Lettings: Expected changes in 2020
24th January 2020 posted in Landlords
Just like most other years in recent memory, 2020 is set to usher in a range of changes to the rental industry. This will not be a surprise for landlords, who are more than accustomed to new and updated regulations. It is vital landlords remain up to date with the expected changes for 2020, and we are here to assist you in making informed decisions in the private rental sector.
Extension of the Homes (Fitness for Human Habitation) Act, March 2020
The Residential Landlord Association, RLA, says that the original Act - which means landlords or agents acting on their behalf can be forced to carry out improvement works to properties or risk being sued - is being extended from 20 March 2020 to include existing statutory periodic tenancies. Until that date it applies only to tenants who signed contracts on or after 20 March 2019.
This legislation applies in England only – with responsibility for these standards in Wales falling under the scope of the Renting Homes (Wales) Act.
Minimum Energy Efficiency Standards, in April 2020:
From 1 April 2020, ALL existing tenancies will fall in line with the existing law introduced in 2018, whereby landlords or their agents cannot let property to new tenants unless it has an EPC rating of E or better. This means that properties with an F or G rating will no longer be legal to let out. Landlords could be expected to pay up to £3,500 towards energy efficiency improvement works. However, if work will cost more than this amount, landlords can apply for an exemption.
There are plans to abolish Section 21 repossessions
While no set date has been announced as of yet, the Conservative Government intends to remove Section 21 repossessions to provide more support to tenants. However, a range of landlord organisations and bodies, including ARLA Propertymark, have raised concerns about this change causing problems for landlords. There is an argument that if Section 21 repossessions are abolished, it will become more difficult for landlords to regain possession of their properties.
If this change occurs, landlords and tenants should be aware that it changes the way tenancy agreements can end. Landlords would be required to follow the Section 8 possession process, which is detailed in the Housing Act 1988.
A significant year concerning Mortgage Interest: Section 24
April 2020 sees tax relief for buy-to-let landlords reduced to the basic rate of income tax. From this date, landlords will not be able to deduct mortgage interest payments from the rental income they receive.
This will lead to landlords paying more tax on rental properties, and it could see some landlords placed in a higher tax bracket. It is imperative all landlords review their finances in light of these changes, and ensure they are aware of their tax bracket.
The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020
These have now been published by the Ministry of Housing, Communities and Local Government. Full and proper guidance is yet to be issued (as of date of article) but it is likely that an EICR (Electrical Installation Condition Report) will need to be carried out to show the safety of the electrics in a rented home. With 4.5 million households in the PRS, getting your checks done sooner rather than later is advised – please contact your local Hunters office for more information.
The Regulations will apply in England only and will come into force on 1 June 2020. Once they are in force the Regulations will then apply to all new tenancies (excluding holiday lets) commencing on or after 1 July 2020. Tenancies which commenced prior to 1 July 2020 will need to comply with the Regulations on or before 1 April 2021. New tenancies include all renewals and would presumably include statutory periodic tenancies.
Landlords should be aware of changes to the tax system
Tax is often a difficult matter for landlords, and there will likely be further changes this year. There is an aim to digitise the tax system before the end of the year. Ultimately, this should help to make taxes more accurate, efficient and easier to manage, but many professionals will struggle with the new system.
When it comes to tax matters, it is always best to call on an expert for support, and this matter is no different. If you are not comfortable with computer systems, make sure you liaise with someone who is. Landlords with a sizable portfolio should find this system aids them to manage their properties for tax purposes better, but not everyone is comfortable dealing with change.
While 2020 will pose challenges for landlords, it should still be a busy time for landlords. There is no reason to think the demand for rental property will fall, which means letting should continue to be an industry which provides landlords with the chance to enjoy a suitable return.
If you are a landlord looking for guidance or you need help managing your rental property, contact Hunters. We are pleased to say we have branches across the country, and we look forward to assisting you to manage your rental accommodation and providing tenants with the best standard of service.