New regulations, tax changes, and other reforms
After a difficult 2020, we’re getting into the swing of the new year and hoping for better things to come. To help you prepare for the year ahead, here are ten upcoming changes to rules and regulations affecting landlords, and what they mean for you.
While almost all evictions were suspended over the Christmas period due to the pandemic, this suspension is lifted as of 11 January. This means that you’re now able to serve eviction notices, although most evictions are still subject to a six-month notice period. The exceptions are if you are evicting on the grounds of serious antisocial behaviour, or if the tenant has failed to pay rent or made late payment for at least six months. In these cases, the required notice period is four weeks.
2. Fire safety requirements
From February, new legislation in Scotland requires landlords to install a heat alarm in every kitchen and a smoke alarm in every living room, hallway, landing, or other circulation space. These alarms must be ceiling mounted and interlinked. Carbon monoxide alarms must be fitted where there are appliances such as wood burners or boilers.
3. Stamp duty
The current stamp duty holiday will end on 31 March 2021. Landlords hoping to invest in new properties this year should move quickly to take advantage of the reduced rates.
4. Electrical safety requirements
By 1 April 2021, you are required to have an Electrical Installation Condition Report (EICR) for every property you own and let. This is already a requirement for new tenancies but will now be required for existing tenancies also.
To obtain the EICR you’ll need a qualified electrician to test all of the property’s electrical installations (wiring, sockets, etc.) This testing must be undertaken once every five years, with a copy of the report given to the tenant within 28 days.
5. Client money protection
Letting agents are required to join a client money protection scheme by 1 April 2021, into which they must place any money collected from landlords or tenants from that date onwards. They must display a certificate in their office to show which scheme they are a member of.
As a landlord, you are not required to make any changes. You should simply be aware of this requirement of the agents you work with so that you can ensure your money, and your tenants’ money, is protected.
6. Right to Rent
Under the Right to Rent scheme, it is the landlord’s responsibility to check a tenant’s legal right to rent a property in the UK, including their immigration status.
Now that the Brexit transition period has come to an end, the UK is operating on a new points-based immigration system. This will bring changes to the process for Right to Rent checks. It’s not yet defined what these changes will be, but they are due in the spring.
‘No pets’ clauses in tenancy agreements could become a thing of the past if the Dogs and Domestic Animals bill is approved by the government. The bill will have its second reading in February, with several subsequent stages, so any changes will take some time to be introduced.
8. Renters’ Reform Bill
The Renters’ Reform Bill is currently paused, to be resumed at an unspecified date in the future. This is likely to be at some point in 2021 but could be later. The bill includes various reforms including changes to eviction processes and deposit protection.
9. Making Tax Digital for VAT and income tax
The government’s Making Tax Digital scheme is gradually digitising the process of submitting tax returns, and it’s wise for landlords to know the key dates.
Landlords with VAT-registered businesses with a turnover of £85,000 a year or more are already required to keep digital records and use software to submit VAT returns. From April 2022 this will apply to all VAT-registered businesses, regardless of turnover.
From April 2023, landlords with a property income of £10,000 or more will be required to keep digital records and use software to submit income tax updates instead of filing a Self Assessment tax return. Corporation tax will be digitised from 2026.
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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.