2020 will be a year of change, all due to new legislation covering everything from tenant fees to energy efficiency.
What and when we can expect to see change…
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 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.
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 now to be extended to cover all existing tenancies from April 2020. This means those rentals which have F or G ratings will no longer be able to legally let them out or renew a tenancy. In addition properties that were exempt before may not necessarily fall in this category and could now need an EPC.
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. There are Government Funding schemes available to help landlords with this cost, but there is criteria required to qualify to get this.
Capital Gains Tax
Changes to capital gains tax (CGT) will come into effect in April 2020.
Capital Gains Tax 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.
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. 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 Capital Gains Tax owed on a sale within 30 days. At the moment they have until the next tax year.
APRIL: Compulsory CMP for agents (Client Money Protection)
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.
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 pre-charging for cleaning, having pets, referencing, inventories and administration 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.
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. This will commence on 1st July 2020 with all new tenancies or renewed tenancies to have an electrical safety check carried out, as of the 1st April 2021 ALL properties must have the safety check – which includes those properties already tenanted.
…Still to come in 2020…
Section 21 changes
Ending Section 21 notice 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.
The date for this is still to be confirmed along with the contents of what is and is not included for the Section 21 and how the Section 8 notice with its grounds will work.