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

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.

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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.

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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.

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