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Support, Advice and Experience within the Property Market

More Legal Changes in 2020 – You Need to Know

From Robert Ulph on January 31, 2020

Last week I wrote about the forthcoming regulations on electrical testing, which could mean fines of up to £30,000 for non-compliance, and this week I’m highlighting more legal changes you will need to know.

The electrical testing changes mean that landlords and agents will need to ensure that electrical installation inspections and testing are carried out for all new tenancies in England from 1st July 2020 and from 1st April 2021 for existing tenancies.

In addition, from April this year the minimum energy efficiency standards (MEES) regulations, which were introduced in April 2018 and meant that all new tenancy agreements and renewals must have an energy performance certificate (EPC) rating of E or above, will extend to cover existing tenancies.

This means that, under the new legislation, properties with an EPC rating of F or G will be classed as unrentable from April 2020 onwards. If you have any questions specific to MEES please let me know and I can advise on your best course of action.

On the taxation side there are also key changes coming into effect, again from April this year, which affect both tax relief on mortgage interest payments and also Capital Gains Tax (CGT) relief on Private Residence Relief.

In 2015 the Government announced that the tax relief private landlords could claim on mortgage interest payments would be phased out. This means that after the process started in 2017/2018, from 2020/2021 landlords won’t be able to claim any tax relief on mortgage interest payments at all. Instead from April 2020, landlords will get a 20% tax credit on their interest payments.

Some of our landlords are now looking to set up limited companies when buying new rental property so if you need any advice on this please let me know.

Also, from April this year landlords looking to sell will also lose some of the CGT relief previously applied to Private Residence Relief. Currently landlords can claim Private Residence Relief for the whole time they lived in the property that they now rent out, plus an additional 18 months after they moved out. From April this is being cut to nine months from when they moved out. The CGT bill will now also be due within 30 days of completion of the sale, not in the following tax year as previously.

Further changes to, to the letting relief landlords can claim on any property they have lived in, unless they now share occupancy with their tenants. Previously landlords who rented out property that had been their main home could claim £40,000 worth of letting relief but from April 2020 this is removed.

All in all a great deal to digest so if you need any advice on what all of this means for you as a landlord and how to ensure you are fully compliant and making the most of the financial management of your rental property, please do not hesitate to contact me.