What have the most recent changes to the lettings industry over the past 12 months?
The past 12 months have seen a significant number of changes in the lettings industry, and it is important for landlords and tenants to remain up to date with what is expected of them.
One of the notable changes in the lettings industry in the past 12 months has been the Section 21 Notice legislation. This permits a landlord to regain possession of their property at the end of any fixed term tenancy agreement or an assured shorthold tenancy, as long as they follow the correct procedure.
There had been a number of “retaliatory or revenge evictions” from landlords reported in the media and this change in legislation provides tenants with a greater level of security. Previously landlords had been able to remove troublesome or vulnerable tenants in an easy or convenient manner, but the Section 21 Notice has made it more difficult to evict people without proper cause.
In the past 12 months, letting agents have found themselves having to comply with stronger transparency rules, which can be enforced by local authorities. This new legislation sees agents having to declare or publicise a full rundown of any fees that have been charged to tenants or landlords. They must also state if they are a member of the Client Money Protection (CMP) scheme and the agent must state what mandatory redress scheme they belong to.
These are actions that letting agents have had to comply with but since May of 2015, the Consumer Rights Act has required this information to be displayed in estate agent stores and on websites.
Right To Rent Scheme
As of October 2015, landlords have been legally obliged to ensure that all tenants have the right to legally rent in the United Kingdom. This involved asking tenants about their right to stay in the UK and obtaining/copying documents to verify whether a tenant can stay. A failure to do this can see a landlord fined.
One of the most discussed developments in the lettings industry in 2015 doesn’t actually come into effect until April of 2016 but the repercussions of the additional 3% stamp duty charge on buy to let property have already impacted the market. The first few months of 2016 has seen many landlords buy additional properties before they had to pay a higher fee.
After spending a prolonged period in the headlines at the back-end of 2014, stamp duty came to the fore again exactly a year later. Last time, George Osborne announced an overhaul of the outdated ‘slab’ tax system. This time it was revealed that from April, purchasers of buy-to-let or second homes will have to pay an additional 3% stamp duty.
Another change which is due to come in, but won’t until 2017, is the reduction in tax relief that landlords can claim on finance costs. By the beginning of the 2020/21 tax year, landlords will find that they will only be able to claim tax relief at 20%, the basic rate, which is significantly less than the 40% or 45% that some landlords enjoys presently. Again, while this hasn’t taken effect yet, some landlords believe that it will cost them money, leading some to believe it is best to sell their buy to let property as opposed to receive a smaller level of tax relief.
There has also been new regulations relating to smoke alarms and carbon monoxide alarms, encouraging landlords to provide a better standard of service to ensure their tenants remain safe in their home.