As the year is coming to a close, it’s time to look back at what has happened in the world of letting industry. 2018 was a busy year for landlords in terms of keeping up with legislation and its impact on the industry. Here’s a look at some of the legal issues landlords faced in 2018.
Changed Tax Deductions
The 2017-18 tax year was the first year for many of the most recent tax deduction changes. For this tax year, landlords can claim 75% of the finance cost at the higher rate, and the remaining 25% being deducted with basic rate. For the 2018-19 tax year, this will fall to 50%. It will fall further in the following years and is something that’s having a noticeable impact on the buy-to-let industry.
Higher Energy Efficiency Standards
The year also introduced a requirement for privately rented properties to have a minimum energy performance rating of E on an Energy Performance Certificate (EPC). Landlords have to ensure their properties meet the standards by making improvements and ensuring they can prove they meet the standards.
Disclosure of Property Portfolios
A new change that has affected many landlords in 2018 is the requirement to declare the financial status of properties if you’re applying for further property finance. This rule applies to landlords with more than four properties in their portfolio and who are seeking for further funding.
Rogue Landlord Database is Up and Running
Landlords in England subject to banning orders will now be reported to a new rogue landlord database. This is typically only accessed by local authorities but in London, the general public can access the Rogue Landlord Agent Checker.
HMO Licence Needed by More Properties
The start of October brought changes in the requirements for the Houses in Multiple Occupation (HMO) licence, meaning more properties now fall under it. The law now states that any property with five or more people from two or more households will fall under the HMO licencing. If you have to register as an HMO, you will also have to meet other additional requirements.
The Introduction of Local Licencing Schemes
Local authorities have also started introducing licencing schemes to private landlords. Over 70 local councils across England have done so this year and the need for registering with a licencing scheme might even become mandatory, as a new Bill is currently being considered.
Landlords Turned to Incorporating
Many of the above issues and changes had changed the face of private rentals in England. The first half of 2018 witnessed a 4% increase in the number of limited companies running rentals. According to data from Hamptons International, 18% of private rentals in the country were owned by limited companies rather than individuals.
A Busy Year with More to Come
2018 has been full of legislative changes that landlords would have had to get on top of. The changes to buy-to-let laws are going to continue to have an impact on the appetite to buy property for letting. Furthermore, there are legislative changes on the horizon and these could well make 2019 another busy year for landlords.
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