Landlord’s Key Dates for 2020

Rental Rules:

Here is a handy
guide to some key legal dates all landlords should have in their
diaries for 2020.

As the big build up
to Christmas begins, many landlords will be hoping for some
much-needed downtime over the festive period.

But, according to
Paul Barnes, Head of Dispute Resolution at Kirwans law firm, those
who can spare some time to look at the forthcoming regulatory changes
before the end of the year could safeguard themselves against
potential problems in 2020.

Paul says:

“From minimum
energy efficiency standards to tax relief, a number of legal changes
will take effect in 2020.

“For some
landlords, little work will be required to ensure they comply with
the new regulations, while for others, wholescale changes will be
required.

“Those who
familiarise themselves with the new rules now should have ample time
to put measures in place that will keep them on the right side of the
law.”

Here, Paul looks at
the top four legal changes to affect landlords next year:

1) Minimum energy
efficiency standards (MEES)

Most of us are by
now familiar with the minimum energy efficiency standards (MEES) that
came into effect in April 2018, which stated that new tenancy
agreements and renewals (other than some HMOs such as bedsits) must
have an energy performance certificate (EPC) rating of E or above.

By April 1, 2020,
however (or April 1, 2023 for commercial property) the regulations
will be extended to also cover existing tenancies. This means that,
under the new legislation, properties with an energy performance
certificate (EPC) rating of F or G will be classed as unrentable from
that date on.

But landlords can’t
rest on their laurels at that point; there are already whispers that
these standards could rise again in another couple of years, at which
point ‘D’ will be the minimum EPC rating, so it’s worth getting
your properties up to scratch now to prevent even more work later.

2) Electrical
installation checks

Last January, the
Ministry of Housing, Communities and Local Government (MHCLG)
announced that mandatory five-year electrical installation checks on
private rented housing in England would be introduced over a
transitional period of two years. The first year would see all new
private tenancies subject to the checks, while the second year would
encompass all existing tenancies too.

However, the
implementation date has not yet been clarified so, while it is still
unconfirmed as to exactly when this will begin, there is a good
chance that the legislation could be introduced at some point in
2020.

3) New tax relief
rules

There was a time
when private and individual landlords could claim tax relief on
mortgage interest payments and fees, as well as fees and interest
incurred on loans to buy furnishings.

Then, in 2015, the
government made property rentals a much less viable option for many
when they announced that this was to be phased out.

In 2017-18 the
process began, with claimable tax relief reduced to 75 per cent, and
so the reduction continued through 2019-20. In 2020-21, landlords
won’t be able to claim any tax relief on mortgage interest payments
at all.

Instead, from April
2020, landlords will receive a 20% tax credit on their interest
payments; not great news for those in the higher tax bracket –
which could now include landlords who will have to declare the rental
income that they previously used for interest payments.

Many landlords are
now setting up limited companies when buying new rental properties in
order to avoid the higher individual rates, but there’s no
guarantee that the rules won’t change to affected limited companies
in the future.

4) Changes to
Private Residence Relief

From April 2020,
changes to Private Residence Relief mean that landlords will lose
nine months’ worth of Capital Gains tax relief when they come to
sell.

While at the moment
landlords can claim Private Residence Relief for all the time they
lived in their property before letting it to tenants, plus an extra
18 months after moving out, this final exemption period will be
reduced next April to the time they lived in their property plus just
nine months post-moving out.

In addition,
landlords who rent out a property that was once their main home will
see the £40,000 worth of lettings relief they currently enjoy
scrapped as, from April, only landlords who share an occupancy with
their tenants will be able to claim. The deadline for payment of the
Capital Gains Tax bill will also change from April 2020, from January
31st in the year after the tax year they made the sale, as it is now,
to within 30 days of the completion of the sale.

So, if you’re a
landlord thinking of selling up, it might be worth seeking legal
advice about doing so sooner rather than later.

Kirwans Solicitors

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