CHANGES TO LEGISLATION OVER THE COURSE OF 2020
Outside of the many changes we have had to deal with since March 2020 due to Covid19, there have been many further legislative changes which should be noted.
MARCH 2020: Extension of Homes (Fitness for Human Habitation) Act
Under the Fitness for Human Habitation Act landlords can be forced to carry out improvement works to their properties and be sued for damages for the entire length of the contract. It was introduced in March 2019 to ensure rented homes are safe and secure. Tenants can take their landlords to court if this is not the case. Tenants who signed contracts on or after 20 March 2019 were able to use the act right away and as of March 20, 2020 rules will be extended to cover existing statutory periodic tenancies.
APRIL 2020: Minimum Energy Efficiency Standards
Since 2018, landlords have been unable to let their property to new tenants unless it has a minimum energy efficiency rating of an E (unless exempted) on its Energy Performance Certificate (EPC). This is being extended to cover all existing tenancies from April 2020. This means that anyone whose rentals have F or G ratings will no longer be able to legally let them out. Landlords will be expected to pay up to £3,500 towards energy efficiency improvement works. However, if work will cost more than that landlords can apply for an exemption.
APRIL 2020: Capital Gains Tax
Changes to capital gains tax (CGT) will come into effect in April 2020. CGT is paid on profits made through the sale of any property that is not your main home, so will affect the sales of most second properties. The changes will affect the timescale for payment and the tax relief you can claim. Prior to this date, if you once lived in the home you now let out, you were eligible for ‘lettings relief’. This meant you didn’t pay tax for the years you lived at the property, plus the last 18 months you owned the property (regardless of whether you lived there or not during this time). From April 2020 this has been abolished and landlords will only be able to claim lettings relief if they share the property with their tenant. It will also limit the ‘final exemption period’ from 18 months to nine. Also, from April, landlords need to pay the full amount of CGT owed on a sale within 30 days where previously they had until the following tax year.
APRIL 2020: Compulsory CMP for agents
New rules on money laundering have been extended to cover letting agents, with an April 2020 deadline for agents to become members of an official Client Money Protection scheme. Rules were introduced making membership of a scheme compulsory in April 2019, however agents were given a ‘grace period’ of 12 months to set up a client account, following technical issues. Providing agents could prove they had made genuine efforts during this time they were protected.
JUNE 2020: Extension of Tenant Fees Act
The Tenant Fees Act came into force in England in June 2019 and is extended to cover all existing tenancies in June 2020. This means landlords and letting agents cannot charge fees other than rent, deposits, holding deposits and charges for defaulting on the contract with additional restrictions on how much tenants must pay. Deposits are already limited to a maximum of five weeks’ rent where the annual rent is below £50,000 for any new or replacement tenancy. If the annual rent is above this, the maximum is six weeks, with holding deposits limited to a week. Charges for ‘extras’ such as cleaning, pets, referencing, inventories and admin are all off limits.
Where a banned fee has been taken, tenants will be able to get money back via the county court. Landlords could be fined up to £5,000 for a first offence, and £30,0000 for subsequent breaches.
Section 21 changes
Ending Section 21 was backed by all major parties ahead of the election, and in the Queen’s Speech the government announced plans to bring in a Renters’ Reform Bill, which it says will: “Introduce a package of reforms to deliver a fairer and more effective rental market.” The main elements of the Bill will be:
· Abolishing the use of ‘no fault’ evictions by removing section 21 of the Housing Act 1988
· Giving landlords more rights to gain possession of their property through the courts
· Introducing a new lifetime deposit so that tenants don’t need to save for a new deposit every time they move to a new house.
· Developing and implementing measures to increase access to and expand the scope of the database of rogue landlords and property agents.
Inclusion in the Queen’s Speech means the government intends to bring it in during next Parliamentary term.