The challenges, now more than ever, being faced by landlords in both the private and social sectors are huge
With a long-established real estate practice, Ince has years of experience in advising landlords of residential property. The challenges, now more than ever, being faced by landlords in both the private and social sectors are huge:
• Increasing legal and regulatory obligations
The legal and regulatory obligations faced by landlords are ever increasing. The government has started a path towards leasehold reform in the enfranchisement space and has recently backed setting the ground rents for new build houses at a peppercorn. It will also very likely continue to introduce further regulation in the day to day leasehold management sphere including notice periods, repossession procedures and service charges. The steps taken to protect tenants during the Covid-19 pandemic gave some insight into this.
The Grenfell Tower tragedy has understandably led to much-needed attention to the regulations surrounding fire proofing of buildings but the processes introduced to deal with this such as the EWS1 forms have also attracted criticism from landlords and tenants alike.
In a recent study of 1,000 landlords, performed by AXA*, the challenges faced by landlords were considered. It found that 48% of landlords believe that legislation and regulatory issues are the biggest challenge to overcome. This echoes the conversations we have with our landlord clients on a daily basis.
• Rent receipts
The ability of tenants to meet their rent obligations has clearly been impacted by the economic effects of Covid-19, and the ability of landlords to recover possession in the event of default due to the stays on possession proceedings imposed by the Coronavirus Act 2020 and legislation made under it.
• Reductions in tax relief
With mortgage interest no longer deductible from rental income, and income tax relief on expenses limited to basic rate relief, the margins available to private residential landlords have been significantly eroded in recent years. Landlords must take steps to structure their ownership of property in the most tax efficient way.
• Maintaining property portfolio
Landlords are also feeling the burden of physically maintaining their property portfolio whilst bringing new stock to market. The big issues include ongoing labour and material shortages, as well the need to meet the vital considerations of energy efficiency and sustainability. It is therefore no surprise that in the above mentioned study by AXA*, it was found that 42% of landlords agree that increased maintenance costs are one of the biggest challenges faced.
Life has rarely been more complex and challenging for residential landlords. It is more important than ever for landlords to have specialist advisors to help them to navigate the ever-changing landscape.
Ince is delighted to celebrate successes and to acknowledge excellence by sponsoring the Residential Landlord of the Year 2021.
* Research carried out online by Opinium on behalf of AXA between 17 to 27 September, among a national poll of 1,000 UK landlords.