Thursday 16 January 2020

What’s in store for Chichester’s landlords in 2020?

Last year the government rolled out new laws enforcing the ‘fitness for human habitation’ of rental properties, along with the multi-faceted Tenant Fees Act. Due to the political toing and froing of the past 12 months a lot of new legislation is now up in the air, but it seems there are still many changes afoot for the lettings market:

Final tax relief reductions - confirmed
Until a few years ago a landlord could offset the interest on their buy-to-let mortgages against rental income. This relief has slowly been reduced, whilst from April 2020 it will be removed entirely (in place of a reduced ‘tax credit’).

Changes to capital gains tax also come into effect from April, whereby some lettings reliefs have been reduced and the time you have to pay the tax has been shortened to 30 days.

Minimum energy efficiency rules extended - confirmed
From April 2018 all new tenancies could only go ahead in a property with at least an ‘E’ rating according to their EPC (Energy Performance Certificate). There was a two-year grace period for existing tenancies…which means the rules apply to ALL tenancies from April 2020. Ignoring this can lead to steep fines (starting from £2,000), so check whether any energy upgrades are required to comply with the new laws.

Letting agents must have Client Money Protection - confirmed
Introduced last year, there was a 12-month grace period that ends this April. From then on all letting agents must have this insurance, which covers the misappropriation of their landlords and tenants money, so check they have it!

Electrical safety checks - highly likely
Electrical safety checks every five years are already mandatory in larger shared houses and it stands to reason this will be expanded to the entire rental sector, much like the annual gas safety certificate.

Removal of Section 21 - likely
This has become something of a political football, as its use in evicting tenants ‘without fault’ gains traction in the media. Whilst technically correct, the reason Section 21 is typically used by landlords is to eject bad tenants, knowing that to do so via the courts and having to prove fault is a much trickier process. Supposedly rules to evict non-paying or problematic tenants are to be shored up to counteract this, but if not a lot of landlords will be worried by a significant shift in power towards tenants, regardless of their behaviour.

Impact of Brexit - who knows!!

With all these sticks being thrown at landlords, whilst few carrots get dished out, it’s no surprise that research from RICS shows a falling number of landlords (even though there’s a rising number of tenants). However, I believe those landlords and letting agents who adapt and provide a good-quality product and service to a more-demanding pool of tenants will be in a good position to bear the fruits of their hard work.

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