Here are some notable dates that Landlords should be aware of.
1/ COVID-19 eviction rules
During the COVID-19 pandemic, temporary rules were introduced that meant landlords had to give longer notice periods when starting eviction proceedings against their tenants.
The rules, which apply to 31st March, mean that in England and Wales landlords must give six months notice, except in extreme circumstances where for example a tenant has committed fraud, behaved anti-socially or is at least six months in arrears.
In Scotland landlords must give six months’ notice under most circumstances. A couple of exceptions to this would be if the tenant has been anti-social then only 28 days notice is required, and if the landlord or their family want to move into the property, then they only need to give 3 months notice.
In Northern Ireland landlords must give 12 weeks’ notice, and an eviction notice must not be issued unless it is ‘absolutely unavoidable’.
2/ Possible abolition of Section 21
Late in 2019 there was a government consultation around the abolishment of Section 21 – this is a clause that allows landlords to end rolling tenancies with two months notice. No reason has to be given for doing so. To date this section continues to remain in place, as the Renters Reform Bill was delayed (indefinitely) due to the COVID-19 pandemic. Landlords should keep an eye on this as it is possible that we could see movement on this bill this year. Another couple of proposals on the same bill are the introduction of a ‘lifetime deposit’ (replacing security deposits), where the deposit ‘moves’ with the tenant. There is also the possibility of making the rogue landlord database publicly available.
3/ The end of mortgage payment holidays
If your tenant is struggling to pay their rent or you are having difficulty paying your mortgage due to COVID-19 then you can apply for a payment holiday until 31st March. There is a six-month limit, so if you haven’t taken a payment holiday at all then you can apply for up to the full six months, or if you have previously taken a holiday for less than the maximum then you can apply for another to take you up to the six-month limit.
4/ The stamp duty holiday
In England, Scotland and Northern Ireland, landlords can benefit from the stamp duty holiday on the purchase of investment properties.
In England and Northern Ireland landlords still have to pay a 3% surcharge, but this is on top of the reduced rates, and so it means a flat rate of 3% on purchases up to £500,000.
In Scotland landlords still have to pay a 4% Land and Buildings Transaction Tax (LBTT) surcharge, again on the reduced rates, meaning you will need to pay 4% on purchases up to £250,000.
In Wales, landlords aren’t eligible for the current Land Transaction Tax (LTT) holiday and must pay the same rates as before.
5/ Stamp duty surcharge for overseas investors
Buyers from overseas will need to pay a 2% stamp duty surcharge on all property purchases in England and Northern Ireland from 1st April. This is in addition to the regular buy-to-let surcharge, and the rules apply to all non-UK residents.
In order to be classed as a UK resident you will need to have spent at least 183 days (six months) in the UK in the year before or the year after you buy the property.
6/ Brexit uncertainty
Despite the fact that the UK has now agreed a deal with the European Union, Brexit is likely to remain a big talking point this year. As the finer details of the deal are still to be applied, there could be additional bumps in the road. Furthermore, if the economic uncertainty continues, we could see this having an impact on interest rates. Speak with a good broker, they will be keeping an eager eye on this area so that they can advise their clients accordingly. Here at Lodestone, this is a daily routine, in order that we can constantly keep our clients ahead of any turmoil (wherever possible).
7/ Changes to Right to Rent
At present, landlords must check that all tenants have a right to live in the UK prior to letting them move into their property, however this could change. To date they have been advised to use the current system of accepting passports and photo id cards until 30 June. There is uncertainty how the Right to Rent scheme will work after this date.
8/ Tax return deadline
As all self-employed people know, 31st January sees the deadline for the submission of your online self assessment tax return. Do not miss this deadline as you may have a penalty to pay. For those who earn less than £30,000, the governments Time to Pay Scheme is available if needed, allowing the ability to spread the payment of income tax due over the course of the year.
9/ Capital gains tax uncertainty.
The government is reviewing the capital gains tax (CGT) system, and any changes to this could have a significant effect on landlords selling their investment properties., The Office for Tax Simplification made 11 recommendations for CGT changes in November, including more closely aligning rates with income tax, or reducing he CT free allowance. Although the government is currently reviewing these recommendations, it’s unlikely any changes will happen soon, but this is an area to keep an eye on in 2021.
10/ Mortgage interest tax relief
This is a touchy subject for landlords, and the end of the changes that have been phased in over the last few years are now approaching. When you file your 19/20 tax return in January 2021 you will be able to deduct 25% of your mortgage interest and get a 20% credit on the remaining 75%. However, when your next return is due in January 2022, for the 20/21 tax year, you will only get a 20% credit on all your mortgage interest.
11/ Client money protection rules
This is one for managing agents, as from April they must adhere to new client money protection rules They must sign up to one of six government approved schemes and hold money in accounts that are registered with the Financial Conduct Authority. Failure to join a scheme could result in fines up to £30,000. Similar rules apply in both Scotland and Wales, but not in Northern Ireland.
12/ Electrical safety rules
From 1st July 2020 new tenancies have been subject to new electrical safety rules. Landlords have had to ensure that all electrical installations are inspected and tested every 5 years. A copy of the test report has to be provided to the tenants within 28 days (before occupation for new tenants). If requested, a copy also has to be provided to the local authority. From 1st April 2021, these rules apply to existing tenancies also.
13/ New smoke alarm rules (Scotland)
From February, all homes in Scotland must have a smoke alarm in living rooms, hallways, and landings. In addition, you must have a heat alarm in the kitchen and a carbon monoxide alarm near any boilers or wood burners.
All above are subject to change without notice. It’s been a crazy 18 months and hasn’t settled back down to the new normality yet. Follow us on social media to keep up to date with any news.
