David Cox, Chief Executive, ARLA Propertymark
With so many recent changes, landlords are more in need than ever of a helpful agent to guide them through the maze of legislation. Here’s a quick guide to recent and upcoming changes you need to be aware of and the dates they came into effect.
Landlords can no longer deduct the finance costs/mortgage interest from their rental income. Instead, a basic rate tax reduction will be deducted from their income tax liability. This restriction is being phased in gradually until 2020/21.
From April 2017 the Government extended the grounds for Rent Repayment Orders. A local authority or tenant can now apply for a Rent Repayment Order against a landlord who has committed one of the listed offences.
An extra 3% Stamp Duty Land Tax is payable on purchases of additional residential property including buy to let properties and second homes. *Properties in Scotland are subject to Land Building Transaction Tax and from April 2018, Land Transaction Tax will replace Stamp Duty Land Tax in Wales
Landlords can only deduct costs they actually incur from replacing furnishings in rental properties – rather than the previous 10% Wear and Tear Allowance for fully furnished properties.
It’s the duty of the landlord or agent to check all prospective adult tenants’ identification to ensure they have the legal right to rent in the UK – or face a hefty penalty and/or prison sentence. **Government is looking at Phase 3 roll out to Scotland, Wales and Northern Ireland.
Landlords must ensure that a smoke alarm is fitted on every floor of the property where there is a room used wholly or partly as living accommodation and a Carbon Monoxide alarm in any room where a solid fuel is burnt. Checks must be made to ensure that each alarm is in working order on the first day of the tenancy. ***Wales & Northern Ireland are looking to bring forward similar legislation.
In June 2017 the Government announced plans to bring forward legislation to tackle unfair fees to tenants. Also in June, the Welsh Government announced that they will introduce a bill to prevent unfair fees being charged to tenants.
CMP is mandatory in Wales under Rent Smart Wales and will be mandatory in Scotland from January 2018. In March 2017 the Government announced that they will make Client Money Protection mandatory for all letting agents in England.
Electrical safety checks are mandatory in Scotland. Wales and Northern Ireland are expected to introduce similar legislation. The Government is considering whether they should take action to mandate electrical safety checks for rented properties in England.
The Government has set out plans to extend mandatory licensing of Houses in Multiple Occupation in England and recently consulted on the matter.
Includes new rules around Recovering Abandoned Premises, the introduction of a Database of Rogue Landlords and Letting Agents and enforcement of Banning Orders.
From 1 April 2018, all new or renewing private sector rental properties must have an EPC rating of E or above. Applies to all existing tenancies on 1 April 2020.
ARLA Propertymark runs regular webinars outlining the latest lettings legislation. Sign up for the next one at hub.rightmove.co.uk/webinars.