2020 will be a year of change for many landlords, with new legislation covering everything from tenant fees to energy efficiency coming in force. Below we have provided a brief overview of all the changes to come and have included links to the official information published by the government for your reference.

Minimum Energy Efficiency Standards (MEES)

Since April 2018, Energy Efficiency Ratings have become mandatory for all new tenancies as well as renewals. However, it is now projected that starting in April 2020, the legislation will expand to all the existing tenancies, including historic ones, meaning that any property scoring less than band E on its EPC certificate will be deemed unrentable.

You can find out more by visiting the following link:

https://www.gov.uk/guidance/domestic-private-rented-property-minimum-energy-efficiency-standard-landlord-guidance

Removing Buy-to-let Tax Relief

Buy-to-let Sector (BTL) has undergone a few legislative changes for past few years, with government targeting the BTL sector and dismantling tax relief on Mortgage interest payments since 2015. However, in 2020 for the first time ever, the government will completely get rid of tax relief and landlords will not be able to claim any amount back. However, as an alternative to tax relief the landlords will be offered a 20% tax credit on their interest payments instead.

This does rather hammer the Buy-to-let market, as the expense of operating a rental property becomes difficult to offset due to tax relief reductions.

You can find out more by visiting the following link:

https://www.gov.uk/government/news/changes-to-tax-relief-for-residential-landlords#:~:text=The%20restriction%20will%20be%20phased,profits%20during%20the%20transitional%20period.

30-day Capital Gains Tax (CGT) Timeframe

Landlords who are planning to sell their property later this year will be affected by the new CGT legislation. If previously, landlords could pay the CGT with the rest of the tax following the tax year the new legislation will bring the timeframe down to 30 days starting from the completion date of the sale. The new legislation will apply to the sale or “disposal” of private landlords’ additional properties other than their main place of residence.

You can find out more by visiting the following link:

https://www.gov.uk/government/news/get-ready-for-changes-to-capital-gains-tax-payment-for-uk-property-sales

Repealing Section 21

The government confirmed its intention to repeal Section 21 legislation from the Housing Act 1988 as part of the Renters’ Reform Bill 2019–20 announced in the Queen’s Speech on 19 December last year.

Section 21 legislation currently allows landlords to issue tenants in Assured Shorthold Tenancies (ASTs) with a notice of eviction procedures without having to state a reason–so called “no-fault” evictions. Repealing Section 21 legislation will mean that tenants can only be evicted if there’s a legal reason to do so. This would make it difficult for landlords to retake possession of their homes early if they wanted to move in themselves or sell up.

You can find out more by visiting the following link:

https://www.gov.uk/government/consultations/a-new-deal-for-renting-resetting-the-balance-of-rights-and-responsibilities-between-landlords-and-tenants

What does this all mean for landlords?

With legislation becoming more stringent, the landlords need to be aware of the future changes and ensure that they are compliant to avoid penalties in the future. It is clear that the government’s new approach will affect many private sector landlords in the UK. At Islington Properties we guide our landlords through the legislative changes and support them in being compliant and in implementing all the necessary changes to their properties through our property management services.