It has been a busy and unforgettable year for the rental industry. The Tenant fees Act was introduced in June, which adjusted the way of the private rental sector (PRS). Now after the general election has occurred, we are sure there will be more changes within the rental market over next couple of months and years with the flux and growth for the PRS.
Landlord must remember to reduce deposits to correspond with the legalisation before 1st June 2020 due to the introduction of the five and six week deposit cap due to the Tenant Fees Act. Due to the act being introduced, it is a no longer legal to take security deposits equalling annual rentals over £50,000 for new tenancies. However, you can still hold deposits above the cap for any existing agreements but they will need to be in line with the legalisation before 1st June or the next time the agreement renewals (whichever comes first). A break in law of the Tenant Fees Act could cost you a fine between £5,000 to £30,000. To avoid this you should be complaint and return cash to your tenants, which is legally theirs.
As well as the introduction of the Tenant Fess Act, the government announced they intend to remove section 21 evictions process in April 2020. The government has explained that they tend to increase section 8-eviction process to accommodate to removal of section 21 from the Housing Act 1988 as well as accelerate the court process to make it easier for landlords to reclaim possession of their properties, although at this time no further comment or discussion has come from the government following this up.
For Landlords to be prepared for this outcome of eviction process, they need to keep up with the news and keep in contact with their letting agents to make sure they are aware of what is happening and when. Once the changes are finally drawn, contracts will need to be reviewed and Landlords will need to understand the new system and rethink their approach to evictions going forward.
Over the past year, The Bank of England has allowed Landlords to benefit from some tremendously satisfactory buy to let mortgage rates and fixed deals due to their base interest rate hovering at record low levels. The current base rate for The Bank of England is at 0.75% and whether it rises or decreases will fundamentally depend on the outcome of Brexit now the general election has occurred. For the last couple of years, there has been low buy to let mortgage rates for Landlords but will this be the situation for 2020?
The sole purpose of this blog is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited trading as Intasure accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.
Published by: intasure