We start 2020, yet again in the knowledge there are big changes ahead for landlords, with the government committing to pressing ahead with plans to axe Section 21 repossessions and the full impact of changes to Section 24 kicking in this year.Here we talk to industry experts about the changes we have seen in the last 12 months, and what to expect from 2020.
Alan Ward, RLA chairman said: “2019 has been a time of great change – both for the RLA and the sector as a whole, with the introduction of more regulation and red tape and talk on everything from compulsory landlord redress to plans for a national register.
Closer to home, 2019 was also a huge year for the association itself, with the association set to merge with the NLA early in the new year.
Looking ahead to 2020 there is, of course, much uncertainty.
The news the Conservatives will push ahead to abolish Section 21 repossessions as outlined in the Queen’s Speech, will see a further shift in the way the sector operates and we will continue to fight to ensure the necessary protections are in place to allow our members to confidently continue to offer the homes for rent that this country so desperately needs.
With Brexit set to take place in just a few weeks, the extension of Minimum Energy Efficiency Standards and the Tenant Fees Act and the full impact of mortgage interest relief changes kicking in, it is not surprising some landlords may be facing the year ahead with some trepidation.
However, with the sector already home to one in five households – a figure which is predicted to grow – demand for rental homes is higher than ever.
We must now equip ourselves to be the best we can be, to provide safe, secure, good quality homes for our tenants, whatever the challenges ahead.
Kate Faulkner, property expert and industry commentator said: “As far as 2020 goes, forecasters tell us that rents will do quite well.
“Any landlords so far who have not been increasing rents in line with inflation need to seriously start thinking about doing this next year and it’s a good idea for landlords to also think about having insurance for non-payment of rent.
“Whether landlords are looking at coming into the market or they’ve been in the business a while, the game has changed.
“In 2020 it is a good idea for landlords to have a proper look to see if a property is delivering back. Landlords really need to have a handle on cash flow, and what they’re a putting in and getting out in terms of return on investment “
Vanessa Warwick, landlord and co-founder of PropertyTribes.com said: “I think 2020 will be another challenging year for landlords, although, following the election result, some will be feeling more optimistic about the sector.
“As with the rest of the population, many landlords have been in a kind of holding pattern, “treading water”, and in the first quarter, I expect to see them becoming more active and making decisions about the future of their landlord business.
“On a positive note, the removal of uncertainty about Brexit and which political party will be in power, will kick-start the property market in early 2020 and we will see a lot more transactional activity, which is healthy.
“One thing we will also definitely see is landlords beefing up their tenant referencing procedures, and I think many more landlords will be more robust in their referencing, and also asking for a home-owner guarantor. I expect that there will be an increased awareness and use of Rent Guarantee Insurance as well.
“For my part, I am not purchasing any new property, and just focussing on maximising my existing portfolio by up-grades and improvements.
“Throughout January on Property Tribes, we will be running our “Landlord 2020 Vision” campaign with a new video each day from an industry commentator with practical things that landlords can do to make 2020 a profitable and successful year.
“Contributors include property investor of 40 years, John Howard, and Economics Editor of the Sunday Times, RLA policy director David Smith, along with landlords and other industry experts like Douglas Haig of the RLA and property analyst, Kate Faulkner.”
Doug Hall, Director of RLA mortgage provider 3mc said: “UK Finance figures showed that in the buy-to-let market last year, new lending was fairly similar to the year before, at around £37billion.
“However, what we have seen is a higher percentage of re-mortgaging than lending for new purchases, with a split of around 75% to 25%.
“It has been a year of uncertainty in terms of Brexit and with the political situation so uncertain and landlords have been looking more closely at managing their existing portfolio rather than expanding.
“The changes to mortgage interest relief (Section 24) have also seen a spike in enquiries regarding higher yielding properties such as HMOs.
“Before the election the predictions for 2020 were fairly similar, but the comprehensive nature of the Conservative win will give investors more certainty.
“My feeling is there is an element of pent up demand for new purchases and we will see a surge of buying within the first six months of the year.”
Sean Hughes, of tax advisory company, Comprehensive Tax Planning, said he expects a period of calm. He said: “I believe that once the 6th April 2020 changes (restrictions on lettings relief, faster payment of CGT, Section 24 being fully in force) we will see a period of stability on the tax front for property investors.
“Investing via limited companies will increase. Also, landlords moving properties into limited companies will increase, ensuring investors can make 100% deductions for interest payments.”
- What do you expect to see in 2020 – and what are your plans for your portfolio – let us know in the comments section below.