If you’re a landlord, you’ll know how fast the rules have been changing recently. It’s not over — several new laws and regulations have either been passed recently or are being considered. So what do you need to know?
The Tenants Fees Act 2019
This received the Royal Assent in February, and its provisions will be applied from the beginning of June. Under the Act, landlords will only be permitted to ask for certain payments from their tenants. These include:
- Council Tax, utility bills, TV licence etc. if you pay these in the first instance
- Deposits — tenancy deposits or holding deposits
- Fees to change or end the tenancy agreement
However, you (or your letting agency) will now be prohibited from charging for inventories, references, phone calls, postage or anything charged purely on the basis of your time, as opposed to actual cost. At present, agencies normally bill these to the tenant, so you’ll need to check whether they’re proposing to pass them on to you — and, if so, how much it’s likely to be.
The Act also sets a cap on tenancy deposits to one month’s rent, as well as restricting charges for a change in the tenancy agreement to £50. This will cover changes such as the name on the agreement, though you’ll still be able to charge more if you can prove that your expenditure in making the changes exceeds £50.
Mortgage Interest Tax Relief
Another change that will affect all landlords with a buy-to-let mortgage is in the tax relief rules. Until recently, landlords have been able to deduct interest payments on their mortgage from rental income in their tax declaration, thus reducing payments.
From the 2018-2019 tax year, the amount that could be deducted was reduced to 50%, and this goes down to 25% for 2019-2020. From April next year, this will be replaced by a 20% tax credit, effectively increasing the tax bill for most landlords.
Three-Year Tenancies Are Coming
A proposed change to tenancy law is to guarantee tenants a minimum three-year tenancy, as well as a break clause of six months and more protection against eviction. This is obviously good for them, giving them security without tying them down, as they can still give notice in the usual way. However, it has obvious downsides for landlords, particularly if they want to sell or repurpose the property.
If you’re a landlord who’s concerned about the effect these changes might have on your profitability, you’re very welcome to get in touch with me for a chat.