Regulatory Changes affecting Landlords in 2020
The past few years have proven to be challenging for Landlords with the government wishing to secure higher tax revenues while protecting and offering more rights to tenants. This year is no exception as there is forthcoming regulation being bestowed on us as the government’s agenda is to improve housing standards for tenants.
The majority of landlords we deal with already have high standards, but In some case, there is a minority of landlords who fall below the ideal standard to let a property, and this is the landlord the government are targeting!
The main regulatory changes are;
March: The Homes (Fitness for Human Habitation) Act 2018 extension.
Should a let property be substandard, the tenant can take legal action via the Courts. The Courts can decide to enforce repairs and health & safety issues and also rule for the landlord to compensate the tenant.
This Act came into force in 2019 but only for tenancies post-March 2019. From 20th March 2020, the Homes Act will extend to almost all tenancies irrespective of tenancy start date.
April: Domestic Minimum Energy Efficiency Standard (MEES) grace period ends
From 1st April all tenancies, irrespective of the contract start date, must have an EPC rating of ‘E’ or better. If your EPC is an ‘F’ or ‘G’, then you WILL need to make improvements to your property. Non-compliance could attract a fine of £2000 for the first notice and £5,000 if non-compliance continues.
April: UK Capital Gains Tax Relief
CGT is likely to increase significantly for many. When you sell a property that is not your main residence CGT is payable. The tax payable is calculated by deducting any private residence relief and lettings relief from the capital gained from the sale of the property. These tax breaks, however, are going to be reduced, leaving landlords with hefty tax bills when they sell their buy-to-let properties.
It is also worth noting that the tax liability is due within 30 days of disposal whereas historically it was payable at the end of the tax year. More information at www.gov.uk – it is worth speaking to your accountant before you sell too! There is nothing worse than an unpleasant surprise when that brown HMRC envelope hits your letterbox.
June: The Electrical Safety Standards in the Private Rented Sector Regulations 2020
We still await for parliamentary approval, but the government has the intention for this to start on 1st June 2020, and therefore we feel it is imminent.
Every landlord will need electrical installation inspections and testing to be commissioned every five years and issued to their tenant.
Our concern is that there are not enough NICEIC qualified electrician to undertake such a task. Thankfully Conran has already secured the services of these electricians and is highly recommending that all landlords act quickly to secure their Electrical Certificate which is valid for five years!
It is likely that once this bill is passed by parliament, a new tenancy must have an electrical certificate and by July 2021 existing tenancies will need one.
June: Tenant Fees Act 2018 transition period ends
From 1st June 2020, for existing tenancies, this will become binding and therefore landlords and letting agents can only charge tenants for designated fees which must be reasonable, transparent and capped.
Being a landlord is a daunting but highly rewarding career when you have the expertise. There are over 170 pieces of legislation a landlord has to comply with, and we make it our job to know and understand these within our lettings management department. After all, it is our job to protect our landlords.
As you can tell, the government are making a beeline for the lettings industry, and there is a good reason for them to do so (maybe not the excessive taxation mind you!). There is also regulation and Renter Reform Bills on their way. Once we have more information, then we will post another blog.
If you want to discuss our services, then please do make contact.