MAB: Easy-going Tories aid rogue landlords
He said landlords are unlikely to be hit by heavy regulation from the Conservatives which will remove extra administration time, but on the downside “there is little being done to stop landlords who are acting unlawfully and providing poor quality accommodation, possibly illegally”.
Rogue landlords hurt the legitimate landlord community, Murphy added, because they are able to compete on price rather than abiding by the law.
In the MAB report Murphy outlined how last week’s Conservative victory will impact the landlord community and how they should prepare.
He added that landlords should find it easier to evict tenants later this year due to the party’s proposed changes to Section 21 of the Housing Act, which will likely come into play later this year.
But in the Budget 2015 the Conservatives indicated that they will ban sub-letting clauses in contracts, which Murphy said “will make it easier for tenants to re-rent the property or rooms to other renters”.
He added: “This also increases the risk of rent-to-rent scams, whereby a middle man poses as a normal tenant, converts shared living spaces into extra rooms and then charges rent for on an individual basis at a much higher price than they are paying the landlord.”
Murphy said that landlords could more of their rental income due to the Tory commitment to raise the personal tax allowance from £10,500 to £12,500, although he added that the benefits “could be lost if the government decides to tax rental income separately to normal income.”
Murphy put forward several measures for landlords to protect their investment and improve their chances of profitability.
He said: “Landlords can protect themselves from future rate rises by locking into a fixed-rate deal, which may come with a higher interest rate but will guarantee the same rate for a fixed period of time regardless of what happens to the Bank of England or lenders’ rates.
“Putting aside money each month will also provide a safety cushion if your monthly costs begin to exceed rental income. Even if not needed to cover mortgage repayments, having a ‘rainy day’ fund is good practice: this can prove invaluable should any unexpected expenses or repairs arise, such as a broken boiler.”