Government changes that landlords must be aware of in 2019
While 2019 is still relatively young, the government began the year with numerous announcements affecting the lettings market that are especially important for landlords to be aware of.
So, in this blog post, Samantha Flint, Associate Director at Tod Anstee Hancock looks at what 2019 has in store for landlords and provides information on how our dedicated Lettings team can help landlords adapt to this transitional period.
Key landlord regulatory changes for 2019
If you’re a landlord who is still adapting to the tax and regulatory changes that were enforced in 2018, then 2019 looks as though it is going to be another 12 months of changes that are likely to affect landlords up and down the country.
Many of these new measures represent a major overhaul for the private rental sector, and the Tod Anstee Hancock team has compiled an expert guide on everything we know so far about what’s new for landlords in 2019 to help you manage the changes.
Client Money Protection Scheme
As of April 2019, every property agent in England will have to belong to an approved Client Money Protection Scheme, safeguarding any tenant and landlord money held by agents, such as a tenancy deposit, rental payments and funds which have been set aside for property maintenance. This move has been welcomed by landlords as it will provide greater peace of mind for their financial transactions with agents.
This scheme has been introduced to ensure that the money of both landlords and tenants is protected during the entire rental process, if for example a letting agent enters administration. The Client Money Protection Scheme will also prevent the money of tenants and landlords being stolen or misused.
The Tenant Fees Bill
The ban on Tenant Fees has been set for June 1st 2019 and will put a stop to agents charging tenants for the following administrative work:
- Completing credit checks
- Preparing rental agreements
- Creating a guarantor form
- Administrative tasks
From Saturday 1st June The Tenant Fees Ban will apply to all new tenancies and renewals of tenancy agreements but may not be applied retrospectively to previous tenancy agreements. By June 2020 (after 1 year) the ban will apply to pre-existing tenancies and clauses that contain fees will become null and void.
The Tenant Fees ban will also limit the amount that letting agents and landlords are currently able to charge tenants for minor property damage. The Tenant Fees ban is widely considered to be a punitive measure against those letting agents which were charging tenants excessive fees but has done little to help those agents charging reasonable fees and who will still need to incur these costs.
Letting agents will need to enter a dialogue with landlords about how to recover the genuine costs they incur. It is hoped that the benefits agents are able to provide landlords in finding the most suitable tenants and the work they do managing property maintenance issues efficiently to minimise property damage and settling deposit disputes will reduce the impact of The Tenant Fees Bill on agents and landlords.
The introduction of longer tenancies
Although longer tenancies are not yet confirmed for 2019, it is no secret that the government is keen to introduce three-year minimum agreements to help provide more stability for the lettings market.
While minimum three- year tenancies would also include a 6-month break clause for both landlords and tenants, it is certainly a legislative change that will provide landlords with more certainty over occupancy rates and ensure loyal tenants who are more likely to take care of the property.
A new redress system
2019 is also the year that the government announces details about the proposed new Housing Court. Initial government proposals outline a compulsory redress system for landlords which would provide a direct route for settling disputes between landlords and tenants.
This is another decision that has been received well by landlords, as it will allow them to evict disruptive tenants through a clear redress process and navigate the legal system in a simpler manner than they are currently able to.
The Homes Fitness for Human Habitation Bill
On March 20, it will be a legal requirement for all landlords to ensure that their properties are maintained to sufficient living standards for the duration of a tenancy.
Tenants will have the right to take legal action against landlords if their rented property does not comply with the standards of The Homes Fitness for Human Habitation Bill. So, it is crucial that landlords ensure that all their properties are fit for human habitation, to avoid the risk of prosecution.
Energy Efficiency and Electrical Safety
Furthermore, many UK landlords must also prepare for the costs of upgrading the energy efficiency of their properties. Previously, if energy efficiency improvement costs were in excess of £2,500 per property, the landlord would be exempt from meeting energy efficiency guidelines. However, the threshold has now been increased by £1,000, a movement that is estimated to affect around 200,000 landlords nationwide. Landlords can read our more detailed article on energy efficiency regulations.
The Government has also published the results of a consultation on Electrical Safety Standards, introducing mandatory five-year electrical safety checks for landlords. Landlords will be legally obliged to ensure that the electrician employed to carry out the checks is suitably qualified. Although no date has been confirmed, legislation is expected to be introduced in stages.
A new online credit system
Summer 2019 is to see the start of development on a system that will allow the government to pay for the housing element of Universal Credit directly to landlords. The RLA has been heavily campaigning for this, as there were lengthy delays in payment of rent under the previous system whereby landlords applied for an Alternative Payment Arrangement (APA) and tenants risked eviction for rent arrears.
Mortgage interest tax and mortgage rate changes
On Saturday April 6th, the amount of mortgage interest tax relief that landlords can claim will be halved. The amount that landlords could previously deduct was 50%, however by April the rate will be slashed to 25%.
It is also worth noting that by April 2020, mortgage interest tax relief for landlords will be completely abolished.
However, there is also good news on the mortgage front. Towards the end of 2018, the costs of fixed rate mortgages for landlords fell by record figures, a trend that financial experts have predicted to continue in 2019.
Speak to the expert Chichester letting agents at Tod Anstee Hancock
If you are a landlord from the West Sussex area who would like some specialist advice on the forthcoming legislative changes that are scheduled for 2019, then please get in touch with the dedicated team of property consultants in the Lettings Department at Tod Anstee Hancock.
To speak directly to one of our lettings advisors today, give Tod Anstee Hancock a call on 01243 531111.
Or alternatively you can request for us to contact you at a more convenient time by completing our quick and simple online enquiry form.
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