Landlords: What you need to know in 2018

News at Waterfords | 11/01/2018


Now we have welcomed in the New Year and settled back behind our desks, it’s time to think about which tax and regulatory changes will affect landlords and investors in 2018.

Whether you’re a first-time landlord or an experienced investor, you may have struggled to keep up with the range of reforms in the buy-to-let sector last year. But don’t worry, we’re here to help.

Energy efficiency - MEES


From 1st April 2018, all new tenancies must meet the Government’s Minimum Energy Efficiency Standards (MEES). This will make it illegal to grant a new lease (this includes existing tenants) on properties with an Energy Performance Certificate (EPC) rating of F or G.

Landlords could face fines of up to £5,000 for breaches such as providing false information, failing to adhere to compliance notices or renting properties that don’t meet the new regulations.

The MEES will apply to all tenancies from April 2020, so it is very important that landlords focus on making sure their properties have an EPC rating of E or above.

Right to Rent 


Right to Rent legislation came into force in February 2016, and requires that landlords check whether their tenants have the right to live in the UK. A total of 106 landlords were charged for breaching Right to Rent rules in 2016 – with fines totalling around £30,000. 

The advantage of using Waterfords’ fully managed service is that we conduct these checks on your behalf.

Rent payments and credit scores

 

The Government has requested that technology firms create tools that make it possible to record tenants’ payment histories in their credit scores. The Rent Recognition Challenge will run until October 2018.

The idea is that by including these records in credit scores, more tenants will be able to get mortgage finance if and when they come to buy property. The measure will also benefit landlords, as they will be able to see whether a prospective tenant has paid their rent on time in the past and make a more informed decision when deciding on whether to accept a tenant

Tax relief reduction 


This year, the Government’s mortgage interest tax relief restrictions will continue to bite. From April last year, the amount of tax relief that landlords can claim on costs (including mortgage interest) is being gradually reduced to the basic rate of Income Tax.

The tapering has already restricted tax relief to 75%, and will fall to 50% in April this year, then 25% in 2019 and 0% in 2020.

Longer tenancies


Back in November 2017, Chancellor Philip Hammond announced plans for a consultation on how to incentivise landlords to offer longer-term tenancies.

Some property industry experts are calling for landlords to receive tax relief if they offer longer-term tenancies over shorter term ones to tenants. David Cox, the Chief Executive of ARLA Propertymark (the Association of Residential Letting Agents), believes that merging tax relief with a new housing court to speed up the eviction process will help to encourage landlords to offer longer-term tenancies. 

We will keep an eye out for any development on the consultation and keep you posted.

Rent-a-room


Hammond has also called for evidence to show how rent-a-room tax relief could be better used to target long-term lettings. Currently, homeowners can earn up to £7,500 a year by renting out a room in their home before they have to pay Income Tax on the earnings.

The problem is that it was designed to encourage people to let out a room in their home on a long-term basis, but the rise in popularity of short-term lets, such as those advertised on Airbnb, has meant that it is being used to make quick cash for short term lets, rather than offering long-term solutions to tenants.

Changes may be brought in to make the rent-a-room scheme more targeted to long-term lettings. Watch this space for updates.

Rogue landlord database


A database of rogue landlords and letting agents is expected to go live in April 2018, having been delayed from October 2017. Only local and central Government will have access to the database, and it will include operators with criminal convictions and any landlords or letting agents that have been issued with banning orders for housing offences.

HMO licensing


The Government is also expected to target rogue landlords running Houses in Multiple Occupation (HMOs) by introducing tougher rules.

At present, all large HMOs require a license, but this could be expanded to far more properties. The rules look set to remove the minimum three-storey requirement on what qualifies as an HMO.

This could mean that HMOs of five or more individuals, regardless of the number of storeys, will need a license, increasing the number of licensed properties from 60,000 to 175,000.

Landlord regulation 


At the 2017 Conservative Party conference, the Communities Secretary, Sajid Javid, announced plans to make it a legal requirement for landlords to belong to an ombudsman scheme.

Javid hopes to create a single housing ombudsman that replaces the four existing schemes. The plan would be good news for landlords as it should mean an improvement to dispute resolution with tenants. Watch this space.

When it comes to your investment you deserve the best letting agent

Waterfords take pride in their reputation for providing a personal and professional service with a unique approach to marketing your property portfolio. We endeavour to remove the stress from the process and make letting your property as straightforward as possible.

Contact our friendly lettings team for advice today on 01276 903127 or email contact.centre@waterfords.co.uk

Please note: This article is intended as a guide only and was correct at the time of publication (January 2018).


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