A number of new rules and requirements are set to be implemented this year, which may have an impact on landlords and their properties. From reduced tax breaks to tougher regulations, we’ve put together a list of the key changes that might affect how you operate as a landlord.
Three-year tenancy There’s new legislation in plans, which were published in July 2018 which may mean that landlords will need to provide their tenants with a three-year term (as minimum) with a break clause of six months.
This legislation change is intended to help tenants feel more at ease with financial security and provides better protection against eviction from the property. Tenants would be able to leave the tenancy early, but the legislation change provides more security.
No tenancy fees As a result of the Tenants Fees Act 2019, letting fees, which are already banned in Scotland, will be banned in England from 1 June 2019.
The new bill effectively ends all payments, that are ‘in connection with the tenancy of housing in England’, except those that fall under the list of permitted payments. This includes:
Rent
Deposits including Tenancy and Holding
Default payments
Fees for changes to the tenancy agreement
Fees for ending a tenancy
Council tax payments
Utility payments
TV licence payments
Communication services payments
This means fees for the following will now be prohibited:
Inventories
References
Phone calls
Postage
Anything else that takes up their time
As a landlord, you may need to consider who is responsible for picking up the cost of the fees, whether it’s the letting agency or yourself. These fees can typically range from £200-£700.
Caps
The bill includes plans to cap the holding deposit amount at one weeks rent and has increased the requirements for returning the deposit. Landlords aren’t able to charge tenants more than £50 for a tenancy charge, unless they can prove that the resulting expenditure is higher than this.
Eco-friendly As of April 1st2019, any new private properties for rent and required to have a minimum energy performance of E on the rating scale. From April 1st2020, this will come into effect for all existing tenancies.
Any renting properties with F or G ratings will be classed as unlawful and means the rule will be breached. You will firstly be given a warning so you can get your property up to scratch, if this isn’t done you may face fines or legal action.
Rent-a-room As it stands, landlords are able to get tax-free profits of £7,500. This is due to change, as a way of stopping landlords from receiving tax-free profits, intended to incentivise landlords to rent out spare rooms.
After potential new rules are in place, you’ll have to be present and resident in the property for at least some time during the letting period to get this money tax-free – this is known as the shared occupancy clause.
Tax Relief – mortgage interest
Up until 2017, landlords were able to deduct their mortgage interest payment from rent income, reducing the total amount of income that would be taxed.
The government are planning to phase in a reduction in the amount of interest that can be used to offset income tax. The overall impact will be to increase the amount of tax paid by most landlords with mortgages.
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Original source: https://www.moneysupermarket.com/landlord-insurance/regulations/
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