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Overview of landlord legislative changes in 2016

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While some landlords express the opinion  that every year brings yet more changes to the laws and regulations which govern their business, even they might say that 2016 has been unusually ‘busy’ in that respect.

So, as the end of the year approaches, we thought we’d reflect a little on some of the more important changes that have taken place in the last 12 months.

HMO licencing

If you’re the landlord of an HMO (House in Multiple Occupation), registration with your local authority is now obligatory.

Keep in mind that this isn’t just red tape. The new rules can be rigorously enforced and transgressors can face stiff fines and other measures.

In some parts of the UK, private landlords must register as well and that might also be true for some English local authority areas.

As a gentle reminder, if you’re planning to convert a single dwelling into an HMO, you should consider the insurance issues and we’d be pleased to help.

Removal of flat-rate 10% wear and tear allowance

Back in the spring, this was a controversial and painful measure for many landlords.

It basically entailed the government removing the flat rate allowance as mentioned above. That now means that claims are on an item-by-item replacement basis and original purchase values will be ignored.

Changes to mortgage tax relief

The government introduced legislation to limit the amount of tax relief available on finance costs to the basic rate.

Although government sources indicated this did not mean that most landlords would be paying more tax, they did accept that some would – subject to their overall business and tax position.

Letting agents fees removed from tenants

This change means that landlords will now need to accept any agency fees that would previously have been paid by tenants. Landlords will need to somehow balance those in as part of their own business costs.

At the time of writing, this change is still new and its effects are not yet clear. However, this has been the legal position in Scotland for some time and the general consensus seems to be that this change has been ‘managed out’ by all parties without a significant impact on the marketplace.

Stamp duty increases for buy-to-let and second properties

The government’s case for this was clearly laid out but it remained controversial for many – and not just landlords.

Yet again, this change is still perhaps too recent for its full effects to have yet been assessed though it is cost-inflationary however it is measured.

Summary

There’s no doubt that 2016 has been an unusually active year for changes that will affect many and in some cases, all, landlords.

It’s perfectly possible to read the above as a litany of bad news and punitive measures but that would perhaps be unduly pessimistic.  Some landlords will probably concede that certain fiscal ‘balancing’ measures have been likely for some time now and some of the above steps should not have been a total surprise, even if we didn’t know their exact nature.

The market is resilient and will, in the end, probably cope. However, some caution may be required by society at large.

Landlords are a hugely important part of the economy and provide a service in making accommodation available. They are though also a business and some are warning that casual assumptions that ongoing cost can simply be loaded onto the landlord without negative effect might be dangerous.

At the very least, there is the risk that adding cost will simply drive up rents. That cannot be in anyone’s interest in the medium to longer term.  The other very real risk is that some landlords may be driven to leave the business altogether.  That’s also not good news for society or the many tenants who rely on them to make affordable accommodation possible.

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