The world of property is constantly changing and being a landlord is already a difficult task without the additional stress and pressure of having to remain aware of the constantly changing rules, regulations, and responsibilities.
However, external factors such as the COVID-19 pandemic and Brexit mean that the property market is going to change as will the responsibilities associated with being a landlord.
With that in kind we are going to look at some of the key changes and updates landlords should be aware of going into the new year.
Changes to Buy-to-let tax for 2020/2021
It is essential that landlords are aware of and understand the changes in buy to let tax that have come into force at the start of the new tax year for 2020/2021.
Despite the fact that these changes have been coming for quite some time, it is paramount that the changes are fully understood. There are a lot of changes coming to buy to let tax, so it is essential that you conduct your own research as well as covering the points below.
As of April 2020, landlords have only been able to offset 20% of their mortgage interest when filling in their annual returns. This change in mortgage interest tax relief will continue into the new year.
Investors must now declare capital gains tax liabilities withing 30 days of selling a property.
Only costs that are incurred exclusively due to the property being rented out can be deducted to reduce a landlords’ tax bill. These include service charges, accountant fees, maintenance costs and landlord insurance.
These are only some of the tax changes coming into effect in the new year so it is essential that you conduct your own research to be fully aware of anything that may affect you or your responsibilities.
Private Resident Relief
The current rules regarding private residence relief state that landlords who are looking to sell a property that used to be their main residence are exempt from paying tax on the final 18 months that they owned the property regardless of whether it was rented out.
However, this has recently been reduced to nine months as of April 2020 and this change will remain in place going into the new year.
Mandatory Electrical checks
New regulations on the Electrical Safety Standards in the Private Rented Sector mean that landlords and agents can be held responsible for ensuring that all electrical installation inspections are carried out on all new tenancies from July 1, 2020 and all existing tenancies from April 1, 2021.
Changes to planning regulations
Unfortunately, there have been numerous incidents where developers have been building homes without enough space or natural light leading to poor living conditions for tenants. In an attempt to combat this issue, the UK Government is planning to implement new legislation regarding minimum space and light requirements.
This proposed law will specifically target developers using permitted developers rights, or PDR, which is a fast tracking system allowing developers to transform buildings into homes without applying and receiving full planning permission.
Whilst this change may not directly be aimed at landlords it is essential to be aware of all changes that effect the property market as a whole to ensure that your homes are meeting all the current legislation.
There are perhaps 5, key considerations landlords should be aware of with regards to Brexit, however it is likely that you will not be affected by all of these proposed changes.
Currency – for those looking to buy abroad in 2021 may people are hoping and expecting the pound will strengthen against the euro post-Brexit, however this is more likely should a trade deal be agreed.
Golden Visas – as non-EU citizens UK buyers will be able to apply for Golden Visa residency permits as of the new year. These initiatives are currently only being offered by certain countries, however, including Portugal, Spain, Malta, Cyprus, and Greece.
Relocation – it is expected that it will become more difficult for UK citizens to relocate to an EU country permanently after the New Year as the process is expected to become more complex.
Second Homes – for UK citizens looking to spend time at a second home in the European union the number of days you will be allowed to stay for will still vary from country to country. However, it is likely that individuals will require an electronic travel authorisation.
Investment Visas – for non-UK citizens looking to relocate to the UK the government has proposed visa changes however the current Tier 1 investment Visa will remain unchanged.
Key dates landlords should be aware of
Keeping track of the dates for all the new changes in a calendar year is a momentous task, we have compiled a list of all the key dates that landlords need to be aware of in 2021 and have also included changes that will be happening but currently have no fixed date attached to them.
- January 1, 2021 – Brexit
- January 29, 2021 – second reading of the dogs and domestic animals’ bill
- January 31, 2021 – Online tax return deadline
- February 2021 – New Scottish smoke alarm law
- March 2021 – Changes to eviction legislation
- April 1, 2021 – Stamp duty changes
- April 1, 2021 – Client money protection
- April 2021 – deadline for electrical compliance
- June 30, 2021 – Changes to Right to Rent
Also coming in 2021 with no current fixed date:
- Changes to planning regulations
- Amendment to Renting Homes Act 2016 (Wales)
- Deadline for landlords to implement MTD
- Abolition of Section 21
- Potential increase in capital gains tax
It is essential to remember that there will always be changes to the property market which will, in turn, effect the responsibilities of landlords. Whilst we have covered the majority of the changes proposed for 2021 there may be additional changes that arise due to external circumstance so conducting your own research is paramount if you want to remain aware of all the changes happening in the property and buy to let sectors.