Local restrictions can have a significant impact on buy-to-let properties, particularly in certain areas where councils or local authorities impose regulations to maintain standards in the rental market or to address specific housing concerns. Here are some key local restrictions that may apply:
Selective Licensing Schemes
In some areas, local councils have implemented selective licensing schemes to regulate private rental properties. These schemes often apply to areas with a high concentration of rental properties or where the council believes that there is poor property management or issues like antisocial behavior. Under such schemes, landlords are required to obtain a license from the council before renting out their property. This license usually involves a fee and may require the landlord to meet specific property standards or management conditions.
Article 4 Directions
Certain local authorities use Article 4 Directions to control the number of Houses in Multiple Occupation (HMOs) in a particular area. Normally, a small HMO (3-6 unrelated tenants sharing amenities) doesn't need planning permission. However, an Article 4 Direction can remove these automatic rights, meaning that any property owner wishing to convert a property into an HMO must apply for planning permission. This can be a significant consideration for buy-to-let investors in areas where demand for shared housing is high, like university towns.
HMO Licensing
For properties that are rented out as Houses in Multiple Occupation (HMO), additional licensing may be required. This applies to properties rented by five or more people from more than one household who share facilities such as a kitchen or bathroom. Some councils may also require licenses for smaller HMOs. The property must meet specific safety and amenity standards, which may require modifications or upgrades before a license can be granted.
Local Planning Permissions
If you're planning to make changes to a property before renting it out, such as converting a single-family home into separate flats or adding extensions to increase rental space, you may need planning permission from the local authority. This is particularly important in conservation areas or for listed buildings, where additional restrictions may apply.
Short-Term Letting Restrictions:
In some high-demand areas like London, there are restrictions on how long a property can be let out on a short-term basis (such as through Airbnb). For example, in London, short-term lets are generally limited to a maximum of 90 days per calendar year unless specific planning permission is obtained. This can be a critical factor for investors looking to use their buy-to-let property for both long-term and short-term rentals.
Rent Control Zones:
Although currently rare in the UK, there is increasing discussion around rent control in certain areas to make housing more affordable. Some local councils may impose rules around rent increases in line with local regulations, affecting how much landlords can charge and how often rent can be raised. Keeping an eye on such potential regulations is important for long-term financial planning.
Environmental and Energy Efficiency Standards
Some councils are stricter about energy efficiency requirements, particularly for older properties. To legally rent out a property, it must have an Energy Performance Certificate (EPC) rating of E or above. In some areas, however, local authorities may push for higher standards as part of their environmental policies, especially if the property is in a conservation area. Upgrades to meet these requirements can add to the initial costs of preparing the property for rental.
Understanding these local restrictions is vital for buy-to-let investors because they can affect the profitability, legality, and long-term viability of the investment. A specialist buy-to-let solicitor or local property advisor can help navigate these regulations to ensure compliance and avoid unexpected issues.
For more general information on the conveyancing process for rental properties, you can check out our article on the buy to let conveyancing process.