Landlords can expect various changes and developments to come into effect during 2024. While the Renters Reform Bill is set to grab the headlines, other factors are likely to make just as big a difference.
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It’s important to prepare and plan to ensure your business continues to run smoothly, without falling foul of any regulations.
Renters Reform Bill
The Renters Reform Bill is steadily making its way through the various stages of Parliament and there are suggestions it could become law at some point in 2024.
This is the single most far-reaching piece of legislation on the horizon for landlords, as it contains several significant reforms.
If passed in its current form, it will include new laws to govern how often a landlord can increase the rent: tenants will be able to go to a tribunal to dispute what they feel are excessive rent increases.
To speed up landlord/tenant disputes, a new ombudsman will be introduced to avoid costly court actions.
Landlords will no longer be able to issue a blanket ban on pets. Tenants will be able to request to keep a pet and landlords must have a genuine reason for refusing.
However, the controversial ban on no-fault evictions has been temporarily removed from the Bill. This was a key proposal in the Conservative Manifesto of 2019.
It would have given landlords less powers to evict tenants, other than for serious reasons such as antisocial behaviour.
However, last year, the ban was removed from the Bill after legislators ruled changes were needed to the courts system before it could be introduced. A timeframe has not been set to make the change.
Landlords will now have more power to evict tenants for serious breaches, such as repeated rent defaults and antisocial behaviour, if the Bill becomes law.
In November 2023, new amendments were made to prevent landlords from placing a blanket ban on tenants with children, or those on benefits. This is aimed at protecting the vulnerable.
Currently, the changes concern only England and Wales, but there are plans to extend them to Scotland at a later date.
Landlords need to keep up to speed with the proposals and if the Renters Reform Bill becomes law in 2024, they must ensure they adhere to the new regulations.
Changes to house prices and rents
Economists have predicted house prices are going to fall and rents are going to rise in 2024 – which could potentially be a positive factor for landlords.
Rents are increasing due to a national shortage of buy-to-let properties. Many landlords are having to increase rents to help fund their own higher costs due to the economic crisis.
Some have sold their portfolio and left the market due to financial pressure, with 14% selling their rental properties in 2023.
However, according to research by Hamptons, the projections for 2024 could have a more positive outcome for landlords.
The general increase in rents will provide a real chance to stabilise their finances in a challenging market – especially the 38% of landlords who own their property outright.
Their income could increase significantly and without a mortgage to pay, they will have more money in the coffers without the accompanying expense of monthly repayments.
The trend for lower house prices has been occurring throughout 2023, when they reduced by 1.2%, according to the Land Registry. London experienced the biggest reductions.
However, it is a very complex market. While Zoopla and Rightmove are forecasting a drop of 2% and 1% respectively, Halifax has more positive news for property owners, as its data showed a 1.7% increase in property prices in 2023.
This bucked the trend, and some economists are viewing it as a positive sign of market recovery. Halifax attributed the rise to the general shortage of properties on the market.
The biggest area of decline in rental sectors is in HMOs, which has shrunk by 2.4% since 2021, yet this is the type of property many tenants on a tight budget require.
Some experts are predicting interest rates could fall in March 2024, presenting new opportunities for buy-to-let investors who may be considering expanding their portfolio again.
The cost of the average buy-to-let fixed-rate mortgage is starting to drop slightly, according to analysts, so this could be a good time to follow the market more closely and check the prices of properties that could be converted into HMOs to fill a gap in the market.
Furnishing the property need not be a hassle, as professional suppliers provide packages of furniture for landlords, making it easier and more cost-effective to kit out your rental portfolio.
New energy regulations scrapped
Previously, the government had announced plans to make rented homes in England and Wales more energy-efficient through new regulations.
Under the present laws, privately rented properties must have a minimum energy rating of E. However, the government planned to increase this in April 2028 to a C-rating.
Landlord organisations said this could spell disaster for some landlords, as it could cost them between £8,000 and £10,000 in home improvements to bring older houses up to modern standards. This would be money they simply couldn’t afford in the current climate.
However, Prime Minister Rishi Sunak has revealed he is scrapping the plans, as he feels it’s “wrong” to burden already struggling landlords with more expenditure for renovations.
According to a report in The Times, this piece of news, on top of the rent increases, could finally help landlords to get back on their feet in 2024.