As a landlord, there are always legalities and responsibilities to consider, and the past year has been no exception. Landlords have faced several changes to legislation this year, along with some that are still in the pipeline, that buy-to-let investors need to be prepared for and adapt to. These are the key changes that have affected the buy-to-let sector during 2021 and what landlords can expect in the future.
About our guest blogger:
Dakota Murphey has experience in property management with her portfolio of properties expanding in the South of England. Her passion for renovation and home improvement projects is shared through her writing to help educate and inspire others.
Renters’ Reform Bill
The Renters’ Reform Bill has been described as a way to deliver a fairer and more effective rental market, and it will deliver a series of reforms which will change the grounds on which landlords are able to evict their tenants. The goal of the reforms is to provide greater security for tenants and reduce financial pressures when moving between rental properties. ‘No fault’ evictions will be abolished, as a result of the removal of Section 21 of the Housing Act 1988, and there will also be changes to Section 8 to reform the grounds on which a landlord can seek legal possession.
This will be a significant change to legislation but despite plans for them to come into effect in the autumn of 2021, the date for publishing the White Paper has been delayed until 2022. According to the Department of Levelling Up, Housing and Communities, this was agreed at the end of October 2021, with contributors to the documents told that the government needed additional time to make the reforms as balanced as possible.
Stricter Fire Regulations in HMOs
Landlords, letting agents and property managers of a House in Multiple Occupation (HMOs) could face unlimited fines if they don’t adhere to the new measures to enhance fire safety. The new regulations form part of the government response to the Fire Safety Consultation, which only apply to multi-tenancy premises and HMOs. The changes are expected to be published in 2022, as part of the Building Safety Bill. Regulations will amend the Fire Safety Order to include frequent risk assessments for each building and to improve the information passed over throughout the lifetime of a building.
Electrical Compliance
The regulations for electrical safety standards came into force back in June 2020. But since 1st April 2021, they apply in all cases where a private tenant has a right to occupy a property as their main residence and pays rent, including shorthold tenancies. These regulations specify that landlords now have to have the electrical installations in their properties inspected by a qualified electrician every five years, at least, and supply a copy of the safety report to their tenants within 28 days of the inspection. If the local authority requests a copy of the report, landlords are legally required to supply a copy to them.
Right to Rent Deadline Extension
At the start of lockdown, the government relaxed the Right to Rent rules. Since being brought into force, the deadline has been extended several times, and has now been extended until 5th April 2022. Since the beginning of April 2020, the government has allowed Right to Rent checks to be carried out via a review of scanned copies or photos of documents, sent by email or phone. The authenticity of the documents can be checked on a video call with the prospective tenant.
However, landlords need to mark these document copies with the phrase “an adjusted check has been undertaken on [insert date] due to COVID-19” to highlight that the check was amended for safety reasons. It’s not necessary for landlords to carry out retrospective checks for any tenants who had a COVID-19-adjusted check between 30th March 2020 and 5th April 2022.
Regulation of Property Agents
The Regulation of Property Agents’ group made recommendations back in 2019 for an updated regulatory framework for property agents. This is set to include an independent property-agent regulator, mandatory and legally enforceable Code of Practice, and mandatory qualifications for property agents. While there’s no date in place yet for this to come into effect, pressure is building for updates to be made and any changes are likely to have a big impact on landlords who work with property agents, so prospective and existing landlords need to stay on top of the updates for this implementation.
Making Tax Digital Scheme
The government’s Making Tax Digital (MTD) scheme has been extended to taxpayers with business income over £10,000, which includes landlords and sole traders. All VAT businesses will need to follow this ruling from April 2022 while from April 2024, the regulations will demand that many individuals using Self Assessment will be required to change to this method for income tax (including all income tax accounting and reporting as well). If landlords also identify as sole traders, the income from the sole trader businesses they own, along with any income from property ownership, will be combined for the purposes of determining whether they are mandated for MTD Tax.
Essentially, whether you’re an existing landlord managing properties or you’re looking to invest in a buy to let in the near future, staying on top of the legal aspect of rental properties is essential. While some of these changes are yet to come into effect, there have been a number of updates over the course of the past year as a result of COVID-19 that landlords need to be aware of to stay compliant with the latest legislation.