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New Rental Laws In 2020

Published: 10/02/2020 By NIcole Chamberland

As the Chamberland team settle in to 2020, the year of vision, we begin our blog journey this year by sharing some important information on new letting laws. All vital information for landlords to know!
We have been busy doing our research and below we share with you the top ones you need to know about, when they will be happening and how landlords can prepare for them.
It’s important to say that some changes have already been passed through Parliament, others have been through the consultation process but have yet to be drafted as Bills - we expect there to be further progress on them this year. So watch this space!

Anti-Money Laundering

Despite this being an EU directive, and the fact that we have now left the EU, the implementation of this is very much set in stone. If you deal with rental properties with a monthly rent of 10,000 euros or above, you are now required to carry out customer due diligence checks amongst other anti-money laundering requirements. From May 2020, all letting agencies that meet the requirements will have 12 months to register with the HMRC. The online registration system will not be available until May, but lettings agents will be expected to comply with the regulations until then.

Domestic Minimum Energy Efficiency Standard
The Minimum Energy Efficiency Standard (MEES) regulations set a minimum energy efficiency level for private rented properties. The regulations came into effect in April 2018 with a grace period of two years for tenancies which had started before 1 April 2018. Therefore, on 1 April 2020, all rented properties must meet the MEES, which is currently a rating of "E" on a valid Energy Performance Certificate (EPC). Failure to comply can result in steep fines.

Capital Gains Tax Relief
Capital gains tax (CGT) must be paid by anyone selling a property that isn’t their main residence. In the 2020/2021 tax year, starting on 6 April 2020, capital gains tax is likely to increase significantly for landlords. As of April 2020, property sellers will need to pay the full amount of CGT owed within 30 days of their completed sale. The costs will stay the same (18% for basic rate taxpayers and 28% for higher rate taxpayers) however, landlords and property investors will need to be wary of the new time frame. For the most up-to-date guidance, check out gov.co.uk.

Extension of the Homes (Fitness for Human Habitation) Act
This Act came into force in March 2019 and originally applied to new tenancies and renewals only, to ensure that all rental properties are safe and suitable for tenants to live in. The original Act is being extended from 20th March 2020 this year to include existing statutory periodic tenancies. Until that date it applies only to tenants who signed contracts on or after 20 March 2019. As a Landlord, you have a legal responsibility to carry out repairs and maintenance required to keep your property fit for human habitation. Failing to uphold these duties can put you at risk of being sued.

Tenant Fees Act 2018
When the Tenant Fees Act 2018 came into effect on 1 June 2019, a grace period of one year was put in place allowing tenancies which had started before that date to smoothly comply with the new rules. The ban only applies to new tenancies, however, from June 2020, the ban will be extended to all existing tenancies. While periodic tenancies do not need to have their deposit amount adjusted, deposits for new fixed-term tenancies should be capped as set out by the Act, which is five weeks’ rent where the annual rent is less than £50,000 and six weeks’ rent where the annual rent is £50,000 or more.

Stamp Duty
In November 2019, the Conservatives announced plans for a 3% stamp duty surcharge for property buyers who are non-UK tax residents. Anyone purchasing a buy-to-let or second home has been required to pay an additional 3% in Stamp Duty Tax since April 2016 – but now the government intend to extend the tax to overseas buyers. No official dates have been set, but the changes are likely to happen alongside other new rental laws in 2020. Chamberland Residential will share more information on this when we know.

The End of Section 21
At the beginning of 2019, the government announced that they intended to put an end to ‘no fault’ evictions. Plans for these intentions were finally revealed and a new Renters Reform Bill will “introduce a package of reforms to deliver a fairer and more effective rental market”. The Bill is said to put an end to no-fault evictions by removing Section 21, yet will also “strengthen the rights of landlords” who need to legitimately gain possession of their property. A new lifetime deposit will also be introduced so that tenants will not need to save for a new deposit every time they move house. At this point, the changes to Section 21 have no set date, but landlords should keep their eye out.

Tackle Dirty Air for Tenant

The pollution levels in the air tenants breathe is the latest check Landlords must carry out on a buy to let home. From 2020, landlords must include details of high pollution levels on letting particulars for tenants to read before signing up to move in a property. The check is part of ‘material information’ National Trading Standards want landlords to tell tenants before they move into a home. Landlords can discover pollution levels by visiting addresspollution.org 

We understand that keeping track of every legal update and governmental change can be incredibly overwhelming so we hope this blog makes things a little easier to digest. Please of course get in touch with me or any member of the team if you need  help or advice. We are always happy to help,