A Comprehensive Guide for Landlords
2024 promises to be an eventful year for hands-on landlords, with several significant developments on the horizon. The potential progression of the Renters (Reform) Bill through Parliament, a crucial budget release in March, and the likelihood of a General Election are all events that could reshape the landscape of property management significantly1.
As the Government continue to reform the private rented sector, it’s essential for landlords to stay informed about potential policy shifts, especially if there is a change in Government later this year. Understanding these changes and preparing accordingly will be crucial for effective property management and investment decisions.
Mortgage Rates: An Opportunity for LandlordsÂ
The forecasted decline in inflation2Â and the base rate suggests a positive outlook for landlords. With Capital Economics projecting a base rate decrease to 4.75% in 2025, landlords looking to remortgage may find more favourable rates. This environment could also encourage new investments in the property sector.
Tax Changes: Implications for LandlordsÂ
April brings changes that could affect landlords financially. The elimination of Class 2 National Insurance and the reduction of Class 4 contributions are beneficial, but the freeze on Income Tax bands and the Personal Allowance means landlords with increased rents may face higher taxes on their income.
Additionally, the halving of the tax-free allowance for Capital Gains in April will impact landlords contemplating property sales, although it’s unlikely to significantly affect long-term profits.
Property Sales: A Mixed OutlookÂ
The property market in 2024 may initially favour buyers, but a traditional uptick is expected in the spring. However, the Chancellor’s Spring Budget and the prospect of a General Election could introduce uncertainty, affecting market confidence and transaction volumes.
Rental Market Trends: A Steady GrowthÂ
The rental market looks promising, with predictions of sustained rent growth, albeit at a slightly moderated pace. With average UK rents expected to grow by 5%-6% in 20243Â and a cumulative growth of around 20% over the next five years, landlords stand to benefit from a robust rental profit potential, especially if inflation stabilises around 2%.
The Future of Lettings: Key Legislative ChangesÂ
The Renters (Reform) Bill and Labour’s Renters’ Charter are set to bring significant changes. Both proposals advocate for the abolition of Section 21, but the complete abolition by 2024 remains uncertain, especially with the Government’s reluctance to proceed until court reforms are in place1. Landlords may wish to closely monitor these developments to adjust their strategies accordingly.
Compliance with Material Information RequirementsÂ
The definitive change for 2024 concerns the ‘material information’ required in property listings. Ensure compliance with Parts A, B, and C of the guidance, which include details like price/rent, council tax, property type, and other pertinent issues. Whether you use an agent or market your property independently, adhering to the guidelines of the National Trading Standards Estate and Letting Agency Team is essential for accurate and compliant listings.
2024 is set to be a year of significant changes and opportunities for landlords. Staying informed and adaptable will be key to navigating the evolving landscape of property management and investment. By understanding and responding to these developments, landlords can position themselves to make the most of the opportunities and challenges ahead. For more information contact our team
Sources
Landlord Zone (2024)Â What is in store for landlords in 2024?.Available at:Â https://www.landlordzone.co.uk/news/what-is-in-store-for-landlords-in-2024Â (Accessed 18 Jan 2024)
Reuters (2024) Explainer: What is the outlook for UK inflation in 2024?. Available at: https://www.reuters.com/markets/europe/what-is-outlook-uk-inflation-2024-2024-01-17/ (Accessed 18 Jan 2024)
Savills (2024) UK rents to keep on rising but will hit ‘affordability ceiling’ in 2025. Available at: https://www.savills.co.uk/insight-and-opinion/savills-news/354578-0/uk-rents-to-keep-on-rising-but-will-hit–affordability-ceiling–in-2025 (Accessed 18 Jan 2024)
All the information in this article is correct as of the publish date 30th January 2024. The opinions expressed in this publication are those of the authors. The information provided in this article, including text, graphics and images does not, and is not intended to, substitute advice; instead, all information, content and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.