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Four key events for agents to watch for in 2020
A leading law firm has highlighted four key dates for letting agents and landlords to watch for in 2020.
Paul Barnes, head of dispute resolution at Kirwans law firm, says: “From minimum energy efficiency standards to tax relief, a number of legal changes will take effect in 2020. Those who familiarise themselves with the new rules now should have ample time to put measures in place that will keep them on the right side of the law.”
The four are:
Minimum energy efficiency standards: Most of us are by now familiar with the MEES that came into effect in April 2018, stating that new tenancy agreements and renewals (other than some HMOs such as bedsits) must have an energy performance certificate rating of E or above.
By April 1, 2020, however, the regulations will be extended to also 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 that date on.
Barnes says there are “whispers” that these standards could rise again in another couple of years, at which point D will be the minimum EPC rating.
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Electrical installation checks: Last January the Ministry of Housing, Communities and Local Government announced that mandatory five-year electrical installation checks on private rented housing in England would be introduced over a transitional period of two years.
The first year would see all new private tenancies subject to the checks, while the second year would encompass all existing tenancies too.
However, the implementation date has not yet been clarified so, while it is still unconfirmed as to exactly when this will begin, Barnes believes there is a good chance that the legislation could be introduced at some point in 2020.
New tax relief rules: In 2015 the government made property rentals a much less viable option for many when it announced mortgage interest tax relief was to be phased out.
In 2017-18 the process began, with claimable tax relief reduced to 75 per cent, and so the reduction continued through 2019-20. In 2020-21, landlords won’t be able to claim any tax relief on mortgage interest payments at all.
Instead, from April 2020, landlords will receive a 20 per cent tax credit on their interest payments; not great news for those in the higher tax bracket – which could now include landlords who will have to declare the rental income that they previously used for interest payments.
Many landlords are now setting up limited companies when buying new rental properties in order to avoid the higher individual rates, but Barnes suggests there’s no guarantee that the rules won’t change to affected limited companies in the future.
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Changes to Private Residence Relief: From April 2020, changes to Private Residence Relief mean that landlords will lose nine months’ worth of Capital Gains tax relief when they come to sell.
While at the moment landlords can claim Private Residence Relief for all the time they lived in their property before letting it to tenants, plus an extra 18 months after moving out, this final exemption period will be reduced next April to the time they lived in their property plus just nine months post-moving out.
In addition, landlords who rent out a property that was once their main home will see the £40,000 worth of lettings relief they currently enjoy scrapped as, from April, only landlords who share an occupancy with their tenants will be able to claim.
The deadline for payment of the Capital Gains Tax bill will also change from April 2020, from the current position – January 31 in the year after the tax year they made the sale – to within 30 days of the completion of the sale.
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Original Source: Letting Agent Today.
Original Author: Graham Norwood.
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https://www.lettingagenttoday.co.uk/breaking-news/2019/12/four-key-dates-for-agents-to-watch-for-in-2020
