It might be the season of goodwill but landlords and lettings agents need to be prepared for what’s in store for the private rented sector in 2020. While it won’t quite be the winter of discontent there are some big changes coming. Many of them are on a smaller scale but some are set to make a real impact – both on your bottom line and the future of the industry. We take a look at some of the confirmed regulatory changes affecting letting agents and landlords in 2020.
Minimum Energy Efficiency Standards (MEES)
Raising energy efficiency standards has been on the agenda as early as April 2018, when it became mandatory for new tenancies (and renewals) to have an energy performance certificate (EPC) of at least band E or higher. But this April, legislation will be expanded to incorporate all existing tenancies – so if your property has an EPC lower than E, it will be unrentable. Penalties for those who don’t get their properties up to scratch before the deadline (April 1st 2020) could be severe. Those looking for a way to remind their landlords about the MEES deadline, please download our free customisable flyer.
No More Buy-to-let Mortgage Interest Tax Relief
The process to dismantle tax relief on mortgage interest payments began in 2015 with the amount you can claim back being phased out year on year. 2020 marks the first year that landlords can’t claim back a penny. Instead, 2020 changes mean landlords will receive a 20% tax credit on their interest payments instead (not great news for those paying a higher tax rate).
Capital Gains Tax (CGT) Time Frame Slashed
Regulations around CGT are hardening, with the changes affecting how much time you have to pay the bill once you’ve completed the sale of your property, as well as how much tax relief you can claim if you previously lived in it. From April 2020, property owners will need to pay the CGT within 30 days of the sale of their house (rather than with the rest of their tax bill the following tax year). More punitively, the rules around private residents’ relief (which landlords can claim if they have ever lived in the property) are also tightening – the time frame you can claim the relief for will reduce from 18 months to 9. Finally, going forward from April, lettings relief will only be applicable to those who share occupancy with their tenant at the time of sale.
What does this all mean for landlords?
Clearly it’s getting tough out there. Government figures estimate that one in five landlords are expected to pay more tax as part of the new regime, while the National Landlords’ Association predicts half a million flats will flood the market before the new rules come into play.
To read on about regulatory changes in 2020, download our free ebook Regulatory ChangesAffecting Letting Agents and Landlords in 2020 (Second Edition) today.