Landlords have already seen the effects of a reduction on the tax reliefs they can claim, and more big changes are planned to happen over 2019. Yet, with Brexit still in negotiations and the future of the country still in a state of flux, nothing is certain. We take a look at what could happen should things go ahead as planned and the impact they may have.
Capping tenant fees
At the moment, tenants are often required to pay a number of fees on top of their deposit and rent, including inventory and referencing fees. The change means that charging these will be banned for both landlords and estate agents, so you will need to foot the bill for these yourself. However, all is not lost. One of the reasons why these were banned is because the charge was seen as unreasonable for the service, so the impact on your finance shouldn’t realistically represent the same amount the tenant would have paid.
Additionally, you will still have the right to request fees for things like loss of keys or late rent payment. Whilst you do have the option to recoup your costs in areas like rent increases, you will need to be mindful of remaining competitive in the market.
Capping tenant deposits
Whilst you will still be able to deduct damage from the tenant deposit, there will now be a limit on the amount you can ask for a deposit from the outset. Currently, most landlords charge around a month and a half’s rent for a deposit, but the government have proposed a cap of five week’s rent where the annual rent is under £50,000 or six weeks where the annual rent is over £50,000.
Whilst this could put a spanner in the works for some landlords, the proposed changes aren’t too dissimilar to the amount most landlords charge at the moment and the changes could make your property more accessible to a wider range of people.
The impact on your business
Whilst these changes may seem like more regulatory nonsense to cap your business earnings, they could serve to strengthen your relationship with your tenants whilst easing their own cashflow. The changes proposed are targeting unfair or excessive fees and charges, so the changes shouldn’t have a major effect on your earnings.
If you’re worried about the implications of these changes or any uncertainty surrounding Brexit and your insurance, make sure to call one of our team at Park on 0191 3780 716 or email firstname.lastname@example.org to ensure your policy holds up.