New Landlord Rules for the Private Buy to Let Sector
The private rented sector is possibly one of the most regulated sectors of the economy outside finance, and private landlords have significant responsibilities towards their tenants. So renting property can, as every landlord knows, present constantly moving challenges in terms of the regulation and legislation that must be read, understood, and applied.
In 2022 there are new landlord rules set to be introduced for the private buy to let sector that are due to be unveiled by the Government, including the Renters Reform Bill, changes to energy efficiency requirements, and tax.
So what are the New Landlord Rules for the private buy to let sector set to be introduced this year?
Capital Gains Tax
Announced in last year’s budget and coming into effect in October 2021, the reporting time for Capital Gains Tax has been extended from 30 to 60 days. This change was made thanks to a report published by the Office for Tax Simplification which found that taxpayers were having trouble meeting the 30 day deadline.
Making Tax Digital for VAT
There will be no change for businesses trading above the VAT threshold of £85,000, who must keep tax records and submit their VAT return digitally. But all VAT registered businesses trading below the VAT threshold will be required to keep tax records and submit their VAT returns digitally too. This change will take effect from April 2022.
Renters’ Reform Bill: End of Section 21 & Introduction of Lifetime Deposits
The White Paper for this was expected last year, but will likely appear in the Spring. The bill is expected to abolish Section 21 of the Housing Act 1988 which allows tenants to be evicted in a rolling periodic tenant, or at the end of a fixed-term tenancy without a reason.
The changes proposed will strengthen the grounds for possession in Section 8, and improve the current court process. This could mean a specialist housing court including expert judges, which would make the whole process more efficient and less costly to landlords.
Lifetime Deposits also form part of the bill, which would mean tenants have a moveable “deposit passport” that would transfer from one landlord to the next without being returned to the tenant.
Energy Efficiency Changes
The Government has a net-zero emissions target for delivery and it’s expected that the minimum energy efficiency standard will be raised to “C” by 2030. New tenancies are likely to have to meet the standard by April 2026, with existing tenancies by April 2028.
The current standard is “E”, with a spending cap of £3500 for renovations. The cap is expected to increase to £10,000 per property given that landlords are expected to have to undertake larger renovations to meet the standard.
This could be costly for landlords, especially for those with older properties with lower energy ratings, but there could be funding available from local authorities and some charities in due course. The formal announcement for this is expected later in 2022.
Regulation of Property Agents (RoPA)
This follows on from the regulatory framework for property agents published in 2019 and could include a Code of Practice and minimum entry requirements for property agents.
Among the recommendations are:
Licenses for practicing agents
Compliance in ICO, AML(for sales), CMP, redress, and insurance
RoPA has been delayed thanks to Coronavirus, but the white paper is expected at the end of this year or early 2023.
End of Temporary Right to Rent Checks
Introduced in March 2020 to protect buy to let landlords and tenants from Covid, this is expected to end on 5th April 2022. The service is due to move to an online service, but this is currently only available to non-British nationals, so may be delayed until it is available to all.
Smoke and Carbon Monoxide Rules
New rules will require all social landlords to install a smoke alarm on every floor of a property, and a carbon monoxide alarm in any room with a fixed combustion device like a gas fire or boiler. Landlords will have to repair or replace these devices if they are reported as faulty by their tenants, but tenants will still be responsible for testing them.
Pet-Friendly Tenancy Agreements
As part of the new model tenancy agreement introduced by the Government in 2021, landlords were prevented from issuing blanket bans on pets. The default position now is that pets are allowed, and a landlord must provide a good reason for not allowing pets within 28 days of a request from a tenant.
A tenant may have to hold a certificate of responsible animal guardianship, which would be issued subject to a series of tests conducted by a vet. This bill is still working its way through committee stages but may pass into legislation this year.
Regulation of Holiday Lets
A consultation is expected from the Government later this year looking at issues such as the impact of short-term lets on local communities, a mandatory register for holiday lets, and increased council tax.
Ancojada Limited trading as Ancojada Group is not authorised or regulated to provide financial advice.
All financial advice is provided by other regulated businesses.