The new rules for rented properties with effect from 1 April 2020 apply to all tenancies. Any new tenancy, renewal or extension can only be granted on a property with a minimum energy rating of E.
Despite the inevitable challenge of a change (albeit for a sustainable purpose), our latest BM Solutions/ BVA BDRC temperature check found that 39 per cent of landlords have already taken steps to improve the energy efficiency of their portfolio in the last 12 months, with a further 49 per cent considering doing this.
This is great, positive news showing landlords are clearly getting to grips with what the changes might mean for their own portfolios. Brokers will also be working hard to raise awareness among clients between now and then as well as understanding how lenders will have adapted processes to also take account of the changes.
More broadly, continued turbulence in the UK residential buy-to-let industry continues to chip away at landlords’ confidence in both the private rental sector as well as their own lettings business.
These levels are both at an all-time low – according to our latest Landlord Panel data. However, taking these findings on their own could be painting an overly pessimistic outlook.
The study found that an equal proportion of landlords – nine per cent – bought and sold property last quarter, and profitability even remained unchanged with 84 per cent of landlords making a profit.
Those in the South West reported the strongest tenant demand compared to landlords in outer London.
In the East of England, landlords were more positive about the prospects for their own lettings business, with 36 per cent saying their expectations for their own lettings business over the next three months were either ‘good’ or ‘very good’ in comparison to the UK average of 28 per cent.
Some 14 per cent of landlords in this region were also likely to have bought a buy-to-let property in the last three months.
Landlords in the East Midlands achieved the highest average rental yield of any region, at 6.1 per cent, compared to the overall UK average of 5.6 per cent, and London’s 5.1 per cent. They also reported fewer arrears or voids.
In contrast, landlords in the capital were least active in buying and selling property in the last three months, with just four per cent adding property to their portfolio and one per cent divesting.
Overall, it’s clear that the private rental sector plays an important role in providing a supply of homes to those who either aren’t able to buy a property, or who choose the flexibility of renting.
Despite the impact on current confidence levels caused by broader uncertainty and a raft of shake ups in recent years, history has shown that the sector always bounces back.