What Will Brexit Mean for My Rental Property in 2020?
The country has been put through the wringer over Brexit. Whether you are a Remainer or Leaver or opted out of the whole thing, it feels like the UK has been consumed by the Brexit saga since the 2016 UK EU Referendum. There has been a lot of debate about how it will affect the economy after it officially happens, and it’s really unclear the impact it will have on the private rental market.
Interestingly, though Brexit does mean you should take precautions as a landlord. It may not actually be the end of the world as a lot of people think it will be. There may be some real positive results. In the following post, we are going to consider what it may mean for the rental market and landlords.
Will it Affect The Right to Rent?
It is required by law that landlords make sure their tenants have the legal right to rent property in the UK before they take them on. The punishment for failing to do this is a fine of roughly £600 for every illegal tenant.
Although already in place, Brexit and the steady shift towards the exit have created uncertainty so there is no clear idea of how the regulations would be after Brexit had gone through. Especially with regards to the status of EU national renters.
According to the Home Office, while the transitional period is being worked through, EU nationals will legally be allowed to stay in Britain and use either their ID or passport as evidence of their legal right. The governmental department also stated that the Settlement Scheme for the EU will give EU citizens digital documents that will help landlords to check them quickly.
Looking to the future, this development may create issues. For example, if a long-term tenancy is signed and the status of tenants change after Brexit.
The most recent updates released regarding the right to rent check regulations are due to stay the same until at least January in 2021. Regardless of whatever deal is in place at that time. The same is true of Irish citizens living in the UK.
Are The Unstable House Prices Good News for Landlords with Buy-To-Let Landlords?
The uncertainty surrounding Brexit has caused a major slowdown in the housing market, with the average price of UK houses falling by an incredible £5,000 last year. Though it could be seen as a positive movement for landlords with buy-to-let properties who could use the lull in the market to their advantage. If you are a landlord, it may be a good chance to buy property for your portfolio.
The Stamp Duty Issue
Recent updates to stamp duty meant landlords will need to pay an additional 3% for each band on brand-new buy to let properties. This means their outgoings are going to increase.
Although the buy-to-let mortgage tax relief reduction means that landlords are going to pay more tax by the end of the year and could mean they are in a much higher tax bracket.
These changes alone will make landlords think more carefully about making investments in buy-to-let properties. It could be harder for them to enjoy rental yields of the same amount as they did before.
The Positive Effect on the Rental Market Because of Brexit
The instability may continue to put off home buyers from risking their money. this is certainly good news for residential landlords, as people may be looking into extending their lease.
Social housing shortages could result in an increase in the demand for rental properties. This means if you are a landlord operating in the private rental sector you are in a very good position.