Next year will be a year of change for many landlords, with new legislation covering everything from tenant fees to energy efficiency coming in during 2020. Here’s our quick guide to the changes you can expect to see and how they will affect you.
MARCH: Extension of Homes (Fitness for Human Habitation) Act
Under the Fitness for Human Habitation Act landlords can be forced to carry out improvement works to their properties and be sued for damages for the entire length of the contract.
It was introduced in March last year to ensure rented homes are safe and secure. Tenants can take their landlords to court if this isn’t the case.
Tenants who signed contracts on or after 20 March 2019 were able to use the act right away – and as of March 20, 2020 rules will be extended to cover existing statutory periodic tenancies.
NOTE: The rules only apply in England – with responsibility for these standards in Wales falling under the scope of the Renting Homes (Wales) Act.
APRIL: Minimum Energy Efficiency Standards
Since 2018, landlords have been unable to let their property to new tenants unless it has a minimum energy efficiency rating of an E (unless exempted) on its Energy Performance Certificate (EPC).
This is being extended to cover all existing tenancies from April 2020. This means that anyone whose rentals have F or G ratings will no longer be able to legally let them out.
Landlords will be expected to pay up to £3,500 towards energy efficiency improvement works. However, if work will cost more than that landlords can apply for an exemption.
APRIL: Capital Gains Tax
Changes to capital gains tax (CGT) will come into effect in April 2020.
CGT is paid on profits made through the sale of any property that isn’t your main home, so will affect the sales of most second properties.
The changes will affect the timescale for payment and the tax relief you can claim.
Currently if you once lived in the home you now let out, you are eligible for ‘lettings relief’.
This means you don’t pay tax for the years you lived at the property, plus the last 18 months you owned the property (regardless of whether you lived there or not during this time).
From April this will be abolished – and landlords will only be able to claim lettings relief if they share the property with their tenant.
It will also limit the ‘final exemption period’ from 18 months to nine.
Also, from April, landlords will need to pay the full amount of CGT owed on a sale within 30 days. At the moment they have until the next tax year.
APRIL: Compulsory CMP for agents
New rules on money laundering have been extended to cover letting agents, with an April 2020 deadline for agents to become members of an official Client Money Protection scheme.
Rules were introduced making membership of a scheme compulsory in April 2019, however agents were given a ‘grace period’ of 12 months to set up a client account, following technical issues.
As long as agents could prove they had made genuine efforts during this time they were protected.
JUNE: Extension of Tenant Fees Act
The Tenant Fees Act came into force in England in June 2019 and is extended to cover all existing tenancies in June 2020.
This means landlords and letting agents cannot charge fees other than rent, deposits, holding deposits and charges for defaulting on the contract – with additional restrictions on how much tenants must pay.
Deposits are already limited to a maximum of five weeks’ rent where the annual rent is below £50,000 for any new or replacement tenancy. If the annual rent is above this, the maximum is six weeks, with holding deposits limited to a week.
Charges for ‘extras’ such as cleaning, pets, referencing, inventories and admin are all off limits.
Where a banned fee has been taken, tenants will be able to get money back via the county court. Landlords could be fined up to £5,000 for a first offence, and £30,0000 for subsequent breaches.
More detailed information on the Act is available at www.rla.org.uk/feeban
For the latest on the situation in Wales click here.
Panel: On the horizon
There are other new rules set to be introduced in 2020 that have no official implementation date.
Section 21 changes
Ending Section 21 was backed by all major parties ahead of the election, and in the Queen’s Speech the government announced plans to bring in a Renters’ Reform Bill, which it says will: “Introduce a package of reforms to deliver a fairer and more effective rental market.”
The main elements of the Bill will be:
- Abolishing the use of ‘no fault’ evictions by removing section 21 of the Housing Act 1988
- Giving landlords more rights to gain possession of their property through the courts
- Introducing a new lifetime deposit so that tenants don’t need to save for a new deposit every time they move house.
- Developing and implementing measures to increase access to and expand the scope of the database of rogue landlords and property agents.
It’s inclusion in the Queen’s Speech means the government intends to bring it in during next Parliamentary term.
For more on the proposed changes and the RLA’s reaction to the announcement click here.
Rules compelling landlords to carry out regular electrical safety checks are expected to be introduced some time in 2020.
The government will bring in compulsory five-year checks of all electrical installations in rental properties. Rules are expected to be introduced on a phased basis – starting with new tenancies.
Letting Agent Regulation
There are plans for further regulation of the lettings industry, including a new licensing regime, code of practice, regulator and training requirements. The recommendations were made in July last year but there has been no news as to if and when change will happen.
Renting Homes (Wales) Act
Landlords with properties in Wales can expect to see the 2016 Renting Homes (Wales) Act implemented this year.
Tenancy agreements will be converted to a new standard contract with a new fitness standard brought in, along with measures to tackle retaliatory eviction and changes to the Welsh equivalent of Section 21 – Section 173 and mandatory eviction grounds.
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