Here’s a heads up for our Simply Business landlords on what looks to be a busy year ahead.
We’ve compiled a list of some of the most important trends and changes that could affect landlords over the course of the rest of the year. Read on to find out how the private rented sector could change in the coming months.
There are few things that Brits, and British buy-to-let investors in particular, like talking about more than property prices. Following a period of intense uptick in the capital, prices have dominated headlines for some time. However, analysts expect there to be a slowdown of sorts during 2015. Last month the BBC asked a group of commentators how they expected prices to move over the course of the year, and the consensus was that there will be an increase of about 4 per cent – significantly down on last year’s 7.2 per cent rise.
Licensing has become an increasingly hot topic in recent months, following a spate of new schemes introduced by councils across the country. These have been accompanied by crackdowns on so-called ‘rogue’ landlords and letting agents, with some councils putting agencies who fail to meet their obligations out of business.
It seems likely that this trend will continue, with more local authorities choosing to initiate their own schemes. There is also some public appetite for a national licensing programme, although this is yet to be matched by political will in Westminster.
Pressure groups like Generation Rent have brought rent controls back to the top of the political agenda. According to the organisation, Brits “overwhelmingly back” rent controls, with nine people in support for every one who opposes their introduction.
Landlords have indicated that the impact on the private rented sector would be significant. According to figures from the Residential Landlords Association, three out of five would leave or consider leaving the market in the event that rent controls were instituted.
Earlier this month, Labour introduced plans for a new scheme under which landlords would be able to increase rents only by limited amounts, along with proposals for new three year tenancies.
Pension annuity changes
April will see the introduction of new rules that give those over the age of 55 more freedom to choose what they do with their pension. These individuals will be able to cash in annuities, taking out lump sums from the point of retirement. Many analysts believe that this will cause a spike in the number of new entrants to the private rented sector, with more people choosing to invest in buy-to-let property as a way of funding their retirement. This could increase competition in the sector, although there is some debate around the potential impact on rental yields.
Finally, and perhaps most importantly, many landlords are concerned about the potential for interest rate hikes. The base rate remains at its historic low, but towards the end of last year there was some speculation that the Bank of England could be preparing for an increase.
However, recent falls in inflation, along with warnings about potential deflation in the spring, have led many analysts to predict that the Bank will now keep rates on hold for longer. The CEBR believes that the base rate will stay at 0.5 per cent until spring 2016. That said, there remains concern amongst landlords that rates could rise sooner in the event that the Monetary Policy Committee adopts a more “buoyant” outlook for the UK economy.