Landlords, are you ready for the changes that this year will bring ?
Although it may only feel like yesterday since you were packing away the last signs of Christmas, the months of the New Year are starting to run away.
And whilst you may have already set plans in motion for your rental properties at Oakwood homes, we want to ensure you have everything in place for what this year will bring. When it comes to the private rental market, we have come to expect changes to legislation and regulations, and so we expect you’re already on top of where you need to be. But just to be on the safe side, our team want to ensure that you’re ready for the changes that this year will bring in Thanet.
Be one spark ahead
What is it they say? “To be forewarned is to be forearmed.” If you have works planned in any of your properties it may be worth bearing in mind that this year may see new electrical safety regulations implemented. The government are seeking to bring electrical safety in line with the established regulations for gas safety. If passed, the new laws will mean that from 1 July any new private residential tenancies will be required to have a qualified electrician sign off on all electrical wiring and fixed electrical installations. This will also extend to any existing tenancies from 1 April next year. We know that many of our landlords have already implemented this practice in order to provide an exceptional service to their tenants. Whether the government pass this regulation or not, it may be worth thinking about being one spark ahead.
No more relief
If you’re an experienced landlord, the changes to the tax relief rules for landlords will be something you are very familiar with. If you’re a new or accidental landlord, your understanding may not be as clear. Since April 2017 there has been a phased reduction in the tax relief you are able to claim as a landlord, and this will continue until April. As of the tax year 2020/21 you will no longer be able to claim any tax relief on your mortgage interest payments; instead, you will receive a tax credit of 20% on interest payments. This has had a significant impact and, as such, we have been working with our Thanet landlords on a range of strategies to help mitigate the effects that this change has and will continue to bring.
Another relief that will have an effect your Capital Gains Tax when you come to sell your property is Private Residence Relief. Currently, you can claim Private Residence Relief for when you personally lived in the property before deciding to let it out, plus an additional 18 months. Again, as of the new tax year in April, there will be a reduction in this relief allowing you to claim for just 9 months after you moved out of the property, as well as for the time it was your main residence. As a result, you are losing 9 months of Private Residence Relief.
We know several landlords in Thanet have decided to reduce or sell their portfolios as a result of these changes, but before you make a decision in haste, come and chat to our lettings team to discover what options are open to you.
Achieving the minimum standard
Have you undertaken an Energy Performance Certificate (EPC) on your properties in the last few years? If this has been overlooked due to long-standing tenancies then you need to jump into action as soon as possible. As a landlord, you have been required to achieve a minimum EPC rating of E on new tenancies and renewals since April 2018, and as of April this year this will extend to all existing tenancies. This means that, regardless of if your property is due to have new tenants or not, to legally continue to rent your property it must have an EPC rating of an E or above.
If you are planning works on any of your properties in the next year or so it may be worth bearing in mind the widespread expectation that this minimum energy efficiency standard will increase to a D rating for 2025, and a C by 2030. Therefore, it could be worth making changes while works are already being undertaken, rather than having to build in more void periods in the future to make the necessary changes to your properties.
Don’t be left behind
We are continuously helping our landlords to ensure that they and their properties remain compliant, no matter what the industry throws at us. It can as times feel like you’re on your own as a landlord, but at Oakwood homes we can assure you our team work tirelessly researching best practice and innovative strategies to see the continuing success of your portfolios. Give our lettings team a call on 01843 222700 and we can help you end 2020 on a high.