Landlords take note!

Published December 15th, 2016

Amongst current talking points are the impact that The 2015 Energy Efficiency Regulations and the Government’s banning of residential letting agents’ fees on tenants are going to have on the market.

The 2015 Energy Efficiency Regulations set out minimum energy efficiency standards (MEES) for England and Wales and make it illegal from 1 April 2018 for landlords to grant a new lease for properties with an energy performance certificate rating below E unless an exemption is in place. It really is essential that landlords start to plan for this eventuality as soon as possible. Strategically, it might be best to dispose of certain properties in your portfolio at a premium market rate before the onset of the regulations become a liability and depress the building’s value. Alternatively, investing in upgrading the investment to comply with the regulations will add value to it, a higher rent could well be achieved and you will be less likely to suffer void periods and the inevitable associated costs. The first step is to carry out an energy audit of your portfolio and to use that as the basis for your strategic direction. As part of the appraisal process one should consider renewable options as one way of reducing the impact of a poor EPC rating.

In the Government’s Autumn Statement it was announced that it will become illegal for residential letting agents to charge letting agency fees to tenants. These fees will now fall on landlords and it is felt inevitable that this will lead to higher rents being charge in an effort to recoup the additional cost. It is estimated that 4.3M private rental sector tenancies exist in the UK and that tenants will be better off to the sum of £337 per tenancy. Housing minister, Gavin Barwell, is having an uncomfortable time as he has opposed such a course of action for some time. The PM has also voted against a ban twice in the Commons. Whilst the announcement will address the issue of unscrupulous agents charging excessive fees or charging both tenant and landlord together, there seems to be much concern over the negative impact of the decision.

With increased regulation, nervousness over Brexit and rising inflation it is essential that landlords take a strategic approach as we go into 2017 and that wherever possible procedures are put in place to assess investment risk and to make contingency arrangements where possible.


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