Upcoming legal updates and legislation changes for 2020

Upcoming legal updates and legislation changes for 2020

As we enter another year and a new decade, the UK government and local authorities have set out some new changes to laws and legislation surrounding the private rental sector which will be coming into power over the next coming months.

Em Morley, spokesperson for Just Landlords, comments: "We say these are our expectations, rather than predictions, as this is the least we're expecting from the Government and local authorities. "Progress is vital for the sector, as it's about more than the businesses of landlords and letting agents. It's also about the supply of safe, comfortable and affordable housing needed in the UK."

1) Section 21 (Form 6A)

You may have read about that the Government intends to abolish the section 21 (Form 6A) notice in England.

The consultation seeks views on implementing the government's decision to remove Section 21 of the Housing Act 1988 and improving the Section 8 eviction grounds.

• The government will remove 'no fault' evictions from the Section 21 of the Housing Act 1988
• The government will reform the Grounds of Possession within the Section 8 notice
• The Government will give Landlords greater rights to regain possession of their property
• The government will improve the court process for landlords to make it quicker and easier to obtain possession of their properties.

There were over 20,000 responses to the consultation in relation to the abolishment of the Section 21.

2) Electrical Safety Testing - April 2020

An analysis by ARLA says this means agents and Landlords must ensure every fixed electrical installation is inspected and tested at least every five years by a qualified person. The regulations also state that a Landlord is required to obtain a report of the results of the inspection and test, supply it to each tenant within 28 days and retain a copy until the next inspection is due. ARLA says that upon the request, the report must be provided to the local housing authority within seven days, and a private landlord must supply a copy of the last report to any new tenant before occupation or any prospective tenant within 28 days request. Breaches of the regulations can result in the local housing authority imposing a financial penalty of up to £30,000.

3) Homes (Fitness for Human Habitation) Act 2018

This report is to be used pre-tenancy to ensure the condition of the property is 'fit for purpose'. Current legislation only applies to new tenancies from March 2019 however come March 2020, this will apply to all tenancies, regardless of the start date.

4) EPC Law

As of 1st April, Landlords will need to ensure the properties of all private tenancy lets have an energy performance certificate rating of E or higher. Properties with ratings less than an E will not be able to be rented until suggested works have been carried out to increase the performance rating. Nor will Landlords/Agents be able to renew to any existing tenancies.

5) Client Money Protection (England Only)

Client money protection will be required for ALL letting agents - this means that all letting agents or management companies in the private rented sector must be part of an approved scheme before the April deadline.

6) Capital Gains Tax Relief

Capital gains tax is payable when you sell a property that is not your main residence. In the 2020/2021 tax year, starting 6 April 2020, capital gains tax is likely to increase significantly for Landlords. The tax amount payable is calculated by deducting any private residence relief and lettings relief from your capital gained from the sale of a property. These tax breaks are going to be reduced, leaving Landlords with a hefty tax bill should they sell their buy-to-let properties. Lettings relief is also going to be scrapped for Landlords unless they share a home with their tenants. This reduction in tax relief is also going to affect those selling land, business premises and inherited properties. The new payment term for this tax will make things even harder for Landlords. Sellers will be asked to pay the full amount of the tax owed on a sale within 30 days rather than by the end of the tax year - a significant burden on cashflow.

7) Tenant Fee Act 2019

The transitionary period ends 31st May 2020 - this means the tenant fee ban will apply to all tenancies. Periodic tenancies don't need their deposit amount adjusted, deposits for new fixed-term tenancies should be capped at 5 weeks whereby the rent is less than £50,000 per annum and 6 weeks for rents add to £50,000 plus per annum.

If you want any further advice on your portfolio or wish to discuss any of the above topics and how it may affect you in more detail, then please give me a call.