Ten key legal and regulatory changes for buy-to–let landlords in 2019
With the uncertainty of Brexit looming over the property market, it can be an overwhelming time to be a landlord. And if Brexit isn’t enough, it seems there is a raft of new regulations and laws that buy-to-let landlords need to prepare for as we move into the new year. Here we set out our top ten regulations and challenges for landlords in 2019:
1. Letting fees ban
A ban on estate agents charging ‘unfair’ fees to tenants looks set to come into force on 1 June 2019. The proposed change aims to bring an end to the marginal number of agents who exploit their role between renters and landlords as well as to encourage competition in the rental sector. Examples of fees being banned include
• contract changes requested by the tenant
• deposits being capped at 5 weeks rent (unless tenancy is over £50,000 a year)
• tenant issues such as replacement keys
2. Rogue landlord database
The database was launched in 2018 and under the current regulations it can only be accessed by local government officials. However, the change in regulations means that it will be accessible by tenants this year although no firm date has been announced. Read more about how Council’s are enforcing action on rogue landlords.
3. Mortgage interest tax relief
Since April 2017 the way landlords have had to declare their rental income has changed and by April 2020 they will not be able to deduct all of the mortgage expenses from rental income to reduce their tax. Landlords will only be able to claim 25% of their mortgage tax relief, as compared to 50% for the year 2018-2019.
4. Energy Efficiency
Minimum energy efficiency standards were launched in April last year, meaning that newly rented homes and renewed tenancies must have an energy performance certificate rating of E or above. However, from 2020 these rules will also apply to existing tenancies.
5. Houses in Multiple occupation (HMO) licensing
Changes brought about in October 2018 mean that landlords letting shared properties in England will now fall under the HMO licensing rules. Previously, a property was only classified as a HMO if it was let to five or more tenants, had shared amenities and was at least a three story building. The changes from October mean that the three story rule will be revoked.
6. Additional Licensing Schemes
As well as the HMO licensing mentioned above, some councils operate ‘additional’ schemes. Additional licensing is when the councils add extra stipulations if an area have had particular issues with HMOs. The schemes require landlords to adhere to a code or pass specific tests. These additional licenses can cost up to £600 and the fines can be even higher if the guidelines are broken.
7. Minimum space requirements
New regulations came into force on 1 October 2018 regarding the size of sleeping accommodation in a rented home i.e. a person over the age of ten requires a minimum of 6.51 square metres. To avoid a fine, landlords will be given up to 18 months to rectify the issue.
8. Leasehold reforms
The government will be attempting to stop ‘unfair’ leasehold practices such as doubling ground rent clauses and high permission fees. It is suggested that there may be caps put in place on service charges, permission fees and ground rent. There may be the potential for a ban on new houses being sold as leasehold. However, it is yet to be seen what steps will be taken in regard to existing leasehold properties.
9. Stamp Duty Surcharges
The 3% additional property surcharge has been in place since 2016, however investors in Scotland will be seeing this increase to 4% in January 2019.
10. Client Money Protection (CPM)
As of April 2019, all letting agents in England will need to be members of an approved CPM Scheme. These schemes are set up to protect the rent the tenant pays to the letting agents. However, in the event of a claim, CMP schemes might not necessarily cover the full value of the rent.