Changes for landlords in 2019
Since the Housing Act 2004 came into force in 2006, new rules and regulations have flooded into the lettings industry on a regular basis. In 2018 alone, we have seen four new pieces of lettings legislation introduced in England:
• 1st April: Minimum Energy Efficiency Standards (MEES), making it illegal to let a property with an energy rating of F or G.
• 6th April: Banning orders for rogue landlords and letting agents
• 6th April: New ‘MOT-style’ regulations for Gas Safety inspection and certification
• 1st October: Mandatory licensing for HMOs housing five or more people, forming two or more households.
In addition, the new EU-wide General Data Protection Regulation (GDPR) law has affected how landlords and agents can take and store tenants’ personal information. And in Scotland, all letting agents had to sign up to and comply with a new Letting Agent Code of Practice by 30th September.
It’s vital to stay on top of these new laws and know about proposed legislation, so that you can plan and budget ahead to make sure you and your properties remain legally compliant and your buy to let investments continue to work well for you.
So, here are five upcoming changes you need to be aware of for 2019:
Third phase of the withdrawal of mortgage interest as an ‘allowable expense’
For the tax year beginning on 6th April 2017/18, the amount of mortgage interest landlords can deduct as a straight ‘allowance’ reduces to 25%. The remaining 75% attracts tax relief at the basic rate of 20%. For your 2018/19 tax return, it’s 50/50, so you can deduct half your mortgage interest payments as an allowance, with the other half subject to 20% relief.
Client Money Protection Mandatory (CMP) in England
All letting agents will require this insurance from April 2019 which means as a landlord or tenant, if the agent goes bust, your rental income is protected. The reason this is critical is if you are currently letting through an agent that doesn’t have CMP, it means they may not be able to secure it prior to the law changing and may go out of business – taking your rent and any deposits with them.
Ban on tenant fees in England
Although not yet law, it does seem likely that a ban on tenant fees will come into force, possibly around the spring. The Tenant Fees Bill 2017-19 has progressed through the House of Commons, had its second reading in the House of Lords on 10th October this year and is scheduled for the Committee stage – a detailed examination of the Bill – on 5th November.
The proposals in the Bill include:
• Prohibiting landlords and letting agents from charging tenants for anything other than:
o An administration fee when the tenant requests a change or early termination of a tenancy
o Utilities, communication services and Council Tax bills
o Payments arising from a default by the tenant, e.g. replacing a lost key
• Capping holding deposits at one week’s rent
• Capping tenancy deposits at 6 weeks’ rent
• Creating an enforcement authority in the lettings sector.
While this is intended to lighten the financial burden on tenants at the start of a let, it may impact on landlords’ costs if your agent decides to increase their fees, so it is worth speaking to them as soon as possible. If you self-manage, you should already be preparing to cover the cost of the administration of every let yourself.
You can follow the progress of the Bill on the parliament website.
Homes (Fitness for Human Habitation) Bill
This is a Bill currently making its way through Parliament and is likely to implemented next year which allows tenants to take legal action if the landlord fails to keep their property in a good condition. Bearing in mind councils can already fine and jail landlords for not letting a property legally, this should be a good enough incentive to make sure your property is let legally and safely. To keep track of this bill, click here.
Mandatory electrical safety checks (England)
A consultation was held earlier this year on introducing 5-yearly mandatory checks on electrical installations and a requirement to provide the tenant with a copy of the report (EICR) at the start of each tenancy. ‘Good practice’ guidelines would also be introduced for landlords around visual checks and electrical appliance testing (PAT). While it’s yet to be presented as a formal Bill, you should be prepared for this somewhat ‘grey’ area of lettings law clarified in the near future and if you haven’t had your electrical system checked within the last 5 years, it’s advisable to have that carried out by an electrician as soon as possible.
It is likely there will be more changes to lettings which will impact in 2019 and we will do everything we can to keep you up to date.
Because we play by the book we want to tell you that…
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.