Eviction Reforms & Lifetime Deposits
Almost 3 years ago, the government held a consultation on abolishing “Section 21”. S21 is a clause which lets landlords terminate tenancies with 2 months’ notice with no need to provide a reason to the tenants. This proposal forms a large part of the Renters’ Reform Bill but due to the ongoing COVID-19 pandemic, this bill has been continually pushed back by the government. The bill realistically may come into force in 2023, rather than 2022, but with the publishing of a white paper due this year, we should then know the ins and outs of what this reform will include and how it will affect landlords.
Throughout 2022, there are 3 key tax dates/changes to be aware of as a landlord. First, Monday 31st of January 2022, is the date you must submit your online self-assessment tax return. There are penalties for missing this so please ensure this is submitted on time. Secondly, in April, “Digital Tax” is coming in for VAT – this has been the case since 2019 for all businesses with turnover over £85,000 but will apply from April to any VAT-registered businesses with a taxable turnover of £85,000 too. Lastly, affecting Capital Gains Tax, the government announced changes to the filing deadlines on the disposal of properties. This change means you have 60 days to report and pay your CGT bill rather than 30 when it comes to selling a BTL property.
Whilst this area is a case of “watch this space” energy efficiency standards in rental properties is one that’s not going away. The government as we know has a target to have net-zero emissions by 2050 and one way in which they are doing this is pushing the Minimum Energy Performance of Buildings (No.2) Bill through Parliament.
The proposal on the table is to raise the minimum energy efficiency standard to “C” by 2030 which would apply to new tenancies from 2026 and in the case of existing tenancies, landlords will have until the end of 2028 to meet this standard.
Right now, under the MEES, properties must be an “E” to be let to tenants.
Mortgages and Buy-To-Let
In 2022, buy-to-let mortgage rates fell slightly, but as we know, the Bank of England’s base rate is rising in 2022 and there is a likely rise in inflation too which could change this landscape in the next 12 months. Mortgage prices are almost certain to rise due to the base rate increase announcement so for investors and landlords looking to grow their portfolio there could be lender opportunities and more cash buyer opportunities this year. Wanting to know more about this? Contact us today and we can help you grow your portfolio.
“Green Mortgages” have also been on the agenda for some time which presents opportunities for landlords who buy energy efficient properties. Deals may be available and special rates for those properties that are more energy efficient and whilst niche to the market right now, we expect this will grow as the focus on “net-zero” continues to dominate the political agenda.
In January, the government launched a new Model Tenancy Agreement meaning landlords could no longer issue blanket bans on tenants having pets in England. Instead, landlords must now object in writing if they receive a pet request from a tenant and should only reject tenants with pets if there is ‘good reason’, for example in smaller properties or flats where owning a pet could be impractical. While no further legislative changes have been mooted, landlords will need to be aware of the growing interest in pet-friendly properties. Use of the Model Tenancy Agreement is not mandatory for Letting Agents currently.
Building Safety and Internal Standards
Right now, the government is pushing through an improved bill relating to building safety, “The Building Safety Bill”. This is currently going through parliament and the intention is to make sure strict rules are enforced to make buildings safe and compliant throughout the whole process from build to residency. This may not make it through parliament until 2023 but it is one to keep on the agenda for landlords and developers building new properties.
Whilst The Building Safety Bill targets the building process, internally more regulations are coming in to make properties safe for tenants. In 2022, namely further regulations on carbon monoxide and smoke alarms will likely be brought in following a 2021 consultation so whilst no fixed date is set, it gives you time to be compliant with your properties. The main expected changes include:
· Social landlords will be obliged to ensure at least one smoke alarm is installed on each storey of their homes
· All landlords will be obliged to ensure a carbon monoxide alarm is installed in any room in their homes with a fixed combustion appliance (excluding gas cookers)
· In any home, when a new fixed combustion appliance (excluding gas cookers) is installed, a carbon monoxide alarm will be required by law
· Landlords will be legally obliged to repair or replace alarms once informed that they are faulty (testing will remain the occupier’s responsibility)
Unlike previous years when we were fully aware of the regulations and plans from the government in the lettings industry, much of what might happen over the next 48 months is a little up in the air but this guide should help you be able to look at your properties and see what you may need to be aware of should regulations come in. We are here to help so please do get in touch with us to discuss your rental properties or queries.
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*The information within this Guide is for general information only and reflects the understanding at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.