Becoming a landlord can be extremely rewarding and allows a continuous income for those looking for flexibility in their lifestyle.
However, with every year, comes new legislation for rental properties. As a landlord, it can be difficult to keep up with the times and keep on top of legislative changes, particularly when there are so many changes occurring each year.
To make it easier, we have rounded together a list of the upcoming landlord and tenant legislation changes that both landlords and tenants should expect from April 2021 and onward.
1st April: Changes to Stamp Duty
Stamp Duty Land Tax (SDLT) is an amount of tax paid on a property, depending on several factors and isn’t applicable to every buyer. If you are buying a property for the first time, there’s a chance you won’t need to pay stamp duty.
However, from 1st April 2021, all non-UK residents purchasing property in England will be liable to pay an additional two per cent stamp duty surcharge.
For non-UK residents that become a UK resident within 12 months, you could be eligible for a refund of this surcharge.
1st April: Client Money Protection
Client Money Protection is a form of insurance to protect deposits and rental payments against theft or misappropriation. This insurance protects both landlords and tenants, meaning that landlords have the reassurance that they will receive rental payments and that tenants will receive their full deposit back at the end of their tenancy – unless any damages to the property occur.
The Client Money Protection legislation has been pushed back twice in recent years, meaning that letting agents and landlords have had more time to become compliant. However, there is now a firm deadline to become compliant by 1st April 2021.
All letting agents who handle rental payments and deposits must be a member of a Client Money Protection scheme. This can be proven with a certificate of membership.
1st April: Energy Performance Certificates
Also from the 1st of April, every rental property in England must have an Energy Performance Certificate (EPC) by April. The Energy Performance Certificate must be shown to tenants at property viewings, otherwise, tenants should ask their letting agency or landlord to supply it.
Non-compliance can result in a fine of up to £5,000. Some rental properties are exempt if the work will cost more than £3,500.
1st April: Electrical Compliance for All Rental Properties
Last year, new regulations were introduced to enforce compulsory inspections of electrical installations by a qualified person, at least every five years. Landlords must provide tenants and letting agents with a copy of this electrical safety report as proof of compliance. If necessary remedial work is identified in the report, then it must be performed.
Initially, this was only for new tenancies, however, from the 1st April 2021, this will now apply to new and existing tenancies. Non-compliance will result in large financial penalties.
31st May: Potential Changes to Eviction Legislation?
Last year, changes to eviction legislation meant that landlords were legally obliged to give tenants six months’ notice before an eviction takes place, rather than two months. This only applies to evictions that are not a result of anti-social behaviour, domestic abuse, serious rent arrears or problems with tenants having no right to rent.
For tenants, this gives more time to find a new property, and for landlords, this means the process of evicting tenants has become more complex and takes much longer. Although the Government has stated that this legislation is due to expire on 31st May, previous deadlines have been extended and it is also too early to tell what notice period this could be amended too.
30th June: Changes to Right to Rent
Right to Rent checks must be carried out by landlords or letting agencies as part of rental legislation to ensure that a renter is legally entitled to remain in the country, and therefore able to rent a property.
UK landlords or letting agents must undertake Right to Rent checks to check all tenants’ immigration statuses. This applies to all tenants and is a check that is compulsory.
Landlords and letting agents can continue using passports and national ID cards as proof of right to rent in the UK, although this is an interim measure until the 30th of June. After this date, the points-based system will change the way these checks will take place, although this isn’t yet clear how.
Other Changes to Be Aware Of
As well as the above, there are other changes to take into consideration that are not yet confirmed but are likely to be confirmed later on in the year.
Changes to Planning Regulations
Some new build properties lack sufficient light and space, which the Government is now hoping to crack down on. Over the coming months, we are expecting legislation to be introduced for minimum light and space requirements.
This means that developers must adhere to the minimum requirements through planning regulations before selling or renting out the property.
Making Tax Digital
When sending HMRC updates on income and expenses, there may sometimes be discrepancies and errors in the information.
If you are a landlord with a turnover of more than £85,000, you will be required to be using a digitised system to update on a quarterly basis with your income and expenses, meaning that tax is calculated throughout the year. This prevents the need to complete a tax return and only requires you to sign a declaration. Not only does this make the information more accurate, but it also makes it easier for landlords to keep on top.
While this is set to be introduced over the coming months, it is expected that all landlords must sign up in 2022, with no minimum cap of turnover.
Managing Your Rentals
As a lettings agent, we understand that it’s not always convenient to keep on top of legislation and regulations. With that being said, non-compliance can result in hefty fines and in some cases, further penalties.
If you are looking to become a landlord or if you are finding it difficult to keep on top of new and existing changes, we do recommend using a trusted lettings agency to keep you on top of regulations and to ensure a long-lasting relationship with your tenants.
To find out more about new landlord legislation and tenant legislation, please contact us.