BLOG - Key Things Buy-to-Let Landlords Need to Know in 2020

03 March 2020

BLOG - Key Things Buy-to-Let Landlords Need to Know in 2020

03 March 2020

Every new year brings a gulf of changes to the property and lettings markets and it is key that landlords know exactly what this means. Here we’re looking specifically at what buy-to-let landlords may want to be fully abreast of, so they’re ready to make sensible business decisions for their property portfolios. Below are the key points to keep in mind when navigating the buy-to-let property market in 2020.

Rent Rises are Coming

Landlords are always pleased to hear when rental prices are set to increase and the trend from 2019 is continuing into 2020. Tenant demand and diminishing supply means rents will continue to rise across the UK, and as the economy is set to strengthen too, these price rises could be even higher. Buy-to-let rents specifically increased 1.5% to the end of January, which is a promising figure for those already in and looking to move into the sector.

Improved Rental Yields

Rental yields have consistently improved since 2017, with the North East showing particular promise. While it isn’t possible to predict exact percentages, landlords should be happy to see a continued pattern of increased yields. With steady, if not increasing demand, landlords have the potential to boost their profits considerably as the year continues.

The Impact of Brexit

We have already discussed how Brexit may influence the market and unfortunately it will rock the boat a little. Uncertainties may put some investors off, but tenants still need homes, so landlords may not have too much of a concern. Economic uncertainty may impact in some areas, but in others, demand remains high and as Brexit becomes a done deal, this uncertainty should also decrease.

Mortgage Rate Changes

Brexit is likely to have a significant impact on mortgage rates, due to how it will affect the Bank of England Base Rate. While we do not know whether it will shift up or down, any change in the base rate impacts on mortgage rates. Current advice is to consider remortgaging in the current market and getting the most value out of your portfolio while rates are low.

Changes to Stamp Duty

Stamp duty has always been a bit of a sore point for landlords. They have born the brunt of this cost since 2016, when the government initially targeted property investors with a 3% buy-to-let stamp duty. There are suggestions and rumours that foreign investors may be the next target of the government so new stamp charge duty increases may impact on this group of investors, looking to boost their UK property portfolios from overseas. This is one area all buy-to-let landlords should keep a close eye on as changes are almost guaranteed to occur throughout the year.

An End to Section 21 Evictions

2020 may be the year that unlawful Section 21 evictions are no longer possible. Also known as “no-fault” evictions, Section 21 notices tend to be used by unscrupulous landlords looking for a quick way to remove tenants who may have done nothing wrong. New regulations will have to come into place instead and the hope is this new process will be less administrative hard work and quicker for landlords who do have real issues with their tenants.

No More Right to Rent Checks

Right to Rent Checks were rules as discriminatory by the High Court in March 2019, making them a breach of human rights law. This means there should be significant changes to how landlords are allowed to vet their tenants coming very soon. The government has been evaluating the scheme and the current tenant referencing system is likely to be changed, with the practise probably fully stopping at some point in the coming year.

Energy Efficiency and Electrical Safety Checks Vital

As of April 1st, 2020, landlords are only allowed to let out private rental properties if they have an energy efficiency rating of E or above. This minimum E rating is something all landlords must achieve to be allowed to legally let their properties, even if there are tenants already in situ.

The same applies to electrical safety checks. Back in 2018 the government stated they wanted all landlords to conduct electrical safety checks at their properties every five years. The date still hasn’t been set in stone, but it is looking likely that 2020 will be the year this is fully implemented so landlords should ensure they’re ready.

The buy-to-let and wider property markets have faced an uncertain time with Brexit and government intervention changing the playing field at regular intervals. 2020 promising to bring some significant changes, especially around eviction legislation, but landlords can benefit from increased rental rates and yields throughout the year.

Connect with us

Sign up to our newsletter and we'll keep you up to date with
the latest property news and advice

Featured Properties