With so many tax and legislative changes for the rental market, it’s difficult to keep up with it all. We thought it might be useful to give you a rundown of everything that will be happening in 2020.
1) Capital Gains Tax
There will be two significant changes to CGT on any properties you sell that are not your main home. Lettings Relief means that if you lived in your second property at any point, you won’t have to pay for any gains on that time period nor on the last 18 months of ownership. As from April of this year, this will no longer apply. In addition, when you sell the property you will have to pay any CGT owing within 30 days rather than in the next tax year.
2) Mortgage Interest Relief
Also, from April of this year you will no longer be able to deduct your full BTL mortgage interest from your rental income. Instead there will be just 20% tax relief on any interest paid.
In 2018, the government introduced a legal requirement for rental properties to achieve a minimum energy efficiency rating of E. However, if the EPC rating was below that level and the improvements would cost more than £3,500, landlords could apply for an exemption. Initially the rules only applied to new tenancies. From April, it will also apply to any existing tenancies.
4) Fitness for Human Habitation
From March last year, landlords could be forced to make improvements to their properties if there were defects serious enough for a court to consider the property to be unfit for habitation. Initially this only applied to new tenancies, but from March this year, that was extended to existing ones as well.
5) Section 21 and evictions
As yet, there’s no fixed date for this, but the Conservatives outlined their plans in the Queen’s speech to bring an end to no fault evictions, at the same time strengthening landlords’ rights to regain possession through the courts. They also pledged to introduce lifetime deposits, allowing tenants to move them between properties.
6) Electrical Safety
Rental properties will soon require five yearly electrical safety inspections. Although, for the time being, there is no implementation date, it is likely to be phased in, starting with new tenancies and then being extended across the board.
7) Tenant Fees Act
In June, the Tenant Fees Act will cover existing tenancies as well as new ones. This means landlords and letting agents cannot charge fees for anything other than rent, deposits, and charges for defaulting on the contract. Fees for cleaning, pets, referencing, inventories and admin are all banned.
We can now add the emergency changes made as a result of the coronavirus to that list:
8) Covid-19 changes - 3 month rental and mortgage payment holidays for tenants and landlords
The government has introduced legislation to allow tenants who are struggling to pay their rent due to the coronavirus to take a payment holiday of up to three months. At the same time, landlords can also apply for a mortgage payment holiday, even if their tenants continue to pay their rent, if they are facing their own financial hardship. Missed payments will be added onto the landlord’s mortgage and tenants will have to make up the difference in increased payments once the holiday period is over. In addition, the government has extended the notice for required possession from two months to three to prevent landlords evicting tenants during the crisis.
If you are a landlord with properties in Marylebone, Mayfair, Hyde Park and Regent’s Park and would like to discuss any of these issues, feel free to give us a call.