2024 will be a year to watch for landlords, especially those who are self-managing, as there will likely be many changes and new announcements that will affect how landlords operate.
In addition to the Renters (Reform) Bill making its way through parliament, we have a budget to look forward to in March, and there is set to be a general election at some point during the year.
So, as the Conservatives push ahead with their plans to reform the PRS, landlords need to be aware of what could be on the horizon if Labour comes to power in 2024.
A big concern for landlords is the cost of mortgages, which tend to move up and down in line with the Bank of England base rate.
The rate of inflation can greatly influence this, as we've seen over the past two years.
Furthermore, as lenders' confidence in the economy improves and they continue to compete for business, hopefully, five-year fixed deals may become much more attractive.
That will help existing landlords who are remortgaging and should encourage some much-needed new BTL investment.
For existing landlords, especially those with multiple properties, the increase in average capital values since the pandemic's start may have significantly boosted equity.
If you haven't had your properties valued recently, it's well worth doing so now, as you may be able to remortgage and use some of that equity to make new investments.
Ensure you secure an accurate valuation from a qualified agent, as online tools will be too generic for investment valuation purposes.
The current freeze on Income Tax bands and the Personal Allowance means that those landlords who have managed to raise rents by more than their costs have increased could be paying tax on a higher proportion of their income.
The final thing to consider that could affect your finances is the cost of administering any changes that come in during the year.
For instance, if Section 21 is scrapped, new rental agreements may need to be issued.
What will affect property deals?
The forecasts are that 2024 will be a similar market to last year.
That means well-capitalised investors who can offer motivated sellers a quick deal should be able to find some bargains — and cash buyers will be king!
While most areas are likely to be a buyers' market, certainly in the first part of the year, things do tend to pick up each spring, so we may see a busier market with more competition between March and May.
However, we don't yet know what might be in the Chancellor's Spring Budget that could change confidence and affect finances and deals.
And if the general election is announced for later in the year, the sales market may slow again, as people who don't have to move wait to see what the outcome might mean for them. In that case, those who can buy could benefit from there being much less competition for the properties out there.
Will rents rise or fall?
The outlook for the rental market is good.
Most forecasters expect strong rent growth to continue, although at a slightly slower rate than we've seen over the past couple of years, as inflation and wage growth calm.
With the gap between tenant demand and suitable available rental stock likely to widen, landlords who can offer good quality accommodation in the best areas should do very well regarding occupancy and rental income over the next few years.
What could change about the business of letting?
The most significant changes on the horizon are those proposed in the Conservative Party's Renters (Reform) Bill and Labour's Renters' Charter.
While there are differences between the two and a change in power at the general election could certainly derail the Renters Reform Bill (if not enacted at that stage), both parties are pushing for the abolition of Section 21, with Labour's Angela Rayner recently stating that if
they were elected, they would "implement a full and immediate ban" on no-fault evictions.
We don't think it's likely that S21 will be abolished this year, despite Labour's pledge.
The Conservatives have already stated that they're not going to move ahead with it until the court system has been reformed, and the issue is still being debated in Parliament, with elements being strongly protested by industry bodies.
Most likely to change in 2024 is the 'material information' that must be provided in property listings for both sales and lettings.
