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By Bay Estate Agents
The lettings industry has been awash with increasing legislation for years now. Change is good if it means protection for tenants and support for landlords but at the moment the complexities and financial burden on landlords are causing many to consider their options. Here's what could be changed.
The upcoming election provides an opportunity for an overhaul and for the next government to intervene in a big way. The Association of Residential Letting Agents and the National Association of Estate Agents have issued their manifesto which, amongst others, covers the following key areas:
1. Regulation of property agents
Something that should have been made compulsory years ago and would have possibly prevented the need for so much piecemeal legislation is qualifications within the industry. The new government must commit to regulating property agents and take forward the recommendations of the Regulation of Property Agents working group chaired by Lord Best. “We call for government regulation to ensure that everyone in the industry is licensed, adheres to a strict code of practice and holds at least a Level 3 qualification (the level equivalent to an A-level). Regulation offers huge potential to professionalise the sector and to stamp out bad practice.”
2. Abolish the 3% surcharge on additional residential property
Currently, if you are buying an investment property in addition to your main residence, you are liable for a higher rate of Land Transaction Tax (LTT) in Wales and Stamp Duty Land Tax (SDLT) in England. The policy has had the effect of disadvantaging those buying their first property with the help of Guarantor Mortgages as well as homeowners who must purchase a new main residence before sale completion of their previous property. The policy has also contributed to a stagnation of the private rented sector, which is now the second largest housing tenure after owner-occupiers.
3.Introduce Property "Health Checks"
Since November 2016, Rent Smart Wales landlord licencing has been in force in Wales.
An annual MOT of rental properties should replace the expensive existing discretionary licensing schemes, improve enforcement, and give landlords a steer on how to maintain or improve conditions for tenants. “This would encompass all areas of property condition, including energy efficiency and minimum health and safety standards.”
4. Exempt downsizers from LTT/stamp duty or give them incentives to encourage them to move
Pensioners looking to downsize to a smaller home should be exempt from paying LTT/Stamp Duty. There should be a programme of building for specialised homes for older people, and the Government should introduce over-65s bonds for downsizers.
5. Court system reform
One of the main concerns about the proposed abolition of Section 21 is the state of the alternative avenues for repossession. Under the current system, it can take months to regain possession of a property. A potential Government ban on Section 21 evictions in England and restricting its equivalent in Wales, would put further pressure on current court processes. Introducing a dedicated Housing Court for England and Wales would considerably cut the time taken for a landlord to gain possession of a property and will make the process more straightforward for all parties involved.
6. Introduce a digital logbook for every property bought and sold
There is little more frustrating than the waste of time and resources when a property sale falls apart at the eleventh hour. To cut down the number of failed property transactions and speed up the process of property buying and selling, the government should introduce a digital property logbook. “This would allow for a more interactive, streamlined and transparent process for both home buyers and sellers.”
7. End the Local Housing Allowance cap and improve how Universal Credit operates
The continued cap in Local Housing Allowance is having a significant impact on its recipients’ ability to obtain good quality and well managed accommodation. The cap must be lifted in order to accurately reflect the cost of renting. To improve how Universal Credit is being delivered the next Government should do two things: “Firstly, tenants should have choice over whether the housing element of their Universal Credit is paid direct to their landlord. Secondly, the new administration should also introduce the option for tenants to be paid their Universal Credit twice monthly to assist with budgeting.”
9. An open database for rogue landlords and property agents
By disclosing the existing database for Rogue Landlords and Property Agents, currently only available to local authorities, access would be available for tenants, agents, and regulatory bodies alike. This will make the database a stronger deterrent to the rogue operators and will allow agents to better vet potential employees. The next Government must also merge the database estate agents to limit rogue individuals from moving into sales from lettings.
10. Review of landlord taxes - The next Government must launch a review of all taxes relating to private landlords. Investment is falling because the phasing out of tax relief on mortgage interest for landlords, the additional SDLT surcharge on buy-to-let property and the repercussions of the Tenant Fees Act means that landlords costs have significantly increased, and many landlords can no longer make ends meet. Through a review the Government will be better placed to introduce policies that reduce costs for those wishing to invest in the sector, which in turn will help reduce rent for tenants, lead to longer-term tenancies and make it more affordable for renters.
There's a better way to sell or let your home. At Bay, we really know the property market. We're local and we'll gladly share our knowhow and experience with honest advice that will be just right for you. So whether you're buying, selling or letting, get in touch. We're here to help.