The future is looking gloomy for the buy-to-let market, as landlords have to halt rent rises, are facing nightmare tenants, and could see high fines if they do not carefully check their tenants are living in the UK legally before signing a tenancy agreement.
Long-term buy-to-let investor Ralph Tennent says that landlords must look after their tenants.
Tennent states that it is simpler and cheaper to keep existing tenants than to find new ones. Properties with reliable boilers and central heating are most appealing to good tenants, he adds.
He says: “Earlier this year I realised three of my homes needed new boilers so I did a lot of research into the best replacement options.
“I found a company called Hassle Free Boilers which replaced them with the latest models with no upfront costs. It was the most cost effective way I could find, and as the replacements included a maintenance plan, my tenants can call Hassle Free direct if they have any problems.”
This system also includes gas safety checks, keeping Tennent practising legally in his properties.
“Changing a heating system can be tough but this time the process was painless for me and my tenants,” he says.1
However, letting specialist LSL Property Services claims that rent rises are being held back drastically.
Until lately, their research found that average rents in London have been increasing by up to 8% per year, but now, the average growth is just 1%.1
This is reflected around the country; however, quality homes in good locations can still take excessive rents.
If house prices are steadying, then landlords may not gain the high profits they have seen. Insurance company Axa state additionally, there is a large proportion of tenants causing trouble for their landlords.
Almost a fifth of tenants say that they have broken the terms of their tenancy agreements by having pets in their rental homes, and three in ten say that they frequently pay their rent late. One in ten has left their property before the agreement ended, to avoid paying final bills.
Axa have also reported that 15% of tenants have received noise complains from neighbours, and one in ten state that the police have been called to their property whilst they are living there.1
Landlords are especially aware of troublesome tenants, due to the Misuse of Drugs Act, that sees landlords facing prosecution if their tenant produces illegal substances in their house. The Immigration Act, coming into force next month, will also add pressure to landlords.
The new Act will see landlords face fines of up to £3,000 if they do not thoroughly check their potential tenants’ rights to live in the UK.
Axa’s Business Insurance Manager, Darrell Sansom, says: “New landlords in particularly may not realise all the legal implications and duties now involved in renting out a property.”1
A slice of good news for landlords this autumn is that mortgage rates are not increasing, and may continue dropping.
Lee Grandin, of Landlord Mortgages, says: “The price increases we have seen in the residential market over the past year have not yet filtered through to buy-to-let deals and some mortgage rates for landlords are actually going down.”1