With Brexit looming, it’s unclear what the state of the UK economy will look like in a few months’ time, let alone the private rented market.
While it’s right to be wary, Brexit doesn’t necessarily spell disaster for landlords. In fact, there may even be some positive developments. Here, we look at how Brexit will affect the rental market, what it might mean for landlords and how to protect your investment in this unsettling period.
Since February, 2016 it has been a legal requirement for landlords to ensure that their tenants have the right to rent in the UK. If landlords are found to be letting to an illegal immigrant, they could face fines of around £600 per tenant.
However, Brexit brought new uncertainties as guidance on the new regulations after leaving the EU were unclear, particularly in regard to the status of EU national renters.
For now, the Home Office have confirmed that during this transitional period, EU nationals will still have the right to remain in the UK and will be able to use their current passports or ID as proof of legal status. According to the Home Office, the European Union settlement scheme will provide legal EU citizens with digital documents to make these checks easier for landlords.
However, longer term this could cause issues, especially if longer term tenancy agreements are signed, as the legal status of some tenants may change post-Brexit.
The most recent update from the government confirms that the right to rent check regulations will stay the same until January 2021, regardless of whether a deal is made. Similarly, the requirements for Irish citizens will not change.
One of the easiest ways to stay on top of essential document checks is to enlist the help of a professional reporting service.
No Letting Go clerks can verify right to rent documentation at check in, to determine whether they match the tenant’s appearance as part of our right to rent service. This is particularly helpful for landlords who aren’t able to meet with tenants personally.
Brexit uncertainty has caused the UK housing market to slow down, with average UK house prices falling by £5000 at the beginning of this year.
This could be seen as a positive for buy-to-let landlords who can take advantage of this lull in the UK property market. For landlords looking to expand their portfolio, it could be your chance to buy for less.
However, a lack of stability is understandably putting some people off;
Combined, these changes are making landlords think twice about investing in buy-to-let as it may be harder to enjoy the same rental yields as before.
If you do decide to take the plunge, you may find a real buy-to-let bargain!
To minimise the risks, it’s worth doing your research to find the best place in the UK for rental yields.
Depending on what happens to Bank of England interest rates, mortgages could be affected by Brexit. It has been suggested that the base rate may rise after Brexit, which could make buy-to-let mortgages more expensive. One way around this could be to re-mortgage your property now, before the economy shifts.
Nonetheless, if this is the case, mortgages will be equally difficult to obtain for prospective house buyers, adding to the increase in those looking to rent.
The instability of the UK housing market could put off potential home buyers from taking any risks in the near future. With less people buying, this could be good news for letting agents and residential landlords, as more people will be looking to extend their lease.
Shortages in social housing could also result in a rise in rental demand, placing landlords and property professionals in the private rental sector in a good position.
Bearing this in mind, it looks like the rental market should stay secure for the foreseeable future.
One thing to think about is that the location of your rental property could have an impact on the number of prospective tenants looking for housing. For example, some No Letting Go regional branches in which a higher level of EU nationals reside experienced lulls after the referendum due to uncertainty surrounding legal status.
Providing quality rental properties that people want to live in will help minimise the risk of any void periods as we prepare for this transition. Staying on top of essential property maintenance and providing an appealing home for tenants will help to ensure you don’t lose out.
If you’re thinking of renovating your rental property or building property to rent, Brexit could make things a little difficult.
As much of the construction materials and labour resources used are imported from around the EU, tariffs and ease of supply could be affected. So, if you’re thinking or extending or renovating, you may need to save up more than you originally planned for to be on the safe side.
Thankfully, the government has confirmed that those with EEA qualifications, such as EU architects will still be able to work in the UK, even in the event of a no deal Brexit. Therefore, there shouldn’t be any disruption to ongoing work.
To sum up, Brexit may not be the blow some private landlords thought it might. Although it’s hard to predict what might happen in the coming months, unstable house prices and rising mortgage rates could even drive the demand for rental properties.
To make sure you don’t miss out when the time comes, it pays to have a solid plan in place. And that’s where we come in.
Our professional property inventory services provide you with the essential reports you need to stay on top of the latest legislation. Covering everything from right to rent to property appraisals, our teams of experts are here to help protect your investment and give you peace of mind.
Browse our full list of property services to find out more about our individually tailored services.
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