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Author: Sorcha Dugmore

How to avoid EPC penalties

by Sorcha DugmorePosted on

What is an EPC?
An EPC (Energy Performance Certificate) is necessary for providing insight into the energy efficiency and emissions from a property.

The gov.uk website sets out clear rules for ordering EPC’s: 

  • When selling a property, you must order an EPC for potential buyers and tenants before you market your property to sell or rent.
  • In Scotland, you must display the EPC somewhere in the property, for example in the meter cupboard or next to the boiler.

An EPC will provide an energy efficiency rating for the reviewed property from A (most efficient) to G (least efficient), this rating will then be valid for 10 years. 

Changes to EPC policies

In April 2020 the government introduced the current rules for property EPC’s which apply to all existing tenancies. These changes prohibited letting properties which scored an F or G efficiency rating, landlords who failed to comply with these regulations were faced with fines up to £5000.

After a consultation in December 2020, the Government announced new standards for England and Wales which are set to come into law by 2025.

The change signifies a large-scale shift towards the prioritisation of environmental considerations in the UK property market. From the activation date of the new law, all rental properties will be required to have an EPC rating of between A and C. The regulations will apply to all new tenancies in 2025 and all existing tenancies by 2028.

Not complying with the new law after 2025 will result in a significantly higher penalty of £30,000. 

What can landlords do to avoid EPC charges? 

Landlords should now review the EPC ratings of the properties within their portfolios. For landlords whose properties have a rating of lower than C, it’s advised to start taking action now to prepare for the upcoming law changes in 2025.

The energy provider EDF outlines some of the most effective ways to improve the EPC rating of a property:

  • Adding/ improving loft insulation 
  • Adding/ improving wall insulation 
  • Replacing boilers 
  • Installing solar panels
  • Double glazing windows

The changes will inevitably be costly to landlords whose homes do not have existing energy efficiency measures in place. Landlords are advised to start implementing measures to improve property EPC ratings early in order to spread the cost over a longer period of time, making the home improvements more manageable. 

Landlords look forward to predicted drop in mortgage repayments

by Sorcha DugmorePosted on

Most UK landlords will be using fixed rate mortgages, but there’s good news on the horizon for those who aren’t. New analysis from wealth manager, Quilter, suggests that monthly mortgage payments could fall by around 25% by the end of 2023.

How does this affect landlords?
For affected landlords, this potential drop in mortgage costs could significantly increase cash flow, allowing them to increase profits or reinvest finances back into their rental property. For example, by using the additional income to pay for property repairs, improvements, or even to purchase additional rental properties.

Moreover, landlords may be able to consider mortgage repayment strategies to pay off their mortgages faster by making higher monthly payments or increasing their repayment frequency.


What evidence suggests the 25% drop?
Recent statistics released by the UK government’s house price index indicate that the average cost of a property in the country was £294,910 in November 2022. Mortgage rates surged to roughly 6% in the aftermath of the mini-budget, adding to the already high cost of investing in new properties. 

However, it is anticipated that house prices will fall by 8% in November 2023 as predicted by Halifax.

The director of Halifax Mortgages, Kim Kinnaird, said “We expected that the squeeze on household incomes from the rising cost of living and higher interest rates would lead to a slower housing market, particularly compared to the rapid growth of recent years,”

Halifax predicted that mortgage rates will continue to decline, potentially hitting 4%. As a result, the average UK house price could fall to £271,317, leading to an estimated 25% decrease in monthly mortgage payments compared to the previous year, with payments amounting to £1,145.

Karen Noye, mortgage expert at Quilter says:

“Rising mortgage rates have played a significant role in the affordability of buying a first home or moving home, and for many these costs were pushed to unaffordable highs. It is therefore a real positive that looking forward we can hope to see such a significant dip in monthly mortgage payments by the end of the year should house prices and mortgage rates continue to fall as expected.

The potential reduction in mortgage costs could make it easier for landlords to obtain new mortgages or refinance their existing mortgages. With lower interest rates, landlords may be able to secure more favorable loan terms or lower monthly payments. Additionally, with a lower mortgage payment, landlords may be able to increase their borrowing capacity, allowing them to expand their property portfolios.

Whilst substantial evidence points towards a fall in mortgage rates, this is still vulnerable to many different factors such as inflation, government intervention, the type of property and location. It is not impossible that mortgage rates will rise during 2023, and landlords should stay cautious and up-to-date with new developments as the year progresses.

Potential tax reform for landlords in 2023

by Sorcha DugmorePosted on

Landlords are urging a tax reform in order to combat the rental crisis sweeping the country. In the last year, mortgage prices have been steadily rising for buy-to-let landlords which for many means that selling their investment has sometimes seemed more financially viable than continuing with their rentals.

This has been bad news for tenants, with more people seeking rentals than ever before, in December 2022 Zoopla reported that tenant demand is 46 per cent above the five-year average, while total supply is 38 percent lower, highlighting a significant supply and demand challenge within the UK rental market. 

The widespread supply crisis has additional implications for renters from lower economic backgrounds. With reduced suitable affordable accommodation on the market, many renters will be forced into low quality rentals.

Tax challenges being faced by landlords

Tax changes which have been implemented over the last few years have had a significant impact on landlords. Since the introduction of Section 24 tax ruling in 2015, which means that landlords can no longer deduct their mortgage interest payments from their rental income when calculating their tax bill, landlords have faced increasing challenges and uncertainty around the profitability of their investments.

Additionally, landlords will be familiar with the additional 3% stamp duty surcharge for second residential properties and investments. Introduced in 2016, the reason for the surcharge was to combat housing and financial challenges caused by a nationwide increase in second home ownership.

Conservative MP, Andrew Lewer, made the case in the House of Commons Magazine for a tax reform for property owners, stating “Restrictions on mortgage interest relief and the imposition of a stamp duty levy on the purchase of homes to rent out have indeed made life more costly for landlords.”

In the article Lewer suggested that increasing tax and mortgage rates is contributing to landlords choosing to sell their investments which no longer seem financially viable to keep, causing significant challenges for the UK rental market.

“Marry this to the uncertainty surrounding the government’s plans for the sector, whether in energy efficiency requirements or the ending of Section 21 repossessions, and you do not exactly have an attractive market.”

Lewer wants to see a reform which scraps the 3% stamp duty surcharge for additional homes which he believes will greatly increase the number of new privately rented homes being made available across the next decade. He also suggested an unfreezing of Local Housing Allowance and better security for future rental regulations to encourage more long term investment. 

How landlords can increase rental prices fairly

by Sorcha DugmorePosted on

Average rental prices are increasing across the country with rental demand outweighing housing supply, but how can tenants cope with rising rental prices? And what can landlords do to protect their investments? 

Almost two-thirds of UK landlords will be forced to raise rental prices by at least 10% within 2023 if market conditions don’t improve. Increasing rental prices is a necessity for landlords seeking to protect their profits, but this will be at the expense of tenants who are unable to keep up with rising costs teamed with the cost of living crisis. 

Research by Aldermore Bank found that landlords are conflicted about increasing rental prices at this rate during such a challenging financial time for tenants; with 64% of landlords stating that they would be worried about their tenants being able to keep up with increased monthly payments. 

Guidelines on increasing prices for your existing rentals 

For landlords who are in a position where increasing rental prices is necessary, the below guidelines must be followed to ensure fair and legal practice and to minimise negative consequences for either party. 

  • Tenancy agreements should always include how and when rent prices will be reviewed. Landlords are responsible for ensuring they follow-out the agreed pre-agreed process for increasing rent. 
  • Landlords must seek permission if they want to increase rental prices by more than previously agreed. 
  • Rental increases must be fair and realistic in consideration of local rental prices.

If the tenancy agreement does not state the procedure for increasing rental prices, landlords can: 

  • Increase the monthly rent of a property when the lease is renewed. 
  • Agree a rental increase with the tenant where the tenant must provide a signed written agreement of the rental increase. 
  • Use a landlord notice to increase rent after a fixed term has ended. 

Long-term solutions 
Whilst landlords are facing many serious short-term challenges which are driving up rental prices, landlords should continue to think about their investments with a long-term perspective.

Whilst landlords generally seem concerned about rising living costs, Aldermore’s study revealed that 54% of landlords still feel optimistic about the future. Additionally, it continues to be widely accepted that buy-to-let investments are still a stable way to make a good income.

By making intelligent investment plans, avoiding panic-decisions on current rentals and preparing properties for the future (such as improving energy efficiency), there is still a bright future for buy-to-let landlords in the UK.

How to guarantee rental payments as cost of living increases

by Sorcha DugmorePosted on

Cost of living prices in the UK have been steadily increasing over recent years, having serious consequences for renters. A study in August 2022 revealed that food prices had risen by 12.5% compared to one year earlier. Additionally, rising gas and electric prices are putting huge strains on renters across the UK trying to keep up with the rising prices without compromising on their quality of living. 

Many renters are now facing difficulties being able to pay their monthly rent, due to no fault of their own. Long-term renters chose rental properties which fitted their budgets given the average cost of living prices at the time of entering their rental contract. However, renters who have been in their property for 2+ years are now finding their financial circumstances drastically changed, despite having stayed in the same property. 

Whilst a lot of renters have developed plans to cope with the rising costs, the significant increase in cost of living is inevitably causing serious problems for some renters, with knock-on consequences for landlords as tenants struggle to pay rent each month. 

What can landlords do to guarantee rental payments? 

When entering into new rental contracts, landlords should now pay more attention than ever to the average cost-of-living in the local area, and account for this when bringing in new tenants. Ensuring that your potential new tenants can provide proof of yearly income 30 times the rental cost will create a safety-net which should guarantee timely rental payments each month, whilst leaving space for cost of living prices to increase further throughout the next year. 

In addition to this, the most effective way to ensure timely rental payments is to enter into a “Rent Guarantee Scheme”. For a small monthly payment, this insurance will guarantee rental payments when a tenant does not pay their rent within 10 days of it being due – meaning that landlords will receive the rental payments each month even when their tenant is unable to pay. 

In summary, the cost of living crisis in the UK continues to cause serious challenges for both tenants and landlords. However, by developing an informed plan, landlords can limit the impact these challenges have on their monthly profits and gain more security with their investments.

Time to invest in rental properties?

by Sorcha DugmorePosted on

New investment into private buy-to-let properties is stagnating, whilst tenant demand for rentals is increasing; it’s no surprise that the UK is facing a serious rental crisis. Increased competition for rentals across the country is driving rental prices higher each month – But private landlords still seem hesitant to expand their rental portfolios. 

Why are landlords selling up? 

Going back a couple of years, the pandemic created a huge sellers market across the UK. This, teamed with Rishi Sunak’s stamp duty holiday, created a “selling fever” as many private landlords jumped at the opportunity to sell-up. 

This loss of private landlords has been intensified in the last year by a decrease in new landlords wanting to invest in buy-to-let properties. While the current rental crisis will be a contributing factor as private landlords wait for a more stable economy, there are likely additional factors at play which make this investment seem less appealing. One concern for new landlords will be the costly eco upgrades they will be required to make to properties by 2030. 

Why should landlords invest in Buy-to-let now? 

With the above in mind, landlords will likely be concerned about stepping into new buy-to-let investments, but with the right plan 2023 might be the perfect time to invest. 

Historically, the best time to make an investment is when the property landscape looks bleak. Currently, buying competition is low and house prices continue to plummet across the country. In December 2022, the average UK house price dropped for the third month in a row by 1.5%, creating interesting affordable investment opportunities. 

With increasing rental demand landlords will be able to charge higher rental prices, driving up yields for properties which were bought for lower prices. 

Landlords who are still considering selling-up should consider selling their more expensive properties in the South in trade of new affordable investments in the North. Rental yields are increasing rapidly around cities such as Birmingham and Manchester, now could be the perfect time to capture these opportunities whilst property prices are still low. 

Whilst no investment is risk-free, a property investment strategy tailored for the current market can still yield very profitable results. There will be some short-term hurdles which come with investing during a rental crisis but the right investments should lay a strong foundation for a lucrative long-term investment.

Best investment opportunities for 2023

by Sorcha DugmorePosted on

A new year often provides an opportunity to take stock of your current investment and reflect on your ambitions for the year to come. You may be considering new investment opportunities or wondering how the housing investment landscape has changed over the last year. 

To help you start your new year with a plan, we’ve identified some investment opportunities which have a lot of potential in 2023. 

Apartments or houses?

Whilst traditionally you may have sought out larger properties or single houses, it’s time to think small and explore apartment rentals. Generally, apartments offer a lower capital entry point, higher yields and more of a hands-off, hassle-free investment. With rental prices continuing to increase, young renters will be seeking cost-efficient homes which will undoubtedly continue to increase the popularity of apartments vs houses. Being a more cost-efficient entry point, apartments are a great starter property for new investors. 

Student Accommodation 

As we’ve covered in a previous article, a handful of northern student cities seem to be leading uk rental yield increases. Including; Newcastle Upon Tyne (Avg. 9.8%),  Manchester (avg. 10.1%), Bradford (10.6%) and Nottingham (11.3%). Renting to students often bring higher yields by charging rent per person rather than by property. Student rentals in busy cities will always be in high demand, making for a fast tenant turnover with each new semester. 

Looking beyond London

Research suggests that cities in the North and Midlands are becoming the new hot-spots for property investment in the UK. With cities such as Birmingham and Manchester rapidly growing in popularity with both movers and businesses (attracting higher numbers of young professionals) these cities are prime hot-spots to invest in early 2023 before property prices peak with the rising popularity. 

Property will always provide great investment opportunities, but it’s vital to be strategic with your investments to ensure you are getting your desired yield. Always conduct thorough research before making a new investment. 

New limitations on social housing rent increases

by Sorcha DugmorePosted on

Driven by inflation and high rental demand, rental prices are increasing across the country. But what does this mean for landlords? And what are your limitations when considering rental increases? 

Social Housing rental increases 

Housing associations are considering the impact of rental increases for social and affordable housing tenants; several options are now being considered to offer support to tenants dealing with these price increases. Most notably, new limitations are being implemented in 2023 to cap rental costs for social housing tenants. 

Why does action need to be taken? 

Monthly rental costs for Social housing are permitted to increase by up to CPI plus 1% annually. However, in August 2022 the Bank of England forecast that CPI would be 9.9% in Quarter 3 of 2022, suggesting very significant rental increases would be permitted in 2023-24. These increases will inevitably cause significant pressure for some social renters as they struggle to keep up with the price increases. 

In October 2022, the UK government launched a consultation to cap these social housing rental increases in 2023. The consultation proposed to protect existing social tenants from significant rent increases in 2023 by capping social housing rent increases from April. The consultation considered rental increase caps at 3%, 5% and 7% in response to these concerns. 

Whilst many social housing providers might independently choose to cap property rental below CPI plus 1%, imposing a rental increase ceiling would provide protection for tenants who are in exceptional circumstances. 

The Government has now confirmed that these rental increases will be capped at 7% from April 1st 2023, this change also applies to shared ownership tenants. 

A detailed report of the October consultation can be found here. 

The new cap on rental increases for social housing tenants in 2023 should offer a sense of security and protection to tenants concerned about rental increases. 

Government scheme allows tenants to buy share of their homes

by Sorcha DugmorePosted on

As part of the Right to Shared Ownership scheme, residents in social and affordable housing can now apply for the chance to buy a share in their rental home. 

The government is positioning this scheme as an alternative route to buying a home for those who would have previously found the step challenging. Lucy Frazer, Housing Minister, suggested that this scheme has been put into motion to provide tenants with the chance to live in a home of their own. 

What does this mean for tenants? 

Affordable and social housing tenants will be provided with the opportunity to own a share of their home as a leaseholder. The tenant will usually be required to pay monthly service charges on the building which will include maintenance charges. 

What does this mean?

  • Tenants will be able to buy a share of their property worth between 10 and 75 %
  • Having a share of the property provides the tenant with more control over the home they live in
  • Becoming a shared owner would require the tenant to take out a mortgage while continuing to pay rent on the remaining equity, increasing living costs for the tenant
  • The Right to Shared Ownership scheme is not available in Scotland, Wales or Northern Ireland.

Which Tenants could be eligible to use this scheme? 

Tenants can apply to buy a share of their home when:

  • It is the tenant’s main home
  • The tenant has lived in the property for at least 1 year
  • They have been a tenant of social or affordable housing for at least 3 years
  • The property is eligible for the Right to Shared Ownership scheme (Landlords will be able to confirm this)

 The UK Government plans to make the Right to Shared Ownership an option that is available to more tenants in the coming years.

What does this mean for Landlords 

  • The tenant will become a leaseholder and be liable to pay service charges for necessary maintenance on the property at the same rate as someone who owns 100% of the equity on the property
  • There is an ‘initial repair period’ whilst the scheme is implemented. Meaning that costs such as structural repairs and installations will continue to be the landlord’s responsibility for 10 years after the property was built
  • If a shared owner does not pay their rent, there are measures in place for landlords to regain full possession.