill
Although Housing Secretary Michael Gove recently shared that the government would bring forward the Renters (Reform) Bill "shortly", the House of Commons and House of Lords is currently in recess.
That means that the Houses won't meet to "conduct business" during this time. The second reading now looks unlikely before 4 September, when the recess comes to an end.
In the meantime, you can read more about what's expected to change in our guide.
Things to know from July 2023
No rent controls under a Labour government?
Labour is becoming more vocal on its plans for the sector - and some of it's good news for letting agents and landlords. Shadow Housing Secretary Lisa Nandy has shared that she no longer advocates for rent controls, saying that "rent controls that cut rents for some will almost certainly leave others homeless."
Alongside this, Labour have published a draft outline of the party's manifesto policy details for the next election, highlighting how it will support first time buyers, and how it aims to support renters. You can read more about this in our comparison of policies on housing between the Conservative and Labour parties.
Rent cap in Scotland extended
However, in Scotland, the existing, temporary rent cap has been extended again. The rent cap limits rent increases at 3% in most instances, but with scope for a 6% cap to help cover a landlord's "prescribed costs" such as interest payable on a mortgage.
Previously in place until September 2023, this has already been extended for a further six months until March 2024. You can read more about what this means in our guide.
Another base rate increase - but no mortgage support for landlords
The base rate has jumped once again, affecting the mortgage interest rates for landlords coming to the end of their fixed terms as well as those on variable or tracker mortgages.
Research shows that the majority of landlords are still choosing fixed-term mortgages, but many are choosing shorter than normal terms - two years instead of five - in the hope that rates will drop in the near future. However, while the government has created a new mortgage charter, this excludes buy-to-let landlords.
You can read more about the base rate and its effects in our blog.
The future of rent increases
There are many aspects of the Renters (Reform) Bill to unpick, and one of them is how rent increases will happen going forwards. The answer is with a mechanism very similar to the existing section 13 notice, which can be used to increase rents on a periodic tenancy.
As is the case now, landlords wouldn't be able to increase rents in the first year of the tenancy. They'd also need to give tenants two months' notice of an increase.
Rent review clauses will no longer be possible, with the switch to Assured Tenancies, and tenants will be able to dispute the increase through the First-tier Tribunal. You can read a deeper explanation about rent increases in our guide.
Things to know from June 2023
Student lets in the bill and how this could disrupt seasonality
Most student lets take place during January to March ahead of the next academic year. However, with private student lets currently expected to transition to the single system of periodic tenancies under the bill, this seasonality could be disrupted.
Two-month notice periods for tenants may mean no guarantee of properties for those looking earlier. It could also mean longer void periods for landlords if their tenants choose to move out before the summer months - meaning that properties could be lost from the student let market as landlords look to house professionals instead.
However, the Telegraph has reported that Michael Gove is considering amending the bill to take these concerns into consideration. You can read more about this in our blog.
Eviction powers to increase
One letting agency has said that the risks posed by abolishing section 21 may be lower than originally feared by landlords. Beverley Kennard, Head of Lettings Operations at Knight Frank, explains that, although that trigger for eviction has changed, the grounds for eviction under section 8 have increased.
“The [grounds] now include rent arrears and anti-social behaviour, which should give landlords even more comfort” Kennard says. You can read more about changes to section 8 in our guide.
The property portal could be important for tax
HMRC may be able to use the new property portal to advise its investigations into taxes unpaid by landlords. Advisory firm BDO has said that the bill doesn't state this explicitly but that it will have access to the same public data as tenants.
BDO shares that HMRC will be able to combine data from the new database with the information it can access through the Land Registry for analysis.
Dawn Register, Head of Tax Dispute Resolution at BDO, says: “HMRC already holds significant information on taxpayers’ financial affairs. The introduction of a new private rented sector database will leave few places to hide for landlords who don’t comply."
Preparation can now begin for the bill
The bill may yet face some amendments, but there's plenty that agents and landlords can do to start to prepare. Our blog highlights five of the things that you can do to start getting reform ready.
Goodlord has plenty of extra materials and resources that outline all of the changes to come under the Renters (Reform) Bill, from the abolition of section 21 and Assured Shorthold Tenancies, to the introduction of a property portal and landlord ombudsman.
You can download our e-book, watch our webinar, read our guide, or even listen to our podcast on it. Head to our resource hub to find everything in one space.
