The UK’s buy-to-let landscape has changed significantly since the pandemic.
According to data published by the Office for National Statistics (ONS), private rental prices increased by 5.1% in the year to June 2023. But in some areas, the Guardian reports, rents have been hiked by as much as 20% this year.
Many of these rent price increases are being implemented as a direct result of rising mortgage costs. The Bank of England (BoE) brought the base interest rate from 0.1% to 5% between December 2021 and June 2023. Unsurprisingly, as a result, as of 19 July 2023 the best rate available on a two-year fixed-rate mortgage deal was 6.39%, with five-year deals available at a minimum of 5.69%, Moneyfacts states.
All this to say: if you are a landlord with multiple properties, you may be finding it difficult to shoulder increasing monthly repayments.
Aside from this central challenge, though, 2023 has also brought some lesser-known rule changes that buy-to-let landlords should be aware of.
So, if you’ve been focusing on price rises, you may have missed these two key rule changes to the UK rental market.
1. Energy Price Certificate rules have tightened
An Energy Price Certificate (EPC) shows how energy-efficient your property is. It looks at how well the home retains heat, and its CO2 emissions.
Starting in April 2023, all rental properties (including those under ongoing tenancies) must meet the government’s Minimum Efficiency Standards, which means they should have an EPC rating of “E” or above.
And, from April 2025, landlords must update their homes if necessary to meet an EPC rating of “C”. This will apply to new tenancies, and come into force for ongoing tenancies in April 2028.
So, if your rental homes currently have an EPC rating of “E”, you’re out of the woods for now.
However, by 2025, you may need to make the necessary renovations to achieve a “C” score if you wish to keep your properties tenanted in future.
2. Pet regulations are shifting in favour of tenants
“Well-behaved pets” have been allowed into Scottish rental properties since the new Model Private Residential Tenancy Agreement was produced by the government in 2020. Under this agreement, while landlords can still refuse pets in extenuating circumstances, tenants in Scotland may no longer face a blanket ban on having pets in their rented home.
In England, meanwhile, similar reforms are only just coming into force. The government’s Renters (Reform) Bill, proposed in May 2023 and set to be passed in 2024, “will ensure landlords do not unreasonably withhold consent when a tenant requests to have a pet in their home, with the tenant able to challenge unfair decisions”.
The bill also states that landlords will be allowed to request additional insurance if a tenant wishes to have animals on the property, to ensure that any pet damage caused will be covered by the tenant.
This bill, if passed, may see an end to total pet bans on rental properties in England.
So, if you have properties in Scotland or England, it’s important to note that you may no longer be able to refuse your tenants’ pet requests unless there are behavioural or welfare concerns. If you do refuse, your tenant can make a legal appeal.
Get in touch
If you’re a landlord wishing to expand your property portfolio, or you’re worried about the current mortgage climate, contact us today. Email enquiry@edinburghmortgageadvice.co.uk or call 0131 339 2281 to speak to us.
Please note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
All contents are based on our understanding of HMRC legislation, which is subject to change.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it. Buy-to-let (pure) and commercial mortgages are not regulated by the FCA. Think carefully before securing other debts against your home.
