Shocking new buy-to-let laws kick in today! How will they affect you?

More bad news for buy-to-let investors has emerged over the weekend. Is it finally time for us to turn our backs on the sector?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

It’s a tough time to be a landlord right now. Lost tax relief, increased paperwork and bigger stamp duty costs all reflect lawmakers’s efforts to drive landlords out of the market and to help soothe the country’s colossal homes shortage.

The government’s bid to court first-time buyers and renters took another decisive step on Sunday too, when it announced that Section 21 notices — the mechanism by which proprietors can easily evict tenants and at short notice — in England are set to be scrapped.

Explaining the policy shift, Prime Minister Theresa May said that “millions of responsible tenants could still be uprooted by their landlord with little notice, and often little justification,” adding that “this important step will not only protect tenants from unethical behaviour, but also give them the long-term certainty and the peace of mind they deserve.”

Section 21 notices, or ‘no-fault evictions’ as they are also known, allow landlords to turf tenants out without having to provide a reason when the fixed-term tenancy comes to an end, and to remove them within eight weeks of the tenancy agreement coming to a close.

But landlords with properties in England aren’t the only ones set to be hit, as First Minister of Wales Mark Drakeford also announced over the weekend that such evictions will be axed in Wales in the not-too-distant future. This legislation already exists in Scotland.

Lead balloon

As you can imagine, the imminent demise of Section 21 has gone down like a lead balloon with those in the buy-to-let community.

The Rental Landlords Association, no doubt echoing the frustration of proprietors the length and breadth of the country, commented that “landlords have already been hammered by tax changes and with increasing costs, regulations and the onslaught of local licensing schemes this could be the last straw for some.

With the demand for private rented homes continuing to increase, we need the majority of good landlords to have confidence to invest in new homes,” it added. “This means ensuring they can swiftly repossess properties for legitimate reasons such as rent arrears, tenant anti-social behaviour or wanting to sell them. This needs to happen before any moves are made to end Section 21.”

More to come?

Landlords have been dealt a double whammy of bad news on the regulatory front in April, with legislation also introduced in the past fortnight to boost the green credentials of rented homes, measures that could leave property owners nursing extra bills worth thousands of pounds.

If the last couple of years is a guide, then proprietors should be braced for more law changes coming down the line to restrict the power of landlords and raise the costs of owning rental properties. In fact, the spectre of a fresh general election being called in the not-too-distant future could prompt a step-up in the attack on buy-to-let investors as Conservatives and Labour position themselves as being on the side of non-home-owning citizens.

The end of Section 21 has hammered another nail into the coffin of buy-to-let and its status as an appealing investment class, certainly in my eyes. There are plenty of great ways that investors can make a mint from property, but in my opinion, renting out property isn’t one of those.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

I’ve got £2k and I’m on the hunt for cheap shares to buy in December

Harvey Jones finally has some cash in his trading account and is hunting for cheap shares to buy next month.…

Read more »

Investing Articles

Down 25% with a 4.32% yield and P/E of 8.6! Is this my best second income stock or worst?

Harvey Jones bought GSK shares hoping to bag a solid second income stream while nailing down steady share price growth…

Read more »

Investing Articles

Here’s how the Legal & General dividend yield could ultimately hit 15%!

The Legal & General dividend yield is already among the best of any FTSE 100 share. Christopher Ruane explores some…

Read more »

Investing Articles

Is December a good time for me to buy UK shares?

This writer is weighing up which shares to buy for his portfolio next month, and one household name from the…

Read more »

Investing Articles

Is it time to dump my Lloyds shares and never look back?

Harvey Jones was chuffed with his Lloyds shares but recent events have made him rethink his entire decision to go…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

If I’d invested £20,000 in the FTSE 250 at the start of 2024, here’s what I’d have now

The FTSE 250 has been in growth mode this year. Our writer weighs some pros and cons of investing in…

Read more »

Investing Articles

Is the Rolls-Royce share price about to go nuclear?

This writer wonders whether excitement about Rolls-Royce's small modular reactor (SMR) business could push the share price even higher.

Read more »

Investing Articles

Down 13% today on results, is this FTSE 250 share too cheap to miss?

After slumping to multi-year lows, is FTSE 250 share Pets at Home now an excellent value stock to consider? Royston…

Read more »