Tax and legal changes you need to know about if you’re a private landlord

Tax and legal changes you need to know about if you’re a private landlord

From electrical safety tests to capital gains tax, here are the things to look out for

Martina Lees
Friday February 28 2020, 12.01am
The Times

● Legal changes will hit landlords this year, none more so than losing the right to take back their properties automatically at the end of a tenancy.
This right, granted under Section 21 of the Housing Act 1988, sparked the buy-to-let boom. The government has pledged to abolish such “no-fault evictions” in its upcoming Renters’ Reform Bill, while also giving landlords more rights to regain their property through the courts. Details have not yet been published on how this would work.

● Electrical safety tests will be required for all new tenancies in England from July 1. An engineer must test electrical installations, including wiring and switches (inspections cost £160-£300), and any faults must be fixed. Landlords must give tenants the report, which is valid for five years, before they move in, or face fines of up to £30,000.

● Tax relief cuts on mortgage interest will be fully phased in from April 6. Landlords earning more than £50,000 will then be able to claim a flat tax credit of 20 per cent on all their loan costs.

● Capital gains tax will hit accidental landlords harder. If you sell a rental property that you used to live in, you will be taxed on the amount it went up in value after you moved out, although you do get a grace period. From April 6 this period will be halved from 18 months to 9 months. Accidental landlords will also no longer get lettings relief, a tax break that exempted up to £40,000 of their former home’s gain in price (up to £80,000 for married couples).

● Minimum energy efficiency standards (MEES) will ban landlords from letting homes with the lowest efficiency ratings of F or G to existing tenants from April 1. The rules have applied to new lets in England and Wales since 2018. Landlords should check a property’s rating on its energy performance certificate (EPC) and ask an assessor what you can do to improve the rating to at least E.

● The tenant fee ban, which kicked in for new tenancies last year, will apply to existing lets in England from June 1. Although the law caps deposits at five weeks’ rent (where the annual rent is less than £50,000, and six weeks’ rent where it is more), landlords will not have to immediately refund tenants who have paid a higher deposit — only when they renew their contract or move out. They will no longer be able to charge existing tenants for professional cleaning or gardening, as long as they return the property in the same state it was in when they moved in. They can only be charged for the costs of changing or ending the contract early on their request, breaching it or replacing lost keys.