It’s a truth universally acknowledged that a person in possession of good fortune, must be in want of property. Property is always a good investment, but it does take some navigating that the average Joe might not be aware of. No one teaches you what is a good investment and how to go about it, which is why you might be in need of a solicitor. The Buy-to-Let market is an attractive choice, as it gives you ongoing income as time goes on, but it’s important you know what you’re doing. Take a look at our guide to be sure you know what is expected when you go into the buy-to-let market.
Understanding Recent Legislative Changes
There are a number of new legislation considerations that the friends and family around you might not have come across in their buy-to-let ventures. For instance, the Renters’ Reform Bill, introduced in 2023, has seen big (and controversial) changes to the dynamic between tenants and landlords. Ultimately, it aims to offer more security for tenants by abolishing No-Fault Evictions, which means you’ll need a “valid” reason to evict tenants, but also a strengthened system for Section 8 to balance this out, making it easier for landlords to take back control of their home for a valid reason.
Additionally. There are energy efficiency regulations coming into effect, set by the Minimum Energy Efficiency Standards (MEES) that say that all newly rented properties have to have a C or above Energy Performance Certificate as of 2025.
And there is the Capital Gains Tax to consider, which, in 2024, has had its annual allowance for property sales reduced from £12,300 to £6,000 and will further drop to £3,000 in April of 2025.
All of these and more are just a part of the constantly changing regulations that too many landlords ignore, purposefully or not, and end up meeting the consequences of.
Licensing and Compliance Requirements
It’s very important to get the right licenses to keep and manage any rental properties. The first step is to understand the HMO (House in Multiple Occupations) licensing rules. This is considered a property that is rented by more than five people from at least two different households, such as student housing, co-living spaces, etc.
Gaining a license for these homes is mandatory and typically lasts five years. The criteria include various factors, including safety standards like ensuring there are the proper fire alarms in place, annual gas safety certificates, etc.
Tax Implications for Buy-to-Let Investments
When it comes to buy-to-let investments, you might want to think about how they change your taxes. Key considerations include changing your mortgage interest relief and how that might impact your profitability. Plus, your income tax will be taken from the profits of your rental properties.
Additionally, your tax band might change, and you’ll find you don’t get mortgage interest deducted from your rental properties and instead get a 20% tax credit. You’ll want to get into good habits like record-keeping and working with tax professionals to ensure that you are doing everything by the book and adhering to compliance.
Navigating Tenant Agreements and Dispute Resolution
The other half of being a landlord is dealing with tenants, and that’s not always fun. You’ll want to get familiar with the Private Residential Tenancy agreements (or the Assured Shorthold Tenancy in England and Wales) and what to include in rental contacts. Make sure you include, the names of the parties, property, address, rent amount, due date, payment method, etc. tenancy term and deposit.
We touched on it here, but you will also need to understand or hire someone to understand the difference between Scottish and English/Welsh property law and regulations.
You’ll want to get all of this in writing so that both you and your tenant know and can refer to it when lines are crossed. When it comes to disputes, particularly evictions, you’ll want to know what you can legally do, and maybe even have use for a mediator down the line.
Conclusion
If you’re going to get involved in the buy-to-let market, you might want to consult a solicitor to make sure everything is going as it should. Be it to explain regulations, do the paperwork, or act as a mediator, you can find details on our property services on our website.