Letting Agents – Are You Ready for 2024?

The UK PRS has evolved rapidly over recent years, and 2024 is set to be no exception. It’s imperative that letting agents stay up to date on the latest trends, regulations, and market shifts to be able to advise their landlords effectively.

We provide key insights and considerations that you should keep in mind for the year ahead.

Help from the ONS

The Office for National Statistics (ONS) has always been a valuable resource for agents and landlords in Britain, providing reports on private rental prices and market statistics. However, a recent announcement outlined significant changes which will offer a far more detailed and useful level of data.

From March 2024 the ONS plans to provide a single monthly publication measuring both the change in price of renting residential property from private landlords, and rental price estimates, broken down by property type and number of bedrooms. This data is free to access and provides up-to-date insights into the latest rental price statistics. It is a secret weapon that many agents may be unaware of. Rent increases, however, are far from the only thing to consider.

The world has changed significantly in recent years, and if your landlords increase rental prices without considering the changing trends in the rental market, they could potentially limit their revenue – and, of course, that will affect your bottom line too.

From government initiatives to public activism, sustainability is a hot topic that affects everyone. Don’t be fooled into thinking this is just a buzzword though – prospective tenants are increasingly seeking eco-friendly properties equipped with energy-efficient features, for both environmental and financial reasons.

In 2023 the government announced a plan to increase the Minimum Energy Efficiency Standards (MEES) EPC rating for England and Wales from E to C, however, this was subsequently scrapped and there are no firm plans to change this.

It’s always worth advising your landlords on energy-efficiency upgrades. Insulation, energy-efficient appliances, and mindful waste disposal will make the property more appealing to tenants, but will also reduce long-term operating costs.

The government has said it will “continue to encourage households” to upgrade the energy efficiency of their properties where they can, so look out for grants and other incentives. Currently, grants of £7500 are available for upgrading boilers to air and ground source heat pumps, and £5000 towards a biomass boiler, although this is only likely to cover at most 50% of the total cost to install (read more)

In addition to evolving market trends, it’s important to keep landlords up to date with changes to their responsibilities in 2024. These include tax considerations, material information, and of course the anticipated Renter’s (Reform) Bill.

Changes to the Capital Gains Tax Threshold

The government recently confirmed that the taxable threshold for landlord capital gains would be halved once again to just £3,000 from April 2024. This tax is only payable when a landlord sells a rental property that has increased in value since the time of purchase, and it is calculated on the profit rather than on the total sale price. You should make sure your landlords are aware of this.

Increase in Local Housing Allowance

In his 2023 Autumn Statement, Chancellor Jeremy Hunt revealed that the Local Housing Allowance (LHA) will be increased for the first time in three years and will now cover the cheapest third (30th percentile) of local market rents. This is good news for those renting in the private and social housing sectors, helping rent affordability for many households. It remains to be seen whether the government will boost LHA every year to keep pace with market rents.

Renter’s (Reform) Bill

The Renters (Reform) Bill, introduced to Parliament on 17 May 2023, only completed the Committee stage in December. With over 140 pages of amendments put forward so far, it potentially still has a long way to go before it is likely to come into effect!

As you are probably aware, the most significant changes are regarding the scrapping of Section 21 notices, strengthening of Section 8 notices, and an end to fixed term tenancies. However, Michael Gove has already announced that Section 21s will not be scrapped until there are significant improvements to the court system, though they have not announced how this will be achieved.

It is essential you stay informed about the Bill’s progress and understand the implications of these reforms, as it will allow you to advise both your landlords and tenants and ensure compliance with the evolving legislation.

Keep up to date here.

Changes to Trading Standards Material Information in Property Listings Rules

Trading Standards have now published parts B and C of the Material Information Rules for property listings.

Part A included the requirement to show council tax band/rate, rent amount, and for sales – price and tenure information.

Part B requires agents to include the physical characteristics of the property, including type, construction materials used, room measurements, information about utility supply and parking. Also, the type and speed of broadband and mobile signal/coverage – including any known issues or restrictions. In a nutshell, this is information which could affect someone’s decision to rent a property so it’s crucial that your landlords are able to supply accurate information.

Part C concerns building safety, planning permissions, public rights of way, flood risk and similar, and depends on whether the property is affected/impacted. You can read the guide for Letting Agents here.

Also on the Horizon..

The Competition and Markets Authority (CMA) which covers the whole of the UK, is currently researching the private rented sector to identify any areas where enforcement action might be necessary. The outcomes will be reflected in updated guidance to help landlords, tenants and letting agents understand their rights and obligations. The next update on this is expected in Spring 2024 so keep your eyes peeled to avoid getting caught out!

Finally

The rental market is changing rapidly, which can be overwhelming for landlords. Reassure them, and help them navigate the 2024 rental landscape with confidence by staying informed and focusing on critical aspects. Stay vigilant for potential trends, bills, or tax changes by regularly consulting resources like industry newsletters and the ONS, ensuring ongoing success for both landlords and your agency.