Last decade has seen significant legislation, including tax changes that have hurt landlords.
COVID-19 has meant some commercial & residential landlords taking a haircut on the rental income. UK Landlords have had to lower rents, with some struggle to evict anti-social or non-paying tenants due to evictions’ restrictions.
COVID-19 eviction rules
Temporary legislation enacted during the COVID-19 pandemic means landlords must give six notice periods when they wish to evict their tenants.
However, six months’ notice must be given except in the most extreme circumstances, e.g. when a tenant is found to have demonstrated anti-social behaviour, committed fraud, or has at least six months in rent arrears. This new rule will apply until 31 March 2021 and may well be extended depending on the pandemic.
New smoke alarm rules (Scotland)
The new legislation is being passed in Scotland next year to ensure all homeowners and renters are adequately protected from the risk of fire.
From February 2021, all Scottish homes will require a smoke alarm in living rooms, hallways and landings, heat alarms in kitchens. Carbon monoxide alarms will also be required to be fitted near boilers or wood burners.
The end of mortgage payment holidays
If you are struggling to pay your mortgage or your tenant is having problems paying their rent due to COVID-19, you can apply for a payment holiday on your mortgage until 31 March.
The rules are as follows:
· If you haven’t taken a payment holiday since the start of the pandemic, you can apply for deferrals of up to six months in total.
· If you currently have your first deferral in place or have resumed payments after one deferral, you can apply for another to take you up to the six-month limit.
· If you’ve already had six months’ worth of deferrals, you won’t be eligible for further payment holidays and will need to seek alternative support from your lender.
The stamp duty holiday
Landlords in England, Scotland and Northern Ireland can benefit from the current stamp duty cut when buying investment properties until 31 March.
Due to government debt ballooning, the government is likely to bring in further taxes which are likely to hit property investors across the board. Stamp duty may well be a target.
Stamp duty surcharge for overseas investors
From 1 April, overseas buyers will need to pay a 2% stamp duty surcharge when purchasing properties in England and Northern Ireland. This is on top of the current regular buy-to-let surcharge.
The rules apply to all non-UK residents. To be classified as a UK resident, you will need to have spent at least 183 days (six months) in the UK in the year before or after you buy the property.
Mortgage interest tax relief
Mortgage interest tax relief is now coming to an end of the changes that have been phased in over the last few years.
When you file your 2019-20 tax return in January, you’ll be able to deduct 25% of your mortgage interest and get a 20% credit on the remaining 75%.
But from your next tax return (due in January 2022 for the 2020-21 tax year), you will instead get the 20% credit on all your mortgage interest.
The rules can be complicated; members can seek advice from the BLA appointed accountant should they require it free of charge.
Client money protection rules
If you use a letting agent to let your properties in England, they will need to comply with the new client money protection rules from April 2021.
Agents are required to sign up to one of the government’s six approved schemes and hold money in accounts registered with the Financial Conduct Authority.
Those agents who fail to join a scheme could face fines of up to £30,000.
Letting Agents in Scotland and Wales must follow similar rules, but there are no such regulations for Northern Ireland.
Electrical safety rules
New electrical safety rules mean landlords will need to ensure all electrical installations in their property are inspected and tested every five years.
Tenants must be provided with a copy of the electrical test report within 28 days (or before occupation for new tenants). The electrical report must also be made available to your local council if they have requested a copy.
New tenancies have been subject to the new rules since 1 July, however, from the 1 April 2021 all existing tenancies will need to adhere the to these new regulations.
What do the Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 require?
Landlords of privately rented accommodation must:
Ensure national standards for electrical safety are met. These are set out in the 18th edition of the ‘Wiring Regulations’, published as British Standard 7671. Please read our article on Electrical safety.
Possible abolition of Section 21
In the latter part of 2019, the government consulted on abolishing Section 21, which is the route a landlord can seek vacant possession of there property.
The section 21 notice was introduced in 1988 under Margaret Thatcher, which stimulated the economy, and the private rented sector grew rapidly.
Abolishing the section 21 notice may not enable some people who may wish to rent out their property. It all does depend on the fine details of any legislation if enacted.
The Renters’ Reform Bill has been delayed due to the COVID-19 pandemic; however, this may well resurface.
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Is it worth being a landlord UK 2020?
Without a doubt, it is challenging and getting more challenging each year, read on our blog on this subject.
Can my landlord raise my rent without notice?
No, a landlord should serve a section 13 notice to increase the rent. The landlord can only increase the rent if the fixed term of the tenancy has expired.
Can a landlord let themselves in?
No, a tenant has the right to quiet enjoyment and privacy.
Does a landlord have to provide a cooker UK 2020?
No, not if the property was let with no cooker and the cooker is not a fitted cooker.
Is buy to let still worth it 2021.
Given the property prices are possibly at their peak, it is likely given some of the factors the UK property market will see a correction. So, it may be prudent to wait.
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