Buy to let rules, OK?
Buy to let regulations are set to change. The complex set of 22 rules should be reduced to two, under new rules proposed by the Law Commission
With the buy-to-let market gaining in popularity and many new investors coming into the market, here’s some important information for you.
If you’re considering taking on the role of landlord, you’ll be pleased to hear of some long overdue changes in the legal relationship between landlord and tenant.
There are currently 22 different types of agreements between landlord and tenant. A great many of them are now totally irrelevant as they date back 100 years or more and many of the rest are mainly a confusion of old laws with new clauses. They are extremely difficult to understand and seem full of contradicting terms. However there is now a final draft of a Law Commission report and if the proposals therein become law it will result in a total shake up of the system.
At present most private landlords, consisting generally of those who achieve a rental of less than £25,000 from a single property, make use of the “assured shorthold tenancy agreement”. This came into force in the Housing Act of 1988 and covers rules regarding rent levels, damage liability and rules regarding pets, etc., this is a basic agreement, easily available from stationers and is often in slightly different forms and commonly altered by the landlord to suit varying tenancies.
If the new proposals are implemented there will be just one simple, standard agreement between the private property owner and tenant. Furthermore there will be more protection for the landlord with regard to repossession of the property should this become necessary for any reason. Under current legislation, tenants have the right to hold the tenancy for at least six months, if all clauses have been met.
It is not thought that landlords will be legally required to replace the old assured shorthold tenancy agreements with the new ones, but they will be encouraged to do so. If there is any dispute regarding the tenancy which results in a court hearing, then there would be more likelihood of the law recognising the rights of both parties under the unambiguous new contract.
So far we have covered the private standard agreement. The second type will be a “secure contract” designed to suit the needs of social housing tenants.
These changes should make life much simpler for the private landlord and take away a great many of the problems commonly associated with the old-style agreements. There is plenty of demand for rented accommodation and property is traditionally an excellent longer-term investment. Mortgage lenders are offering competitive especially designed buy- to- let packages and these new laws will make it even easier for you in your new role as a landlord.
A specialized buy-to-let mortgage broker will be able to offer you all the help you need should you decide to investigate the market. They’ll be up-to-date on all the legislation as the changes are implemented and will also no doubt be welcoming the simplification which the new clear-cut laws will bring.
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