Another year, another raft of new legislation for landlords. Whether you are a seasoned hand or new to your role as a landlord, it can be difficult keeping up with the seemingly endless flow of new legislation, rules and regulations.
As we reported several months' ago, a surprising percentage of landlords simply fail to keep themselves up to date with recently introduced changes to the law that affects their business.
To help you navigate that maze, therefore, here is a brief review of what you need to look out for during the course of 2020:
Minimum Energy Efficiency Standards (MEES)
- with effect from the 1st of April, you will be breaking the law by letting your property if its energy performance rating is less than a category E;
- new Minimum Energy Efficiency Standards (MEES) were introduced in 2018 for all tenancies created after the 1st of April of that year;
- this April sees the same regulations extended to all let property, whenever the tenancy began;
- landlords are expected to spend up to £3,500 on measures to bring their property up to the new energy performance standards. Once the costs exceed that sum, a landlord may apply for exemption from the need for further works;
End of mortgage interest tax relief
- April is the beginning of a new tax year and now sees the complete removal of all income tax relief on mortgage interest repayments paid by landlords on their buy to let mortgages;
- the staged withdrawal of the relief began in 2017 and is removed completely in this new tax year;
Capital Gains Tax (CGT)
- the new tax year also sees changes to the liability of landlords for Capital Gains Tax (CGT);
- the so-called “lettings relief” for those years in which the landlord also lived in the property has now been withdrawn and applies only if the landlord continued to share the property in question with his or her tenants;
- the additional lettings relief which also applied to the last 18 months that the landlord owned the property is now reduced to just nine months;
Client Money Protection
- delayed from its full implementation in April last year, the Client Money Protection scheme now makes lettings agents legally responsible for signing up to one of the government’s approved providers;
- agents may be fined up to £30,000 if they do not sign up to such an approved provider – and display the certificate they receive to prove the fact.
- the scheme is in place to ensure that even if the lettings agent goes into bankruptcy, tenants may still recover any monies paid as a deposit to secure a tenancy;
- distinct from both the Client Money Protection scheme and the Tenancy Deposit Protection Scheme, the Tenant Fees Act also comes into full force on the 1st of April;
- the Act bans landlords and their agents from charging a whole range of fees – except for rent and certain security and holding deposits;
- in the case of deposits, the Act limits the amount that tenants can be charged – for security deposits this is a maximum of five weeks rent if the annual rent is less than a total of £50,000, for example, or a maximum of six weeks if the annual rent exceeds £50,000.
As you can see, the laws relating to the way you conduct your buy to let business are changing all the time. Since you face stiff penalties for failing to comply with them, it pays to stay abreast of all the relevant changes.