As we’re half way into the first month of 2020, it’s vital that landlords and investors know what this year has in store for the property sector.
To keep you in the loop, we’ve put together 10 new rental laws and industry changes that are on the cards for 2020, when they will be happening and how landlords can prepare for them.
- Extension of the Homes (Fitness for Human Habitation) Act
- Changes to Capital Gains Tax
- Mandatory Electrical Safety Inspections
- Extension of Minimum Energy Efficiency Standards
- Mortgage Interest Tax Relief
- Money Laundering Regulations for Letting Agents
- Extension of the Tenant Fee Ban
- Changes to Stamp Duty
- Plans for the Removal Section 21
- Preparing for Brexit
Extension of the Homes (Fitness for Human Habitation) Act – March 2020
The Homes (Fitness for Human Habitation) Act came into force in March 2019. The Act originally applied to new tenancies and renewals only, with the purpose of the Act is to ensure that all rental properties are safe and suitable for tenants to live in.
As of 20th March 2020, the Act will be extended to all existing tenancies in England. Landlords have a legal responsibility to carry out repairs and maintenance required to keep their property fit for human habitation. Failing to uphold these duties can put the landlord at risk of being sued.
Changes to capital gains tax – April 2020
England and Wales
Capital gains tax (CGT) must be paid by anyone selling a property that isn’t their main residence.
Currently, capital gains tax is paid through your self-assessment tax return – meaning that property sold in the 2018/19 tax year would not need to be declared until January 2020.
This year, the rules are changing. As of April 2020, property sellers will need to pay the full amount of CGT owed within 30 days of their completed sale.
At the moment, the costs will stay the same (18% for basic rate taxpayers and 28% for higher rate taxpayers) however, landlords and property investors will need to be wary of the new time frame.
Mandatory electrical inspections – April 2020
On 13th January 2020, long-awaited plans were published by the government regarding the introduction of compulsory electrical safety checks.
The new “The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020” – awaiting parliament approval – state that private landlords must carry out a full Electrical Installation Condition Report in order to improve electrical safety of rental properties across the country.
The regulations are expected to come into force on 1st April 2020 and will apply to all new single tenancies. The regulations will be extended to all existing tenancies by April 2021.
Read our full article about new mandatory electrical safety inspections here.
Minimum Energy Efficiency Standards for existing tenancies – April 2020
England and Wales
April will be a busy month for landlords. In 2018, the Minimum Energy Efficiency Standard (MEES) required rental properties with a new tenancy or renewal to have a minimum Energy Performance Rating of ‘E’.
In April 2020, two years on, the rules will now be extended to all existing tenancies. Landlords who’s properties fail to meet the EPC requirements will have to carry out measures to improve energy efficiency (capped at £3,500 per property).
Don’t wait until April – book your EPC today for just £69 (inc VAT).
Changes to mortgage interest tax relief – April 2020
England and Wales
Tax relief on mortgage interest has been phased out by the government since April 2017. The amount landlords have been able to deduct has been slowly reduced every year.
From April 2020, the beginning of the 2020-21 tax year, landlords will only be able to subtract a flat credit of 20% of their mortgage expenses from their rental income when filing their tax return.
Read our full article on calculating your landlord tax return here.
Money laundering regulations for letting agents – May 2020
Across the UK
As of 10th January 2020, all lettings agents who manage properties with an income 10,000 Euros per month or more (or equivalent) will be subject to the regulations set out in the Fifth Money Laundering Directive.
The regulations will help letting agents to identify and assess risks of money laundering and customer due diligence checks will be required for all new tenants and landlords.
From May 2020, all letting agencies that meet the requirements will have 12 months to register with the HMRC. The online registration system will not be available until May, but lettings agents will be expected to comply with the regulations until then.
Extension of Tenant Fees Act – June 2020
The Tenant Fee Ban came into force on 1st June 2019. Since then, landlords and lettings agents are no longer able to charge tenants for lettings fees.
The ban has also capped deposits at five weeks’ rent – or six weeks for tenants with an annual rent over £50,000.
At the moment, the ban only applies to new tenancies, however, from June 2020, the ban will be extended to all existing tenancies as well.
Changes to Stamp Duty – 2020
England and Wales
In November 2019, the Conservatives announced plans for a 3% stamp duty surcharge for property buyers who are non-UK tax residents.
Anyone purchasing a buy-to-let or second home has been required to pay an additional 3% in Stamp Duty Tax since April 2016 – but now the government intend to extend the tax to overseas buyers.
No official dates have been set as of yet, but the changes are likely to happen alongside other new rental laws in 2020.
Find out more about Stamp Duty here.
Goodbye to Section 21 – 2020
At the beginning of 2019, the government announced that they intended to put an end to ‘no fault’ evictions. As the year came to a close, plans for these intentions were finally announced in the Queen’s Speech.
On Thursday 19th December 2019, it was revealed that a new Renters Reform Bill will “introduce a package of reforms to deliver a fairer and more effective rental market”.
The Bill is said to put an end to no-fault evictions by removing Section 21, yet will also “strengthen the rights of landlords” who need to legitimately gain possession of their property.
A new lifetime deposit will also be introduced so that tenants will not need to save for a new deposit every time they move house.
At this point, the changes to Section 21 have no set date, but landlords should keep their eye out.
Take a look at what else went on in 2019 here.
Preparing for Brexit (again) – 2020
Across the UK
Almost four years after the national referendum, the House of Commons have voted for Prime Minister Boris Johnson’s Brexit deal.
It is unclear what exactly landlords can expect from Brexit, but it the Bank of England base rate is likely to be subject to fluctuation and having a knock-on effect on mortgage rates.
With no formal plans set in stone for the property sector regarding the UK’s departure from the EU, landlords must simply brace themselves for economic uncertainty and be prepared for legislative change.
Seem like a lot to keep track of?
We understand that keeping track of every legal update and governmental change in the property sector can be a bit overwhelming. But we’re here to make things easier.
If you’re a self-managing landlord (or want to become one) in England, Scotland or Wales, talk to us. We can help remove your administrative burden and leave you more time to focus on building or managing your property portfolio.
Give us a call on 0333 777 888 or explore or rental management plans here.
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