What legal changes can landlords expect in 2020?

What legal changes can landlords expect in 2020?

As 2019 draws to a close and the festive period creeps in, it’s easy to start winding down for the year. However, the new year is going to bring a number of changes within the Private Rented Sector that landlords will need to prepare for.

Although these new regulations won’t be a huge inconvenience for landlords, it’s important that they familiarise themselves with them before they are implemented in the new year. The top four legal changes that landlords will have to pay attention to are as follows:

Minimum energy efficiency standards (MEES)

The minimum energy efficiency standards (MEES) came into effect in April of 2018 and it stated that new tenancies and renewals needed to have an energy performance certificate (EPC) rating of E or above. However, as of April 2020, the minimum efficiency standards will be extended to existing tenancies, as well as new ones. This means that any properties that have an EPC rating of F or G will be classified as being unfit to rent out. There have also been talks of increasing the standards so that ‘D’ is the minimum EPC rating, so it would be advisable for landlords to make sure that their properties meet these standards so that they won’t have any more work further down the line.

Changes to private residence relief

At the moment, landlords can claim Private Residence Relief for all the time they lived in their property before renting it out, plus an extra 18 months after they move out. This, however, is set to change in April of next year. The final exemption period will be reduced to the time they lived in their property plus the nine-month period after they have moved out. In addition to this, landlords who rent out a property that was once their home will no longer receive the £40,000 worth of lettings relief they currently enjoy. As of April 2020, only landlords who share an occupancy with their tenants will be able to claim the lettings relief.

New tax relief rules

It won’t be just private residence relief that is going to take a hit in 2020, landlords will also be unable to claim any tax relief on mortgage interest payments. Instead, landlords will receive 20% tax credit. It’ll be landlords in the higher tax bracket that will feel the pinch the most with this and many have decided to set up a limited company when investing in buy to let, in order to avoid the higher individual rates.

Electrical installation checks

In January of this year, the government announced that five-year mandatory electrical installation checks on private rented housing is going to be introduced over a two-year transitional period. It will only be introduced to new tenancies in the first year and then it will be rolled to existing tenancies in the second year. There is no set date of when this is going to be implemented exactly, but it is believed to be at some point in 2020.

Although these changes may cause some inconvenience to landlords, this can be minimised by preparing for them well in advance and thinking about a clear strategy going forward.

Do you need advice on your duties as a landlord? You can download our landlord guide by clicking here.

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