What does 2019 hold for Inverness Landlords?
The Paperwork Has Changed. Landlords who are re-letting their property, or letting it for the first time, will need to do so as a Scottish Private Residential Tenancy, as the familiar Short Assured Tenancy is no longer lawful. The Private Residential Tenancy (PRT) was introduced in December 2017 and with a year’s experience of it under our belt, we at Simply Let now feel familiar with it. We value its simplicity, and the absence of the need to serve critical supporting documents. We explained it’s effects in a couple of earlier blogs, which you can read here and here but, broadly, the PRT gives tenants considerably enhanced security by making it no longer possible to end a tenancy just because a contractual term has ended. There are of course certain grounds on which a tenancy can be ended, some mandatory and some discretionary, as explained in the blogs referred to but, generally, options for ending a tenancy are now much more limited.
The fact that tenancies can no longer be ended on a whim suggests that landlords will need to be more business-like in selecting their tenants if they are to minimise the possibility of difficulties. A little investment in a professional referencing agent would be sensible as referencing agents will undertake comprehensive searches to establish the credentials of applicants. Or, given the inherent risks of getting things wrong by falling foul of the 150 or so pieces of legislation that impact on residential property letting, why not appoint a good professional letting agent? Simply Let would be delighted to help! At the very least acquire awareness of best practice and earn yourself accredited landlord status through the excellent training sessions and materials provided by Landlord Accreditation Scotland.
The Inverness market is characterised by the presence of well-salaried professionals who could afford to buy but prefer to rent, perhaps because their time in Inverness is likely to be transient due to fixed-term contracts or the fact that they’re at a stage in career progression. These folks are looking for quality – both of property presentation and of tenancy management – and landlords who can recognise that and deliver will do well. The renting market overall is changing: it’s no longer about providing a roof for the needy, its about delivering a reliable renting experience to folks who have choice in the market. It follows that properties need to be well-presented and appealing if landlords want to avoid prolonged void periods, so don’t skimp on things like lampshades, mirrors and lighting, and make sure the decoration is fresh and attractive.
Dispute handling has changed.
Landlords should be aware, too, that disputes arising from residential letting are no longer dealt with in the Sherriff Courts. The new Housing and Property Chamber has been established to deal solely with private sector housing disputes. It’s a faster and less formal process than the court system it has replaced. It’s interesting and educational to look through its growing body of decisions, which you can do here.
Investment's getting more expensive As Finance Secretary Derek Mackay announced in his budget on 12 December, the Land and Buildings Transaction Tax (LBTT) Additional Dwelling Supplement (ADS) on the purchase of additional properties is increasing from 3% to 4% with effect from 25 January. This will clearly make acquisition of investment properties more expensive, and it’s difficult to see how that can be anything other than a disincentive for landlords, which seems perverse when government is applauding landlords for supplying much-needed accommodation. (The increase won’t apply if missives were concluded before the 12 December announcement date however)
Changes to EPC legislation
Landlords should be gearing up now for any necessary works to their properties in advance of the introduction, in 2020, of minimum energy efficiency standards for let properties. The details have still to be finalised, but it looks very likely that the following will apply:
- From 1 April 2020, any new tenancy will require the property to have an EPC of at least band E.
- By 31 March 2022, all let properties will need to have at least EPC band E.
- From 1 April 2022, any new tenancy will require the property to have an EPC of at least band D.
- By 31 March 2025, all let properties will need to have at least EPC band D.
The Scottish Government has said it will publish regulations in early 2019 that provide more detail on how the standards will be applied. We are eager to see the detail of exemptions and expenditure ceilings, and there are concerns over the impact of these changes on rural and older properties where options are limited or curtailed by building character.
Simply Let will update clients as soon as the situation is clear, but landlords faced with something like a boiler replacement or considering a replacement heating system would be prudent to anticipate these minimum standards in their job planning.
In summary, despite a less favourable tax-regime, more expensive investments and the challenges posed by minimum energy standards, things remain positive for Inverness landlords. The city enjoys a buoyant economy, and tenant demand remains consistently high. So, it’s a good place to be a landlord and we can’t see that changing much for the foreseeable future.