Notable stories from the second half of 2021



As the year draws to a close, Property Investor Post reflects on some of the major stories and themes that emerged in the second half of 2021.

Green energy

The year plenty of news related to green energy, prompted by a government push to upgrade the Energy Performance Certificate ratings of properties.

Government plans, subject to consultation, mean that landlords will need to upgrade their properties to an EPC rating of C by 2026 for new tenancies, and by 2028 for existing tenancies. Otherwise they will face a hefty fine.

Mortgage lenders have also been told to make their books greener, resulting in big names like The Mortgage Works and NatWest releasing mortgages with lower rates for properties with a good EPC rating.

The authorities are also looking to phase out carbon-based gas boilers, as new builds will no longer be able to install them from 2025, while the government plans to place a surcharge on them in future.

As explored in August however, the way EPCs are calculated are inherently flawed. Indeed, despite the government favouring homeowners switching away from using gas boilers, doing so isn’t recognised by the EPC system.

There’s also the sheer cost of replacing gas boilers, with heat pumps costing tens of thousands of pounds to install, prompting a push for research into hydrogen-based heating systems, because they can theoretically run off some of the same infrastructure as gas boilers.

It’s no surprise that landlords have been calling for tax incentives to upgrade their homes to deal with this green problem.

Tax

Taxation is an issue that impacts landlords every year, though some running HMOs have come unstuck in 2021.

In October it emerged that some landlords are getting charged council tax multiple times on the same HMO, because homes are being split into separate units.

In response landlords have looked to join forces and fight these ‘disaggregation’ decisions, which seem far from consistent.

Looking at other tax issues, being a landlord can have its challenges, as was highlighted by accountancy firm Bevan Buckland LLP in July.

The firm concluded that some investors are being tripped up by a changed tax rule that means the HMRC requires capital gains tax (CGT) on UK residential property sales to be reported and paid within 30 days. Clearly you need to make sure you don’t fall foul of this change.

You should also ensure you prepare for the HMRC’s Making Tax Digital regulation, which is now set to come into force in April 2024 after being extended by a year.

Universal Credit issues

While landlords are often chastised for failing to rent to tenants in need, it seems issues with the DWP are a strong factor that gets rarely talked about.

It seems the Department for Work and Pensions’ ‘Direct Payment’ scheme isn’t fit for purpose, because landlords are in many cases unable to claim housing benefit directly if the tenant doesn’t pay, leaving them out of pocket for months.

It’s also difficult to contact the government department, because landlords don’t have a direct line and government officials are uneasy about releasing tenant data.

The result is landlords are regularly forced to take court action and left without rent.

HMO struggles

While running an HMO can be rewarding financially, landlords have encountered some unforeseen difficulties when trying to get a license.

In September Property Investor Post found that maximum space guidelines from some councils are causing landlords big headaches.

In Leeds a document from the council contains specific ‘recommendations’ about room dimensions, which councils need to follow to get a license.

This has been very damaging to some with older stock with lower ceilings, who worry they won’t be able to let them out despite having done so for years.

It appears there’s some inconsistency regarding how strict some councils are about HMO rules, as landlord associations are apparently stronger in areas where councils are more hands on.

Landlords are also having to deal with a rise in red tape and extra costs, as councils are frequently creating and expanding HMO licensing schemes.

Rogue landlords

As with any sector, you get those who don’t play by the rules.

One notable example was a London landlord who isn’t allowed anywhere near his own property after trying to evict his tenants illegally.

Another landlord built an entire unauthorised sports and leisure complex in his garden, but was forced to remove it.

It seems there’s a lack of consistency in how councils deal with rogue landlords, resulting in the National Residential Landlords Association calling for improved enforcement to weed out the rogues that give good landlords a bad name.

As many have rightly highlighted in the comments section at the bottom of our stories, you can have bad tenants, just like you get bad landlords.

December saw one of the most serious examples of this in Manchester, when a landlord recovered his home to find every room piled with rotting rubbish, glass bottles and even faeces – here’s hoping he is able to recover some money from the rogue tenant.

Rent controls

Being a landlord in Scotland and Wales could get harder in the years ahead, as rules to control rents emerge.

In Scotland the appointment of a minister for tenants’ rights, Green Party co-leader Patrick Harvie (pictured, right), means controls are set to come in by 2025. How this will work is yet to be established, but if you’re a landlord in the country you should watch this space.

It’s rather gone under the radar, but it’s also likely rent controls be introduced in Wales due to a co-operation deal signed by the Labour-led Welsh government and Plaid Cymru.

Conclusion

Clearly, it’s been a challenging year for landlords.

Here’s hoping the government does more to incentivise green energy and more work is undertaken to help landlords rent to tenants on benefits without putting themselves at risk.

Looking ahead, the upcoming abolition of Section 21 will pose new challenges for landlords, though the government is so unspecific about the issue that it’s difficult to know when that will happen.

As ever I’d recommend landlords to focus on their knitting – be careful about who you rent to, maintain high standards and ensure you play by the rules.

From all at Property Investor Post, we wish you a Merry Christmas and Happy New Year!

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