Buy to let landlords were hit by the Chancellor’s plans to change mortgage tax relief in the summer Budget. George Osborne announced that the relief would be cut to 20% from 40/45%, which will be phased in over four years from April 2017. This fuels fears that landlords would increase rents to cover their loss of income.
A survey of landlords by the Residential Landlords Association found that 65% of respondents were considering increasing rents as a direct result of the budget.
Recent data released by Countrywide, based on figures from the Valuation Office Agency, has revealed that average rent in the UK has reached £937 per month. This is a 4.5% increase from one year ago.
Michelle Hayter is a Dispute Resolution Partner at Frettens, specialising in assisting both landlords and tenants in dealing with the various disputes that can arise. She comments on the stats, saying “Countrywide’s analysis concluded that private landlords hold onto their properties longer than homebuyers. Combine this with the increasing number of private landlords, the mortgage tax relief cut and the failure to build more houses; this is driving rent increases.”
Landlords must continue to be aware of their obligations on properties and to tenants. A recent example in the press is a landlord in Islington, who was recently prosecuted by the Council and faces an £85,000 bill for unlawfully letting a substandard flat. The flat was subject to an enforcement notice, flouted by the owner, which said that the flat was ‘an unsatisfactory and substandard unit of residential accommodation with inadequate light and outlook and poor living environment.’ Included in the bill was a confiscation order of £70,000 in relation to the profits made from renting the flat.
Michelle concludes with a warning to landlords “Be wary and ensure that your properties are properly maintained. The law often falls on the side of the tenant and, particularly in light of the statistics reported above, if landlords can be seen to be making money from properties while exploiting their tenants they could face very large claims. I would be happy to discuss and review any documentation for landlords to ensure that they have everything correctly in order to avoid claims and disputes arising in the future.”
Our Dispute Resolution team, based in Christchurch, also cover Bournemouth, Poole and the New Forest. For a free initial chat, please call 01202 499255 and Michelle or a member of the team will be happy to discuss any questions that you may have.