It’s been a tough year many Landlords - strict covid-19 restrictions, changes in government regulations, routine inspections under strict government guidelines whilst keeping your property rented and fully maintained has been a massive challenge for all our landlords . So here’s a round-up of the main upcoming changes that may affect you. Latest on evictions and notice periods - It has been announced that from 1 June, notice periods in England that are currently 6 months, will reduce to at least 4 months. This will not impact notices already served, only notices served after 1 June.
Notice periods for the most serious cases will remain lower:
o anti-social behaviour (immediate to 4 weeks’ notice)
o domestic abuse in the social sector (2 to 4 weeks’ notice)
o false statement (2 to 4 weeks’ notice)
o over 4 months’ accumulated rent arrears (4 weeks’ notice)
o breach of immigration rules ‘Right to Rent’ (2 weeks’ notice)
o death of a tenant (2 months’ notice)
o Notice periods for cases where there is less than four months’ of unpaid rent, will reduce to two months’ notice from 1 August. This is to support both landlords and tenants and responds to the greater difference between COVID and pre-COVID notice periods for rent arrears.
o The current ban on bailiff-enforced evictions, introduced as an emergency measure during lockdown, will end on 31 May.
The Government’s pilot mediation service
The Ministry of Housing, Communities and Local Government (MHCLG) is funding a new mediation service in England and Wales to support tenants and landlords in coming to out-of-court agreements over possession claims, which it’s hoped will help streamline the court process. If you’ve begun a possession claim, your tenant can access free legal advice from the Housing Possession Court Duty Scheme and if you both then agree, the case will be referred to a mediator. If an agreement is reached, the court will be informed; if not, the hearing will go ahead.
Letting a Property with Pets
The issue of tenants with pets is often the subject of debate and that’s likely to continue throughout the year. The first thing to know is that the government ‘model tenancy agreement’ has been adjusted, taking out the ability for landlords to issue a blanket ban on tenants with pets. At the moment, this is only applicable if a landlord uses the government agreement.
However, you also need to be aware that a new Bill to ban ‘no pet’ clauses in all tenancy agreements passed its first reading in October and is awaiting a date for its second reading. So, although it’s currently down to you as the landlord whether you want to let your property to people with pets, this might change in the near future.
Mandatory 5 year electrical checks (England)
On 1st April, the requirement for all rented properties to have a full electrical inspection every 5 years came into effect. Remember your tenant must be given a copy of the written report, either when they move in or within 28 days of the inspection if they’re already living there. If Kerr and Co are managing your property for you we will have already completed this on your behalf.
Right to Rent checks
During the pandemic, the government has allowed tenant checks to be made remotely and there was a fear that once restrictions are lifted, tenants would have to be re-checked in person with their original documents. Currently these temporary adjustments ended on the 17th May 2021 and after this time landlords must either check the applicants original documentation or use the online right to rent check for applicants.
Breathing Space regulations
The Debt Respite Scheme (Breathing Space) came into force on 4 May 2021. The Debt Respite Scheme will give someone in problem debt the right to legal protections from their creditors. There are two types of breathing space: a standard breathing space and a mental health crisis breathing space. A standard breathing space is available to anyone with problem debt. It gives them legal protections from creditor action for up to 60 days. A mental health crisis breathing space is only available to someone who is receiving mental health crisis treatment and it has some stronger protections. It lasts as long as the person's mental health crisis treatment, plus 30 days (no matter how long the crisis treatment lasts).
Section 8 notices
As a result of the Breathing Space regulations, section 8 notices now need to be amended to refer to them. A new statutory instrument has been made which can be found here.
Landlord tax - Stamp Duty holiday ending
The Stamp Duty holiday in England for property purchases under £500,000 will be phased out from 30th June. From 1st July until 30th September, the nil threshold will drop to £250,000, then the usual rates will apply from 1st October. The higher rate surcharge for additional properties continues to apply as normal.
Wales has extended its Land Transaction Tax holiday until 30th June, but this doesn’t apply to additional homes. Scotland returned to the standard nil threshold of £145,000 on the 1st April.
Tax relief on mortgage interest has ended Remember that for the 2020-21 tax year, you can’t offset any of your mortgage interest against rental income. This is the first year where a standard 20% tax credit is applied to the entire amount of interest you’ve paid.
Freeze on Personal Allowance for 5 years
Usually, the Personal Allowance – the amount of income you can earn tax-free – rises each year. But to help the government recover some of the cost of the pandemic, the Chancellor announced in his Spring Budget that this would be frozen from 6 April 2022 until 5 April 2026. That includes the allowances relating to income tax, inheritance tax and Capital Gains Tax.
Making Tax Digital (MTD)
As part of government plans to modernise the tax system, from 6th April 2023, all landlords and self-employed people will be required to submit quarterly updates of income and expenses to HMRC via MTD-compatible software.
If you have a rental turnover of more than £85,000 and are VAT registered, you may already be using the system. If not, be aware that it will become compulsory for all VAT-eligible companies from April 2022, so it’s advisable to sign up as soon as possible. More information on the Government website - making tax digital
Helping you through the minefield of the New Landlord Changes
Our Fully Managed service for landlords can give you peace of mind that your properties are adhering to all the latest legislation. Andrew and his Property Management Team are here to help and give individual advice for you portfolio be it one property you have or a portfolio . If Kerr and Co are managing your property for you, we will worry about getting this done, however if you are self-managing and need any help or further advice, do get in touch.