In the year 2023, the property landscape in the UK witnessed the introduction of two pivotal bills. Firstly, the Renters Reform Bill and secondly, the Leasehold and Freehold Reform Bill. For those entering or already present in the landlord market, grasping the possible consequences of these bills is of paramount importance for successful property investment in the upcoming year. Although an official enactment date is still pending confirmation, both bills are expected to be ratified into law in 2024.
Renters Reform Bill
The Renters Reform Bill underwent its second reading on October 23rd, 2023, aiming to enhance the private renting system for both tenants and landlords. Expected to pass in 2024, this legislation seeks to streamline existing tenancy structures into a unified system where all Assured Shorthold Tenancies will transition to periodic tenancies.
A notable feature of the bill is the intention to eliminate Section 21 evictions, often employed by landlords for ‘no-fault’ evictions. The National Residential Landlords Association (NRLA) responded, suggesting the need for timely grounds for possession in such cases. Consequently, the government clarified that the abolition would await justice system reforms.
Additionally, the bill reinforces the grounds on which landlords can reclaim their properties, making it easier to do so in cases of persistent rent arrears or anti-social behaviour. The Renters Reform Bill also grants tenants the right to request pet ownership, with landlords having limited grounds to refuse. Landlords can safeguard against potential property damage by obtaining pet insurance.
Leasehold and Freehold Reform Bill
The downward trend in house prices coincides with an increase in seller discounts. Between November and December, property discounts reached a 5-year high, averaging 5.5%, or £18,000 off the original asking price. This buyer-friendly environment has spurred a 6% increase in demand. Investors are advised to act promptly to capitalise on these discounts, as heightened competition among buyers continues to drive demand.
Improvements in Interest Rates
Introduced on November 27th, 2023, the Leasehold and Freehold Reform Bill is anticipated to become law by the summer of 2024. Focused on enhancing homeownership for leaseholders, the bill empowers their rights in significant ways.
Addressing the intricacies of leasehold properties, where buyers own the property but not the land, the reform seeks to cease the sale of new leasehold properties. The objective is to ensure that all newly purchased houses in England and Wales automatically become freehold.
Another key provision of the bill extends the standard lease term to 990 years for houses (from the current 50 years) and 990 years for flats (up from 90 years). Ground rent is set to reduce to zero after a premium is paid. The bill also accelerates the process for leaseholders to benefit from freehold ownership or the extended lease, removing the two-year ownership condition.
These reform bills underscore the concerted efforts to elevate the private rental sector and homeownership in the UK. Coupled with the positive sentiment surrounding the UK property market, these developments bode well for property investors in the upcoming year.
How Can We Help
With the introduction of these two bills, investments in the UK property market are likely to increase even more. If you want to invest in the UK, look no further. Galaxy of Homes is here to help you find the right property. We will provide you with top-notch refurbishment, proper tenants, maaintenance and management, and even facilitate you to sell your existing property. Connect with us today to start your UK property investment journey.
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