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Energy performance rating deadline
You’ve probably already heard the news - EPC legislation is changing. From 2025, new tenancies must achieve a minimum rating of a C.
In May last year, Rightmove reported that nearly 60% of available rental properties on their portal still had an EPC rating below C.
This means there's a lot of work ahead to get every property up to standard by the 2025 deadline for new tenancies. Landlords waiting until the last minute to raise their ratings will face heavy competition in the race for contractors.
This is all to say that it’s time to start planning now.
To meet the deadline and beat the queues, you can focus on low-energy lighting, insulation, and window improvements.
We've also found that an increasing number of residents are searching for 'energy efficient' properties to try to cut their bills and avoid the pinch.
So, not only will these improvements keep you compliant, but they'll also make your property more attractive to renters.
Expanding licensing schemes
2022 saw property licensing schemes expand to take over several London boroughs, including Barnet and Haringey. So far this year, Ealing and Newham have joined in to implement property licencing schemes.
Other boroughs, including Kensington & Chelsea, have either added to their schemes or are in active consultation, like Greenwich and Brent.
We don’t expect it to stop there; as the government tries to crack down on rogue landlords, we expect more licensing expansions to be implemented. Kamma, a tech suite with a host of property profiling products, predicts that over 525 schemes will be live in England and Wales by July 2023.
If your property is managed by Paramount, we'll take care of any licencing requirements that affect your property if and when they come into place.
If you have properties in your portfolio that we don't manage, make sure you're aware of any changes that might be coming into play in your borough. The fines for non-compliance are sometimes hefty - up to £30,000. According to Kamma, Camden is the top enforcer.
Rental demand is growing
It's fair to say that the rental market was massively busy last year, and we think it will continue that way. The demand for rental properties in London remains relatively high this January, with an average of just over 50 enquiries per property.
With mortgage rates still high compared to the last few years and a higher cost of living being felt by all, we expect that many who were hoping to buy their first property will choose to wait.
Those who aren't living at home will remain in the rental market and wait for more favourable mortgage rates to become available. This means even more demand for quality rental property.
That said, the increased cost of living is also a reason landlords should consider a rent recovery policy for their investments.
While we do everything in our power to ensure residents meet our strict affordability criteria, unexpected changes in living situations can severely affect a resident's ability to pay rent.
Last year, two of our landlords had residents who fell into arrears, and one of them entered a Breathing Space (a debt respite scheme introduced during COVID-19). This meant we couldn't chase their arrears for up to 60 days.
The combined arrears for both properties totalled £8790, but they didn't lose their income because both landlords had a rent recovery policy.
We encourage all landlords to consider a rent recovery policy because it's affordable and protects against significant financial loss. If you're not already covered, 2023 is the perfect year to sign up!
Capital gains tax allowance changing
Has the thought crossed your mind to sell your buy-to-let investment? Last November, The Treasury announced changes to the tax-free allowance for capital gains tax, which currently sits at a rate of 28% for private landlords.
This means landlords will have to pay more tax on their profits from selling a buy-to-let property. The tax-free allowance will drop this April from the current £12,300 to £6,000, and then it will drop again to £3,000 in April 2024.
We can't stress enough how important it is to really consider your options before selling. Why did you buy the property in the first place? Have you looked at all of your options to retain it?
In our experience, nearly all landlords thinking of selling decide to keep their property after speaking to us—and not because we're really persuasive. It's because there are many options out there that they simply haven't considered. You can read our blog here for more information!
