As a landlord, you’ll have been no stranger to tax and regulation changes over the years. That trend is set to continue for 2019, with plenty of new provisions being rolled out for the private rented sector.
While a good letting agent can help take the pressure off the day-to-day management of your property, it’s still easy for landlords to feel confused by all the regulatory upheaval from year to year. So to give you a helping hand, we’ve rounded up some of the most important legislative changes you should be aware of now.
Tenant Fees Bill
Perhaps most controversially for landlords, the Tenant Fees Bill, which comes into effect on June 1st this year, will remove letting agent charges to tenants.
This will mean tenants will only be required to pay their rent and deposit when securing a property in the private rented sector.
As such, letting agents will not be able to charge tenant fees to cover administration costs and credit checks. While this in theory should save tenants a fair amount of money when signing on the dotted line, landlords should be aware that these costs may be passed onto them.
Client money protection
From April 2019, both landlords and tenants can have peace of mind when it comes to how their money is secured.
Under the new regulations, all letting agents in England will have to belong to an approved Client Money Protection scheme.
The CMP scheme will protect landlords and tenants from rogue agents, as it will safeguard their money from theft or misuse, as well as cover them in the event of the letting agent going bust.
Mortgage interest tax relief cuts
On a less positive note, the level of mortgage interest tax relief that landlords can claim will continue to drop.
Before 2017, landlords could deduct all of the interest they paid towards their mortgage payments from their rental income. Under new buy-to-let tax laws, however, every year from April 2017 onwards, the proportion of that tax relief will drop by 25% – until it reaches 0% next year.
Once it comes to a standstill altogether in April 2020, the tax relief will be replaced by a 20% tax credit for mortgage interest. Nevertheless, be prepared that your tax bill will soar if you’re a higher or additional-rate taxpayer.
Homes (Fitness for Human Habitation) Bill
Landlords should be aware that the Homes (Fitness for Human Habitation) Bill will come into play from 20 March 2019.
Under this Act, all private and social landlords in England will need to ensure their properties meet new standards that deem them fit for human habitation.
This shouldn’t affect you if you’re a landlord of properties that are already well maintained. However, others may find there are certain improvements that need to be made to avoid being faced with legal action from tenants for breach of contract.
Landlords are advised to assess their properties now and tackle any issues sooner rather than later.
Housing Complaints Resolution Service
Since the Ombudsman Services withdrew from handling consumer complaints in the property sector last August, the government have now overhauled the housing complaints service.
The resolution service, which will cover the entire housing market, will seek to provide a more straightforward way for tenants (and homeowners) to resolve disputes about repairs and maintenance, and to claim compensation where it’s owed.
At present, there are several different complaints bodies and landlords aren’t obliged to register with any of them. However, under the new redress scheme, private landlords will this year be legally required to join – or they may face a fine of £5,000.
Other legislation to be aware of
This year a decision should be made on whether the government will introduce three-year tenancy agreements, with a view to providing greater protection and stability to families in rented properties.
While landlords of the coldest homes have been required since April to upgrade the energy efficiency in their homes to at least an E grade, more property owners will be forced this year to make improvements. Previously, any landlord who faced costs of up to £2,500 for new insulation would be exempt from making the upgrades, but the cap will be lifted to £3,500 this year.
As landlords will be expected to make various adjustments in 2019, it’s important to keep on top of any changes and ensure you have a good understanding of how you will be affected.