It’s been a rocky couple of years with Brexit expecting to affect the housing market (but it hasn’t yet), Right to Rent checks and proposed rent caps. What does the new year have in store for landlords? Here, we have a quick rundown of everything the industry could see over the next 12 months.
Tax Reform
The biggest piece of news for property owners is the staged introduction of finance cost tax relief. From April, the deduction from property income is restricted to 75% of your business’ financial costs. The other 25% becomes available as a basic rate tax reduction. George Osborne introduced this as one of his final measures as Chancellor. Phillip Hammond has not moved to make changes to the system.
The Housing and Planning Act Comes into Force
The biggest changes to the law and the processes of owning BTL property comes into effect from the new financial year too. The Act will introduce:
- A database of so-called rogue landlords
- A new system of banning orders, although what this will mean is still under discussion
- New electrical safety scheme to include testing wiring every five years
- Property owners will no longer need to go to court to get property back
Extending HMO Licensing
The most important changes for landlords of student tenants are the changes to HMOs. The rule on the number of storeys a building requires will cease, so licensing will apply to all HMOs with 5 residents no matter how many floors it has. Mandatory licensing now applies to buildings that also contain commercial property (i.e. a three story building which has a shop on the bottom floor and two floors of rental property).
Ban on Lettings Fees
There is a question mark against this issue as no solid plans have been made. All we know is that the government is keen to push through a ban on letting fees for tenants (and this will apply to students also). The issue is still under consultation and central government has yet to make firm or clear plans on how or when this will be introduced. This many not happen until the end of the year at the earliest, but more than likely will be pushed through in 2018.
There are also several changes that apply only in Scotland, and some that apply only in Wales.
Scotland
In Scotland, The Private Housing Act for Scotland will remove a “no fault” repossession clause. This means that landlords can no longer evict a tenant on the grounds that the contractual term ends. It will also include more rent increase protection for tenants.
Wales
In Wales, the Rented House Act 2016 comes into force requiring landlords to carry out repairs. It will also put safeguards in place to prevent a tenant becoming homeless when one person in a joint tenancy vacates (a relationship breaks down or a friend moves out).