Last year saw a number of dramatic changes for landlords and the rental market. Recently, there have been changes to buy-to-let mortgage tax relief, affordability tests and stamp duty which have transformed the rental landscape. However there will be more rules and regulations to come. Here are 6 changes coming up which landlords should be aware of.
1) Energy efficiency
The Government has Minimum Energy Efficiency Standards (MEES) in place, and from April 2018 all new tenancies must adhere to these standards. This will mean that properties with an Energy Performance Certificate (EPC) rating of F and G cannot be leased out. This puts an emphasis on landlords improving their EPC ratings as a property must meet the MEES on 1st April 2018 if they intend to grant a new lease to a tenant.
2) Longer tenancies
The Autumn Budget saw the Government plan a consultation on how to incentivise landlords to offer longer-term tenancies. There are suggestions that tax relief for long leases and quicker evictions could encourage landlords in this direction.
By renting out a room in their property, a homeowner could earn up to £7,500 a year before they have to pay Income Tax.
3) Credit history
The Rent Recognition Challenge was set up by the Government to see if technology firms can find ways to record tenants’ rent payment histories in their credit scores. This will not only help renters get approval for a mortgage but will also allow landlords to see whether a prospective tenant has paid their rent on time in the past or whether they are likely to default.
However this not only applies to tenants. A database of rogue landlords is set to be launched in April. This will only be accessible to local and central governments and will contain details of landlords with criminal convictions, as well as landlords and letting agents who have received banning orders for housing offences.
4) Letting agent fees
Another Government proposal is to ban letting agents from charging fees to tenants. This was part of a draft bill published last year, but could lead to agents passing these fees to landlords instead. This could lead to an overall increase in fees as more and more landlords decide against using a letting agent at all.
5) Landlord regulation
The buy-to-let market is largely unregulated, and so the Government has announced the creation of an ombudsman scheme that landlords will be legally required to be a part of. This will replace four current schemes and aims to improve dispute resolution.
6) Tax relief reduction
The mortgage interest tax relief restrictions will continue to take effect, with it being restricted to 50% in April 2018, before being reduced to 25% the following year. By 2020, this will be removed entirely.
All of these changes will be big news for landlords, so it is important that those renting property understand exactly what it means for them. Ask a lawyer for further information.