We take a look at the 2017 Housing White Paper and highlight what landlords should know.
The UK's decision to leave the EU has caused ripples in the Central London property market. There has a lot of talk about the negative effects leaving the EU will have on property prices and rents in Central London.
However, not everyone is looking on the dark side, and landlords who are able to react swiftly when economic conditions change will be able to find good opportunities in the coming months.
Many people who might have bought property in Central London are choosing to rent instead of buy. There is the possibility some EU citizens who want to move to the UK will do so before it finally leaves in two years’ time. This will only increase the demand for rental property, and could lead to rent rises. However, the recently published Housing White Paper discusses issues that all landlords should be aware of.
The Housing White Paper
The main bulk of the White Paper deals with the shortage of affordable homes in the UK, planning laws, the use of brownfield sites, the green belt, and other problems facing the country in terms of housing.
However, there are sections of the paper which focus on the rental market. Some of the issues raised will have a profound effect on landlords and letting agents if the suggestions proposed in the White Paper become law.
Letting agents fees to be abolished
In the White Paper, the government repeats its intention to abolish letting agent fees for tenants, a proposal which was first announced by Chancellor Philip Hammond during the Autumn Statement in November 2016. There is a feeling in some circles that these fees are onerous, and put an unfair burden on tenants.
Fee prices vary, but the majority of agents charge fees which reflect the work that has to be done when dealing with a new tenancy. An agent may spend many days or even weeks checking references, chasing landlords for paperwork, and arranging inventories. If the agent is prevented from charging the tenant a letting fee, the onus will fall on landlords either to carry out the work themselves or pay the letting fees to the agent.
The government also intends to bring in three-year leases. In their view, it will give tenants more security and continuity, and benefit landlords by potentially eliminating – or at least reducing - void periods. In many cases, this will be true. However, the other side of the coin is there will be no opportunity for a mid-year inspection, and this could lead to the landlord facing a hefty repair and decorating bill at the end of the three years.
It's still only a White Paper
The White Paper has yet to be debated in Parliament. There may be amendments to many of the recommendations contained in it before they make it onto the statute books and become law. Already some people are suggesting a cap on letting fees, or allowing the tenant to pay them over a set period of time. This would prevent tenants from having to find a lump sum for upfront costs. Who knows how things will pan out?
Despite what is contained in the Housing White Paper and the effect Brexit may or may not have on the housing market, we are convinced there are great opportunities for landlords with properties in Central London.
Are you a landlord looking to let property in Central London? Are you looking for good tenants?
Why not contact us today
and let us help you find them.