Talking to Property Wire, chief executive of software company Goodlord William Reeve warned that together with the uncertainty of an election, rising costs, frozen tax thresholds and new regulation will see smaller and ‘accidental landlords’ exiting the market with these properties likely to be purchased by landlords with large portfolios and overseas investors.
Rent prices will increase again in 2024 with property consultancy JLL predicting a 5% increase as reported in Landlord Today. This rise comes on the back of average increases this year of 6% and 7% in Greater London.
A survey by Butterfield Mortgages found more than a quarter (26%) of buy to let landlords plan to increase the size of their portfolio compared to just 7% looking to exit the sector whilst two-thirds (67%) intend to maintain the current size of their portfolios.
Landlords also received a boost earlier this year when Prime Minister Rishi Sunak rowed back on the government’s net zero plans (20/09/23).
Among other things, landlords will no longer have to meet improved EPC ratings and the Boiler Upgrade Grant scheme, which provides grants to help households who want to replace their gas boilers with a low-carbon alternative like a heat pump, was increased by 50% to £7,500. In addition, around a fifth of homes will now no longer have to switch from fossil fuel boilers, including gas, to heat pumps or low-carbon alternatives by 2035.
The list of U-turns on the government’s net zero policy has been listed by Landlord Today although it also reports the chief executive of the National Residential Landlords Association (NRLA) Ben Beadle as demanding a plan to ensure a consistent framework for landlords to work towards.
Landlords who faced the stress and financial investment of having to undertake extensive work to ensure their properties met the minimum C EPC by 2025/2028 will no longer have to do so.
The current minimum E remains in place but there is now no deadline for enforced improvements which had left many landlords feeling they would have no option but to sell up. Not only will landlords be able to make improvements over a longer period, with the deadline removed, they are also now more likely to make an investment in properties which require extensive refurbishment.
Whilst the government has referred to these changes as coming about as a result of the nation’s current over delivery on carbon reduction enabling a revised plan that delivers a ‘pragmatic, proportionate and realistic path to reach net zero by 2050’, not everyone welcomed the move.
The National Housing Federation, which represents housing associations, told The Standard that the announcement was ‘disappointing’ and will leave renters facing higher energy bills for years to come. In fact, an analysis by the Energy Climate and Intelligence Unit (ECIU) calculated the cost of putting such energy efficiency measures on the back burner could cost households up to £8 billion in higher bills over the next decade.
The NRLA welcomed the fact that investment, which it reported to be an average of £10,000 per house to meet the previous proposed requirements is no longer needed, but called for government support of landlords to enable them to achieve energy efficiency goals as well as a clear plan of action.
Bonsors director Andrew Pollard said: “Despite the political uncertainty and the economic climate, the outlook for landlords is looking stable. The change in regulation direction earlier this year means that those landlords with older properties which would inevitably require large investment to have met government eco targets, especially in the current climate, were able to breathe a sigh of relief. However, the general consensus in the sector is that a clear framework of legislation to enable the country to meet carbon zero targets is much needed.”