As a landlord, it can be hard to know where you stand when it comes to the changing laws and legislation that affect you. Whether you are already a landlord or are looking to let property online, here are some of the new laws that you should be aware of.
● The Renters Reform Bill
Announced in June 2022, the Renters Reform Bill is expected to be the biggest shake up of the rented sector for 30 years. It covers a number of issues and proposes some major changes such as
– A new mandatory ombudsman for landlords and renters
– The abolition of section 21 and the end of no-fault evictions
– Improving property safety within the Decent Homes Standard
– New limits on rent increases
– Changes to minimum EPC grade
– Pet friendly tenancies
– Outlawing blanket bans on benefits
At this time no official date for the reform has been released by the government but they have stated that they will provide at least 6 months’ notice of the first implementation date.
● Landlord Licencing
In recent years there has been a rise in licensing schemes with the trend looking likely to continue as more councils and local authorities roll them out. Previously, mandatory and additionally licensing schemes only applied to landlords who let out HMOs, but an increasing number of councils are now requiring some or all landlords in their area to obtain a licence before they can let out their property.
● Rising Interest Rates
After years of interest rates being at a record low, the Bank of England started to raise the base rate in December 2021 to help combat rising inflation with and by September 2023 it was at a high of 5.25%.
Although there is now more choice of buy-to-let mortgages, the rates are still high, with BTL mortgages currently average around 6%. For those who have a fixed rate mortgage deal that is ending soon, this will mean bigger monthly repayments and less profit for you.
● EPC Changes
As the government push towards net zero by 2050, they have made changes to the rules regarding the Minimum Energy Efficiency Standards (MEES) of private rented homes in England and Wales.
At present the MEES is an EPC rating of ‘E’, which means that properties with an ‘F’ or ‘G’ rating can be let out legally.
From 2025, the changes will mean that private rental properties will need to have an EPC rating of at least C in order to comply with MEES, affecting new tenancies straight away and all tenancies by 2028.
Although this change may still be a few years away, it is well worth planning, saving and starting to improve your EPC rating now so that you are well prepared.
● Capital Gains Tax
If you decide to sell a rental property for more than what you paid for it, then you could be required to pay Capital Gains Tax (CGT). The current tax-free allowance for CGT was reduced from £12,300 per person to £6,000 per person in April 2023 and is due to be cut further by April 2024 to £3,000. This is something that landlords who are considering selling their property may need to consider as with the new thresholds they will be much more likely to pay CGT on the profit they make.