For many rugby players, property can be an attractive asset. You can buy property during your career with the goal of selling it for a return when you come to retire.
Alternatively, you might keep hold of it in later life to generate a regular income from rent payments when you are no longer playing professionally.
However, with the “renters (reform) bill” set to come into place, there may be changes coming to the buy-to-let (BTL) sector and how you treat the tenants living in your properties.
The bill had its first reading in the House of Commons in May, with a second reading scheduled for after the end of October 2023.
If you have a property portfolio, you may be wondering how this bill could affect your investments in future.
Read on to find out about a few of the key changes involved in the bill, and what they might mean for you.
Section 21 “no-fault” evictions may be removed
Currently, it is possible to serve a section 21 notice to your tenants, allowing you to repossess your property without needing fault on the side of the tenant. There is normally a notice period of two months to do this. You may still have to go to court after serving a section 21 notice, but not always.
However, this is set to be removed in the new bill. As a result, to repossess your property moving forward, this means you would have to:
- Serve a section eight notice, including grounds for eviction
- Pay any associated court fees
- Wait until the court date you are given
- Provide evidence as to why you should be able to do this.
While this will provide tenants some protection from less scrupulous landlords, it may mean it is more difficult for you to repossess your property.
This could be an issue if you want to sell up and access the value contained within it in future.
All tenancies will become periodic, and you will only be able to raise rents on an annual basis
The bill includes new rules that will see all tenancies become “periodic”, meaning they will roll from month to month with no specified end date.
Furthermore, this will limit all rent increases to just once a year. This is how periodic tenancies currently operate, with some variation in rules for the other forms.
You will need to provide notice of any change in rent at least two months in advance, double the original period of just one month.
While these changes are arguably more restrictive, they do mean you will still be able to raise rents in line with market rates. So, if your mortgage costs increase, you will be able to react to this at least once in a 12-month period.
You may no longer be able to ban pet ownership in your properties
Under the new bill, you will no longer be able to put a blanket ban on pets in your property.
The current wording states that tenants have the right to request a pet, and these requests cannot be “unreasonably refused”. Although there is yet to be a clear definition of what “unreasonable” is, this could mean that you may have to allow pets for the first time if you did not before.
Pets can be potentially costly for you as a landlord. According to figures collected by Compare the Market, 31% of pet owners have had to deal with damage caused by their animals. Furthermore, 25% have made a claim on their home insurance as a result of their pet.
Tenants will have to either take out pet insurance, or agree to pay “reasonable costs” for your insurance should there be damage caused by a pet. Even so, you may not like the idea of having tenants with a pet in your property, and it could end up costing you in repairs or perhaps cleaning fees.
You might have to register your properties on a new portal
As part of a commitment to regulation, the new bill includes provisions for a privately rented property portal. Through this, tenants and local authorities can check this register to see whether properties and landlords are listed on it.
The portal will contain information on compliance and legal requirements that landlords must meet. As a result, this may also be useful for you, both in ensuring you meet all requirements, while being able to show that you do so to prospective tenants.
You may also have to join a new ombudsman, essentially giving tenants a specific watchdog for landlords. This ombudsman will have the power to make you:
- Apologise to tenants if something occurs that is your responsibility
- Provide information when requested
- Take action to fix issues
- Pay compensation of up to £25,000.
While being a good landlord should hopefully mean you do not end up with a tenant dispute, this does mean your tenants may have more options should an issue arise.
The renters (reform) bill is still a fair distance from being law
While these changes may all seem worrying, it is worth noting that there is still some distance from the bill becoming law.
The bill was originally published in May 2023, must still be debated in parliament, and likely will not receive Royal Assent until spring 2024. That would mean coming into force perhaps six months later, around October 2024.
So, while the changes may be significant, there is still some time before it becomes a legal requirement to act on them.
As a result, you could make any adjustments to your properties or tenancy agreements during this period so that they comply with the regulations.
Alternatively, you might feel that the changes make property less attractive as an investment. In that case, you could sell before you have to spend money on any changes.
Either way, it can be sensible to ensure that any decisions you make are in line with your goals for the future.
Get in touch
If you would like help organising your money as a professional rugby player, then please do get in touch with us at DBL Asset Management.
Email firstname.lastname@example.org or call 01625 529 499 to speak to us today.
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
Buy-to-let (pure) and commercial mortgages are not regulated by the FCA.
Think carefully before securing other debts against your home.