3- Article 21 evictions
With the government consulting on the repeal of section 21 of the Housing Act, towards the end of 2019, “no-fault” evictions have been a major topic of debate. Landlords can end a “continuous” tenancy with two months’ notice under section 21 without giving any explanation. Repealing section 21 according to government estimates will provide tenants with greater security. However, landlords fear that these changes will force them to sue annoying tenants to repossess their homes. According to the National Landlords Association, these proposals are “poorly thought out.” Section 21 should remain unless the rules for evicting problematic tenants are revised.
4- Local license
The licensing rules adopted in October 2018 are likely familiar to homeowners operating multiple occupancy homes (HMOs), but confusion persists around other local licensing regimes. In England, programs referred to as “additional” or “selective” are implemented by more than 60 councils. Additional stipulations to the mandatory HMO rules are added by the former and this may apply to all owners of the zone for the latter. Due to the inability of some councils to inform owners of these requirements, enormous processing times have been recorded, which has drawn strong criticism of local licensing systems. Despite receiving 17,523 homeowner applications, Nottingham City Council had only successfully issued 472 licenses according to data collected in November 2019. The Nottingham project has been described as “a farce” and “a purely lucrative bureaucratic exercise. “by the Residential Landlords Association.
5- Changes to the private residence relief
Small homeowners can be affected by an overhaul of the property relief rules with more costly capital gains tax bills when they sell their property. If a property that is or has been your primary residence is rented out, you can claim up to £ 40,000 in capital gains tax relief, even if you haven’t lived there for a long time. This loophole will be closed from April. To claim the repair at the time of sale, landlords must live in the property shared with the tenant.
6- Energy efficiency rules
More homeowners will have to meet the new Minimum Energy Efficiency Standard (MEES) starting in April 2020. These regulations require that rented homes have a minimum Energy Performance Certificate (EPC) rating of E. Energy efficiency up to a cap of £ 3,500 per property should be taken by owners whose properties do not comply with this regulation. These rules were first introduced in 2018 and at that time they only covered new rentals and renewals, but from April they will apply to all existing rentals.
7- Electrical controls
Homeowners should be required to perform electrical safety checks on their homes every five years, the government announced in July 2018. However, no start date for the introduction of these checks has yet been set. This could be imposed in 2020 but certainly, at least six months’ notice will be sent to owners and management agents before its implementation. A two-year transitional period will apply after its implementation, with new leases first being settled, followed by existing leases one year later.
8- Customer money protection systems
All rental agents in England under the new rules introduced in April 2019 must join a customer money protection program. Insurance to landlords and tenants is provided by this against agent malpractice. A program under the Rent Smart Wales Code of Practice and Letting Agent must also be adhered to by agents in Wales and Scotland.
9- Rogue owner database
The rogue owner database was not really used because according to the Guardian only four owners were added to it in its first year. They obtained this information after having had access to the information requested by them. This database will allow the government to verify if its owner or managing agent has been included hence their announcement in July of their intention to open this database. A consultation on the reform of the database was then launched and this consultation closed in October and is currently being analyzed.
10- Stamp duty
The introduction of a 3% purchase stamp duty supplement for real estate investors by the government has made stamp duty the top of the list of homeowner complaints since 2016. A rumour has been spreading recently that a new stamp duty surcharge may be introduced for foreign buyers investing in properties in Britain. The stamp duty in any case should always be watched by the owners because it is an area of political interest.
11- Right to rent
Since its launch in 2016, the right to rent, which is a government initiative, has sparked much debate but this year that can probably change. The purpose of this is to force landlords to check whether their tenants have the right to live in the UK under penalty of criminal sanctions. After an immigrant protection group raised a legal challenge, the policy was ruled incompatible with human rights law by the High Court in March 2019. Without further assessment, the right to rent cannot be deployed in Scotland, Wales or Northern Ireland.
12- Lease reforms
Unfair lease practices could see an end in 2020 thanks to attempts by the government. Unfair practices are for example the spiral of land rent clauses and high “ permission fees ”. The ban on the sale of new homes as a lease, the possibility of caps on service charges or also permission fees and ground rents will likely imply in this reform. An investigation is currently being launched by the Competition and Markets Authority to find out if existing leaseholders have mis-sold their properties. The uncertainty in this area means if homeowners plan to expand their portfolio in 2020 they should pay close attention to the tenure of properties.
13- Property prices
UK property market prices only rose 1.3% YoY last year according to the most recent cadastral data, so the year has been quite slow for the sector. Compared to the old days, homeowners can no longer count on rising house prices as much. For this reason, investors are turning to cheaper markets where rental yields are better, such as in the north of the country. It is important to conduct thorough research before investing if you plan to expand your portfolio in 2020.
14- Mortgage rates
In 2019, rental mortgage rates fell steadily to an average of 3% in December. The lender price war is a great opportunity to consider refinancing your portfolio and securing a favourable rate as it is likely to continue in early 2020. Instead of focusing on the initial rate and incentives like cashback, our advice is to always increase the total price of the transaction. For example, compared to a large upfront fee or a higher interest rate, a £ 1,000 cashback will quickly lose its appeal, although it may look great on paper.
15- The economy, Brexit and government intervention
The base rate of the Bank of England could change having an effect on mortgage rates depending on the outcome of Brexit, so homeowners will have to prepare for more economic peaks and troughs in 2020. It’s more important than ever for homeowners to keep tabs on the latest developments with a secure new government imposing its own plans on the buy-to-lease industry.