With the rental market as competitive as ever, the Revolution Brokers team often works with landlords and private investors who have grasped opportunities to expand their portfolios and provide attractive rental properties commanding high investment returns.
One of the increasingly in-demand factors is allowing pets. Following recent changes to the government standard tenancy agreement, tenants are welcoming the news that more rental properties are likely to permit them to let a home in the company of their animals.
Housing Minister Chris Pincher announced that these new rules mean that a 'blanket ban' on pets cannot be the standard.
This change has multiple considerations for landlords. Property maintenance, upkeep, and repairs are some of the most significant budget factors. Yet, it seems that permitting animals will become more crucial to avoiding vacancies when a tenancy comes to an end.
Here we'll work through the new rules, what landlords can and cannot do, and what you can do to safeguard your property from pet-related damage.
What are the New Government Regulations on Allowing Pets in Rental Properties?
Allowing pets, even with some caveats, is doubtless a marketing tactic that can attract high-value tenants.
The majority of renters with pets are families looking for premium quality rentals. Finding a property, particularly in prestigious areas where pets are allowed, can be highly challenging.
However, suppose you do rent out a residence and permit animals. In that case, that tenant is more likely to remain in situ for the long-term, eliminating cost risks associated with vacant properties.
These new rules do not make it mandatory to allow pets. The Model Tenancy Agreement is a template published by the government and designed to guide long-term rental agreements expected to last for two years or more.
Amendments to the template in January result in the following changes:
- Consent for tenants to keep pets is the default.
- Should a landlord wish to reject a pet request, they need to do so in writing within 28 days.
- Putting a comprehensive ban on pets has been called 'unfair', and there is ongoing pressure to make these guidelines compulsory.
In the meantime, landlords don't have to use the contract template, although most agents will recommend it as best practice.
Tenant's rights remain in the spotlight, and therefore now is a good time for landlords to revisit their policies on permitting pets to stay ahead of the potential for new legislation. Should the proposed 'Jasmine’s Law' be ratified, it may in the future become illegal to include a no-pet clause in a rental agreement.
What is the Financial Impact of Allowing Pets in a Rental Property?
Following the Coronavirus pandemic, there has been a vast surge in the number of tenants and families who have decided to keep a pet.
This has happened primarily due to millions of people being at home for a more significant proportion of the day - which will likely continue with many organisations choosing to adapt to home working practices for the long term.
The good news is that allowing animals won't necessarily harm your rental income - and could, in fact, improve your returns.
Cost implications can include:
- Repairing damage to carpets and furnishings.
- Dealing with outdoor damage.
- Ensuring the pet doesn't cause noise complaints.
- Deep-cleaning requirements after each tenant.
However, with around 44% of homes having a pet (per the RSPCA) and only 7% of rental properties advertised as pet-friendly, there is a massive opportunity here.
Pet ownership has increased dramatically, with around 2.1 million people finding a new pet during the pandemic. Dogs Trust reports that 78% of pet owners find it challenging to find a suitable rental home, and the search can take up to seven times longer.
Is a Pet-Friendly Rental Investment More Profitable?
Given these statistics, it's crucial to weigh the pros and cons and consider the most viable buy to let investment properties to plug this enormous demand area.
- Family homes or properties with gardens that allow pets are rare and can command higher rental prices.
- Finding a new tenant for a pet-friendly property is typically much faster than for an empty rental where animals are not permitted.
- Settled tenants who have space for animals, including a garden, are more likely to remain for the long-term.
- Landlords do not currently have to allow all pets - they might limit that to dogs or cats, caged animals like hamsters or rabbits, or require a meeting with the pet in advance to ensure they are well-behaved and aren't likely to cause undue damage or disturbances to other nearby tenants.
Landlords can also protect themselves from the cost impacts by including a rental premium for the allowance of pets. Premiums must be outlined and in compliance with the Consumer Protection Regulation Act 2008 but provided they are transparent, there is no reason you can't charge more per month.
Buildings and contents cover are also vital, and you must inform your insurer that pets are permitted within the property. Landlords must update existing insurance policies should they decide to change the terms of their rental agreements.
It's also critical that you have an explicit clause in the agreement setting out who is responsible for managing the costs associated with animal-related wear and tear.
By putting some precautions in place, insuring the property correctly, and charging an appropriate rental premium, you can offset any associated risks and earn a better rental return on your investment properties.
With the extension to the Stamp Duty holiday and the increasing volumes of families and professionals looking for attractive rental homes outside of the major cities, investors are in a high-demand market.
It may be that the pet premium will deliver a higher rental yield, allowing you to repay lending costs faster or reducing the interest charges by demonstrating a higher monthly income level.
Lower buy to let mortgage costs, combined with longer-term tenancies, might be the way forward for landlords. Many are looking for ways to streamline their revenues and offset the impact of the new tax relief rules that have been slowly chipping away at profit margins over the last few years.
For more information about buy to let mortgage rates and how a higher monthly income could improve your chances of securing more competitive interest deals, get in touch with the Revolution Brokers team today.
Contact us now to discuss your personal options, Revolution Finance Brokers specialise in commercial and residential finance in Essex, Kent, London and Hertfordshire.