Every year brings additional changes to legislation, taxation and the wider property market that landlords must stay on top of, and 2020 is no exception. Increased regulation, changes in buy to let tax relief and an unsettled market combine to make being a landlord more challenging than it can sometimes look from the outside.
The Government has announced its intention to introduce a Renters’ Reform Bill, which it says will abolish the use of ‘no fault’ evictions, improve the possession process for landlords, and introduce a lifetime deposit, along with measures to expand the database of rogue landlords and letting agents. Exact timings for these changes are not yet clear.
But there are a number of legal changes that will take effect in 2020, as well as some interesting events. From the imminent introduction of minimum energy efficiency standards (MEES) to changes to tax relief, here are some key dates for the 2020 calendar that every landlord/investor should be aware of.
- (TBC) Pet friendly tenancies
The Secretary of State announced a revision of the Model Tenancy Agreement for assured shorthold tenancies in the private rented sector on 4 January. The revision is intended to make it easier for tenants with pets to find landlords who will accept them.
It removes restrictions on responsible tenants with pets and encourages landlords who use the Model Tenancy Agreement to offer greater flexibility in their approach to pet ownership. We should get a Trading Standards announcement on pet rents shortly and a revised Model Tenancy Agreement will be published on Gov.uk.
- From 20 March 2020 the Homes (Fitness for Human Habitation) Act 2018 will come into force for periodic tenancies in England
When it was implemented on 20 March last year, the Act applied only to new tenancies, including renewals. From 20 March 2020, it will apply to all private and social periodic tenancies that existed before 20 March 2019.
The only exception to this are tenancies that are on a fixed term that began before 20 March 2019 – the Act won’t apply in these few cases until the end of that fixed term.
Replacing the existing fitness for human habitation clauses in the Landlord and Tenant Act 1985, this legislation applies to all human habitation tenancies lasting up to seven years.
Essentially, it exists to protect tenants and ensure their property is fit for purpose – and allows them to take legal action should this not be the case. Find out whether you are compliant.
- 1 April 2020: Minimum energy efficiency standards regulations extended
Landlords should be familiar with the minimum energy efficiency standards (MEES) that came into effect in April 2018.
This states that new tenancy agreements and renewals (other than some HMOs, such as bedsits), must have an energy performance certificate (EPC) rating of E or above.
- April 2020 (and onwards): Further changes to mortgage interest tax relief
The phasing in of new buy to let mortgage tax relief laws began in 2017-18, with landlords having been required to change the way they declare rental income since April 2017. This has led to increased tax bills – and the rise is set to continue.
In the 2019-2020 tax year, landlords were only able to claim 25 per cent mortgage tax relief, down from 50 per cent the year before and 75 per cent the year before that. In 2020-21, landlords won’t be able to claim any tax relief on mortgage interest payments at all.
Instead, from April 2020, landlords will receive a 20 per cent tax credit on their interest payments. This will impact those in the higher tax bracket, which could now include landlords who will have to declare the rental income that they previously used for interest payments.
- April 2020 (and onwards): Changes to private residence relief
Changes to private residence relief from April 2020 will mean that landlords will lose nine months’worth of capital gains tax relief when they come to sell. Currently, landlords can claim private residence relief for the whole time they lived in a property before they let it out, in addition to an extra 18 months after moving out. This final exemption period will be reduced from April to the time they lived in the property plus just nine months after the property has been vacated.
- April 2020 (and onwards): Changes to capital gains tax and lettings relief
Landlords who rent out a property that was once their main home currently receive £40,000 worth of lettings relief. From April, only landlords who share an occupancy with their tenants will be able to claim. From April 2020, the deadline for payment of the capital gains tax bill will also change: from 31 January in the year after the tax year the landlord made the sale, to within 30 days of the completion of the sale.
- 12 May 2020: Landlord Law Conference
Landlord Law is an annual event for landlords, letting agents and anyone working in the private rented sector. It’s a great opportunity to get up to date with all the legislative changes that have taken place over the last few years and that are planned for 2020. Suzy Hershman, Head of Dispute Resolution at mydeposits will be providing a deposit update and Paul Shamplina will be talking about current eviction issues.
- June: Extension of Tenant Fees Act
The Tenant Fees Act, which came into force in England in June 2019, will be extended to cover all existing tenancies in June 2020. Read our Tenant Fees Act FAQs for more guidance on permitted fees and the impact of the Act on deposits. The Residential Landlords Association (RLA) has provided more information on the latest situation in Wales.
- June 2020: Brexit stocktaking
The EU-UK political declaration agreed as part of Boris Johnson’s Brexit deal, says a summit should take place in June so that Britain and the EU27 can assess the progress of the talks.
Although Mr Johnson has pledged not to request an extension of Britain’s transition period, June is the final opportunity to do so.
Brexit could bring about changes in regulations for overseas buy to let property investors, it could also mean greater challenges for foreign tenants looking to rent a property.
In the meantime, the Government has reassured landlords and letting agents that they should continue with Right to Rent checks on EU nationals in the run-up to the introduction of a points based-system. The new immigration rules won’t affect Right to Rent until 31 June 2021.
- 1 July 2020: Introduction of mandatory electrical safety checks for new tenancies
Landlords are already required to make sure that the wiring and appliances in their properties are safe, but from July it will be a legal requirement for private landlords to have their electrical installations inspected every five years and provide safety certificates to tenants and their local authority.