Landlord Today has highlighted some important legal changes coming in next year that landlords need to be aware of. They are worth taking note of, as they will impact the way you run your business.
In 2020 the Minimum Energy Efficiency Standards (MEES) will be extended to cover existing, as well as new tenancies. This means rental property that doesn’t have an energy performance certificate rating higher than F or G will no longer comply with legislation and will be classed as “unrentable”. According to the press, there are “whispers” going around the industry that the standards may rise again, once we’ve all had time to get used to the new regs. So it’s vital that landlords ensure their properties are compliant now.
It is also possible that mandatory five-year electrical installation checks on private rented housing in England could be introduced next year. This has been on the cards for some time, so keep an eye out for government announcements.
Two important changes that are definitely happening next year are new rules on tax relief and private residence relief. First, claimable tax relief – which used to apply to all mortgage payments and loans –is being gradually phased out and will come to an end in the 2020/21 tax year. Instead, from April next year, landlords will receive a 20% tax credit on their interest payments.
Also from April, changes to Private Residence Relief will hit landlords who rent out a property that used to be their permanent residence. Under the law as it stands, tax relief can be claimed by landlords,not only for the time they lived in their property before letting it, but also for an additional 18 months after moving out. In future relief can only be claimed for the time they lived in their property plus nine rather than 18 months. In addition, anyone renting a property will also lose nine months’ worth of Capital Gains Tax relief should they decide to sell, with the deadline for payment of their tax bill being brought forward from 31 January in the year after the tax year they made the sale, to within 30 days of completion.
And as if this wasn’t bad enough, the £40,000 worth of lettings relief landlords are currently entitled to will be scrapped from April, unless they continue to live in a property that they also let to tenants.
Small wonder landlords feel under fire. As managing agents, we can’t do much about the tax changes that will impact our clients, but we can help keep landlords compliant. By using our PlanetRent app, you can ensure that when the law changes, so do your processes. So download the software free today and never get caught out by new legislation again.