Being a landlord can be very rewarding and given the level of demand for property in the United Kingdom, you can see why so many people are looking to get involved with the buy to let market. However, people should be aware that the buy to let market is challenging and being a landlord can be very difficult. It makes sense to call on experts for assistance and one area where you will benefit from help comes with staying up to date with landlord regulations.
There have been many changes to landlord regulations in recent times and you need to make sure that you continue to comply with these regulations. If you need assistance call on experienced estate agents and at Williams of Petersfield, we are more than happy to help you out. Here are some of the recent changes to landlord regulations that you need to consider.
Mortgage interest tax relief changes
As of April 2017, there has been a change to the way that landlords deal with their mortgage interest costs from their income when it comes to determining their final tax bill for the year. The first year in this process, which will take place over four years, sees landlords only being able to offset 75% of their mortgage interest until 2020, when landlords will not be able to offset any of their mortgage interest.
This will be replaced by landlords being able to claim the equivalent of a tax credit of 20%, the basic rate of tax, and this means that landlords who are on the higher rates of tax will be hit with this change. This is why it is essential that landlords plan ahead and make sure that these changes do not impact on their income too much.
The removal of wear and tear allowance
Up until 2016, landlords who let furnished property were allowed to deduct 10% of their annual rent before they paid tax and this figure was for “wear and tear” of the furnishing. It didn’t matter if the landlord spent this money or not, they could claim. This has changed and landlords are now only able to claim on items that they have spent money on, replacing or repairing.
Right to rent requirements
As of February 2016, landlords need to ensure that tenants have a legal right to be present in the United Kingdom. A landlord has to review documentation and ensure that a tenant holds a legal right to be present in the UK. If a landlord fails to do this, they can face a fine of up to £3,000 for every person found in their home who doesn’t have the legal right to live in the UK.
Local landlord licencing
Changes have been brought in across the United Kingdom providing local councils with the right to operate a selective licensing for landlords in their area. A local council now has greater ability to impose significant fines on landlords who don’t meet their standards.
A ban on letting fees
As of the autumn statement of 2017, the Government stated that they are looking to ban letting agent fees that can be imposed on tenants in England. At this point in time, the tenant will usually cover the costs of various bills, including references, credit checks and tenancy agreements but these must now be met by the landlord. There is an argument that savvy landlords will pass these costs on to the tenant in some way but it is an issue to be aware of.
EPC ratings as part of landlord regulations
As of April 2018, a landlord looking to arrange a new tenancy will have to ensure that their property carries a minimum energy efficiency rating of an E. This will apply to all tenancies as of April 2020. There are some exceptions to this rule, for a variety of reasons so you may be able to delay the issue but this is an issue that all landlords should be aware of.
Other changes to be aware of include:
- The Housing White Paper, introduced in February 2017
- Section 21 eviction process, introduced in 2015
- The need to hold a tenant’s deposit in the correct manner
- Changes to buy to let regulations
- The additional 3% stamp duty for additional home purchases, as of April 2016
It is not as if these changes will be the final changes that landlords have to contend with, there are many more changes scheduled to appear and there will also be changes that haven’t yet been cited. This is why all landlords should call on experts for assistance and if you need any help, please get in touch with Williams of Petersfield.