Every December I write a roundup which summarises the year gone by; what changes have impacted landlords and what changes we can expect from the year ahead. Perhaps I should just say “Brexit” as a summary and leave it there.

There is no doubt that most industries across the country have felt the impact of the crushing political stalemate. However, one thing we do know is that once we finally get through the election and have some idea of the direction of our country, there will almost certainly be some further big changes to the private rented sector.

So, first of all, let’s look at some of the changes which had previously been announced and came into force in 2019:

Homes (Fitness for Human Habitation) Act

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The Homes Act 2018 came into force on 20 March.  The purpose of this is to ensure that all rented accommodation is fit for human habitation. Although this will only have affected a small number of landlords, it is an important point to note as the Bill means tenants can now take legal action against their landlord should they fail to maintain their property to a good condition, without having to rely on their local authority to get involved.

Tenant Fee Ban

After gaining royal assent, the ban on tenant fee charges came into force on 1 June. This means that landlords and letting agents can no longer charge for anything other than:

  • Rent
  • Deposits (including holding deposits)
  • A change or early termination of a tenancy when requested by the tenant
  • Utilities, communication services and council tax
  • Key replacement costs (charge for new keys and petrol, but not time lost)
  • Arrears
  • Damages

A breach of the fee ban is a civil offence with a financial penalty of up to £5,000. I said at the time, and still believe, that rents will rise to tenants as agents are forced to put up their fees to landlords.

Compulsory CMP (client money protection)

From April this year, it became a legal requirement for all letting agents to hold client money protection insurance. This is good news for landlords as it means their rental income is protected.   I am delighted that this is now a legal requirement as I have been calling for this change for years, especially as I have dealt with my fair share of rogue agents over the years who have stolen landlords’ rent. 

Section 21

Earlier this year, the Government announced a proposal to end “no fault evictions” by abolishing the right for landlords to serve notice under section 21 of the Housing Act 1988.  It launched a consultation “A New Deal for Renting: Resetting the balance of rights and responsibilities between landlords and tenants” to obtain the views of landlords on its proposals. Despite strong opposition from landlords and the industry, including myself, it would seem that whichever political party wins the election, Section 21 will be scrapped.  For me, this could have the greatest impact on the PRS we have ever seen, especially without substantial funding for our court system.

What can we expect from 2020?

Landlord’s Minimum Energy Efficiency Standards broaden

Although this has already been well-documented, the staggered approach means more landlords will be affected by the tightening of the Minimum Energy Efficiency Standards (MEES).

April next year (2020) sees the regulation extended to existing tenancies, too. This means that if a landlord’s property is currently rated at ‘F’ or ‘G’, it will no longer be rentable from 1 April 2020.

Landlords should be taking action now to ensure their properties are compliant.

Mortgage interest tax relief

This may seem like old news, but the 2019-20 tax year begins in April, meaning landlords will only be able to claim 25% of their mortgage tax relief when filing their taxes (down from 50% for the 2018-19 tax year).

This has led to increased tax bills for many landlords and some will find that it is no longer profitable to be a landlord, which may lead to them exiting the market.

Many landlords are looking at how to change their business entities to either an LLP partnership or a limited company.  Please make sure you advise your landlord to seek advice from a specialist property tax accountant.

Mandatory electrical safety checks

Although a date for implementation has not yet been announced, the Ministry of Housing, Communities and Local Government (MHCLG) announced in 2019 that mandatory five-year electrical installation checks on private rented housing in England would be introduced.  It is highly likely that this legislation could be introduced at some point in 2020. After a year of uncertainty and ever increasing legislation in the PRS, 2020 looks likely to bring both fresh challenges and new opportunities for landlords and letting agents. As I wrote in my recent blog for LandlordZONE, Landlords no more excuses, education is one of the most important tools landlords and letting agents have at their disposal. In today’s highly regulated climate, it is your responsibility to educate both yourselves and your tenants. Those who do will stand a much better chance not just of surviving, but of thriving.

3 COMMENTS

  1. Most LL are really only concerned with S21 removal when it comes to rent defaulting tenants.
    It would not be ideal but an enhanced S8 process could be used for ALL other issues EXCEPT rent defaulting.
    For that an enhanced S21 process could be used which would NOT require ANY court action.

    All that would need to happen is a S21 could be issued after 2 month’s rent default which would be 1 month and 1 day where rent is paid in advance monthly.
    The following day the tenants maybe removed by the LL with Police assistance if the tenants cause a breach of the peace.
    These changes would mean that as soon as a tenant defaults on 2 months of rent they could be removed immediately.
    Now lots of LL won’t use this facility as they will wish to retain their tenants and assist them through difficult periods.
    But it gives LL control of their asset almost immediately a tenant stops meeting their contractual rental obligations.
    These changes would encourage many LL to let to the more risky tenant demographic.
    Rent default is the main problem that causes LL to use the S21 process.

    Such changes would ensure Council HB is paid to LL and that rent top ups are paid to prevent EVICTION costing a Council even more in TA costs.

    Rent defaulting is the principal reason LL use the existing S21 process.
    The current S8 process can be games by tenants and is consequently not fit for purpose.

    However no Tory Govt will do any of this.
    Instead it will make possession even more costly and time consuming for LL which will mean even more LL leave the sector and those remaining will refuse to let to the riskier tenant demographic.

  2. Forget about education just leave section 21 alone. With regard to “I didn’t know that” you’ll hear it many times more because its nothing to do with quality affordable housing, just more anti-landlord red-tape invented to drive us out by useless people that have no input to Private Sector Housing or any other housing for that matter. Maybe we should go to university & get a Degree in Law to learn 176 pieces of legislation or would that be 170 pieces too many, how did we manage for all the decades gone by. Then “How to Rent” nonsense by Shelter, changed 9 times in 5 years approx’ not fit for anything & a huge administration cost / waste of paper / re-printing again, and again. The tenants know more about renting than LL’s with their computers & iPhones etc, They are far more educated than us didn’t we pay for their education yet they can’t even house themselves but we did strange that isn’t it. We didn’t get Government handouts, free loans or Stamp Duty concessions and there was no Bank of Mam & Dad either, maybe they should take responsibility for themselves or is education wasted on Digital Technology, we have Driers going on fire, Washing machines going on fire, Post Offices closed down because the computer thought they were on the fiddle when they were not, Planes falling out of the sky & abandoned, please go away and leave us alone.

  3. As a landlord since 1987 I have definitely moved away from the more risky tenants. Now I always have a guarantor in place. Without S 21 tenants will find it harder to find a home when landlords like myself will seriously consider selling up and retiring.
    Lesley Gregson

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