Hello Medway Property Investors,
With the final stage of the extended notice period on evictions ending this month, it finally looks like we are getting out of the dark, dark tunnel of COVID-19 and can begin moving into a more ‘normal’ landscape.
However, something that has come to light is the amount of legislation that buy-to-let landlords now need to adhere to. I will be touching on some points in this article; however, it has certainly got me thinking that we could be on the cusp of an era where the self-managing buy-to-let landlord is a thing of the past.
Certainly, being a buy-to-let landlord is tough and it is disappointing to so regularly read about how landlords are made out to be money-grabbing, lazy good for nothings in the media compared to those who work hard for their money. This has particularly been highlighted with the way that there have been calls for a property tax to fund health and social care (amongst others).
With rising house prices, homeownership is getting further away for many young people, and as more and more need to rent, there’s quickly becoming a ‘Generation Rent’ who certainly do have a mixed experience. This means that the future potential for the rental market is strong, however, the landscape has dramatically changed over the past couple of years!
Many Self Managing Landlords Are Failing In Their Legal Obligations
I read an article recently that commented on how numerous landlords are failing to comply with documentation such as Energy Performance Certificates, gas safety, and deposit protection. In addition to this, it highlighted how a staggering 77% of tenants do not remember receiving a copy of the Government’s “How To Rent” guide.
As a managing agent myself, I know the importance of keeping up to date with the ever-changing legislation that property owners need to adhere to. For example, did you know that there are around 180 rules and regulations that landlords need to meet? That’s a huge amount and it’s no wonder that landlords can so easily genuinely fall foul of multiple pieces of legislation purely by accident (whereas there are certainly still rogue landlords who will just not bother!).
Looking at some data, around 50% of landlords own under five properties and it may also be that they simply just want to ‘let and leave’, meaning the additional legislation can bring a particular headache.
Self-Managing Landlords Could Be risking Significant Fines
Not only do landlords risk getting themselves into a difficult position in relation to serving an eviction notice, not adhering to the legislation could prove to be very costly. Here are some headline points that landlords could be risking:
- Breach of gas safety regulations – £5,000 fine
- Failure to adhere to energy performance (EPC) legislation – £4,000 fine
- Breach of electrical safety regulations – £5,000 fine
- Tenancy Deposit Protection – Up to three times the deposit
- Right to Rent – Up to five years in prison
- HMOs – Up to £30,000 fine per offence / rent repayment / banning order
- Tenant Fee ban – £5,000 fine (first offence) up to £30,000 fine for subsequent offences
- Smoke detector and carbon monoxide regulations – £5,000 fine
- Housing Health & Safety System (HHSRS) – Unlimited
- Housing & Planning Act 2016 – Banning order
These are not vain threats and we regularly see fines pop up in the local media, such as how a landlord of a property in Hartington Street, Chatham was ordered to pay £5,000 earlier this year for failing to carry out essential repairs and another was fined £12,000 by Medway Magistrates Court for failing to maintain a damp and unsafe HMO.
In addition to these pieces of legislation, there are a number of things to watch out for such as the proposal to make all rental properties at least EPC C and regulation of property agents/landlords (plus undoubtedly more) plus the potential for a central database of all rental properties.
With tenants being more informed than ever on their rights, I really do suspect that the end is nigh for self-managing landlords who want a hands-off investment.
Ok, so it’s not the case for all self-managing landlords, however, the question does need to be asked as to whether the person letting a handful of properties has the time to keep themselves up to date with everything.
I often work with new landlords to overcome compliance issues as we onboard them to our management service and whilst there may be a management cost involved, the mitigation of risk it brings is potentially significant.
I hope you found this article helpful. If you have any questions regarding compliance, then I will be more than happy to book an initial consultation. The best way to reach me is through LinkedIn.