The Renters Reform Bill: What To Expect
There are three main elements to the proposed Renters Reform Bill, which was launched as part of the Queen’s Speech in December 2019.
The three main aspects of the Bill are:
The End of Section 21?
Currently, landlords can regain possession of their rental properties at the end of a fixed term tenancy or during a periodic tenancy by issuing tenants with a section 21 notice.
This gives the tenant a period of notice to vacate the property, which is currently six months under new rules brought in during the Covid-19 pandemic.
Under the Renters Reform Bill, ‘no-fault’ evictions and section 21 of the Housing Act 1988 would be scrapped, meaning landlords would need to regain possession of their properties through the court system.
The Bill proposes that tenants should be able to transfer their security deposit from property to property, meaning they don’t have to save for a new deposit when moving rental homes.
The Rogue Database
The government’s database of rogue landlords would be made available to tenants, agents, landlords and professional bodies under the Bill.
Other Landlord Legislation Changes Coming In 2021
As well as the Renters Reform Bill potentially being heard in the new year, there are a host of other changes that landlords need to be prepared for:
Coronavirus Eviction Rules
Laws passed in the wake of the Covid-19 pandemic mean landlords now have to give their tenants six months’ notice if they wish to regain possession of their property.
Previously tenants could be given two months’ notice, but the six-month rule is scheduled to be in place until end of May 2021, which will then change to 4 months from June 2021.
Stamp Duty On Buy-To-Let Properties
As of April 1st, foreign investors will be forced to pay an additional 2% in stamp duty on buy-to-let properties in the UK.
The current stamp duty rates, dubbed a stamp duty ‘holiday’ are also due to end September 2021.
Client Money Protection
Landlords should be aware that the final deadline for all letting agents to comply with Client Money Protection (CMP) rules was April 1, 2021.
CMP protects landlord rental income collected by an agent should that agent go out of business and has been mandatory since 2019.
Electrical safety and EICRs
Since July 1, 2020, landlords issuing new tenancy agreements must have an Electrical Installation Condition Report (EICR) carried out.
The report must also be given to all tenants, while any remedial work required work should be carried out.
From April 1st, 2021, EICRs were made mandatory for all tenancies.
Making Tax Digital
Landlords with a rental turnover of more than £85,000 will need to switch to the Making Tax Digital (MTD) system at some stage in 2021.
The system means landlords would send four quarterly submissions on income and expenses rather than an annual tax return and then sign a declaration to confirm their numbers.
The date for mandatory MTD for turnovers in excess of £85,000 has not yet been confirmed, but is expected in 2021.
In 2022, it’s likely that all businesses, regardless of turnover, will be forced to switch to the MTD system.
Capital Gains Tax Amendments
While nothing has been confirmed as yet, tax changes are expected in 2021 as the government looks to balance the books after the pandemic.
Those changes could include amendments to capital gains tax rates.
Should I Use A Letting Agent To Manage My Property?
With all that legislation change coming in the new year, it can be hard to keep up.
Yet remaining compliant remains the most important aspect of being a landlord.
By using a letting agent to manage your rental property, you don’t have to worry about compliance because a good agent will ensure you are fully compliant as a landlord.
Your letting agent will also:
Find good, reliable tenants to rent your property
Reference your tenants and undertake Right to Rent checks
Collect their deposit and register it legally
Collect and chase rent payments
Arrange repairs and maintenance for you
Renew tenancy agreements and undertake an annual rent review
How Much Do Letting Agents Charge?
A letting agent may charge you a fixed fee to find a tenant and set up a new tenancy, while full property management services are usually payable at a percentage rate of your property’s rent.
Management fees can vary depending on which agent you choose. Click here to find out more about our management fees at Jackson Property.
What To Look For In A Letting Agent.
Choosing the right letting agent to manage your rental property is a big decision. Here are some of the things you should look for:
A proactive agent who stays on top of changes in legislation and understands the complexity of compliance
An agent with solid lettings experience and a great track record of letting and managing properties like yours
An agent who is a member of a Property Redress Scheme, like the Property Ombudsman scheme
An agent registered with an approved Client Money Protection (CMP) scheme and using a Government approved tenancy deposit scheme
A letting agent who uses trusted trades to carry out maintenance work at their managed properties
An agent who carries out regular property inspections and safety checks
For more information on Lettings at Jackson Property, give us a call on 01432 344 779!