Right to rent checks
The Government has now extended its digital right to rent checks in England until the 5th April 2022. This means you can continue to prove Right to rent for tenants by showing their original documents over a video call or providing a scanned copy or photos.
There is a potential that the Government may eventually push these to simpler online checks and this is dependant on various trade agreements being signed.
Right to rent checks only required in England they have not yet been rolled out in Ireland, Scotland or Wales. It should be noted that where people have a VISA and they expire then further checks must be made.
Possession claims and notices
The Section 21 which is the end of tenancy notice has now reverted back to the 2 months in all cases. It had been moved to 6 months then 4 but has now reverted to the normal 2 months notice.
A section 8 notice which relates to arrears of rent has now reverted back to 2 weeks for the common grounds such as rent arrears. It is 2 months of grounds which are not of fault of the tenants such as the landlord wishes to regain possession of the property to live in or carry out development work. For antisocial behaviour in relation to immoral use of the property no notice is required. In respect of serious anti-social behaviour only 1 month.
Renters reform bill
The new rents reform bill which is due to resolve all of these issues including adding life time tenancies and many more other laws by the Government. This has for the moment be pushed back to next year. There is a high likelihood that there will be certain previsions within the new act requiring all landlords to be part of a redress scheme. It is not known whether if you let through an agent you don’t need to do so. All lettings agents have to have a redress scheme from now on.
We shall keep you updated on the provisions and what will be included in the renters reform bill.
Property tax in Wales
Wales has devolved some property taxation. They are in high number of second homes in Wales, the Welsh Government is looking into ways of tackling this by making the ownership of second homes and self-catering accommodation more expensive. This will come through the local council tax. Currently, long term empty properties and properties rented in the holiday sector can be charged at high council tax rates by local authorities. However, most of them do not take advantage of this. This may be changed to be increased to at 50 if not 100% on these properties by way of increase.
Rent repayment orders
There has been a lot of discussion recently regarding rent repayment orders where councils and courts are giving repayments to tenants on certain cases. There was a recent case where refund was given up to 12 months rent for the following circumstances;
- The property doesn’t have a licence.
- The landlord does not comply with the council.
- The occupier has been harassed or evicted without the correct court paperwork.
This has recently been changed by the law courts. It was first decided that 100% of the rent would be given back but then the courts reverted back to 50%. They are now looking between 75-80% of all rent that has been paid.
It is therefore extremely important that if you do not have a licence or not sure, you should contact us.
In a recent rent to rent case the tenants subsequently sublet the property to other people. The tenants were then served with a notice by the local authority to do certain items in the property. As in effect they were the landlords. So, it is this instance, the landlord lets to a rent to rent company – They then sublet it out to various different people. The subtenants sued the main tenant and won the case. However, they were able to claim the rent in a repayment order back from the main landlord not the people they rented from.
What is rent to rent?
Rent to rent is a very new phenomenon on the rental market. There are a lot of companies that are looking to rent properties and then sublet them out for more money. However, a lot of these companies have no form of track record. Very little by way of assets and many people don’t understand that you cannot have an assured shorthold tenancy in a company name by way of a tenant. If you are approached by any of these types of companies then please be careful.
Breathing space and the mental heath crisis
You are probably not aware but there is a new scheme called Breathing space. If a tenant feels that they are unable to cope with their debts and they need help. They can go to their local authority.
The local authority can therefore suspend any current claiming of rent from the tenant for a minimum of 60 days. In addition suspend any possession proceedings. However, it does not extend to a guarantor.
What will happen to taxes in 2022?
Landlords have been hit with a new tax prospective over the recent budget. However, 2021 was a pretty quiet year but these are the proposals for 2022.
Personal tax allowance
This is the amount you can earn without paying any tax. These change on a regular basis and are normally increased via inflation.
The big news is that the allowance and thresholds normally rise each year in line with inflation but are expected to remain static till 2026. This is an effort to replace some of the costs of the pandemic.
Capital gains tax allowance
This is the money you can earn from the rise in your property value free of tax. You have a personal allowance which has currently been temporarily frozen at £12,300 until 2026.
Are there capital gains tax changes?
There is going to be good news here as there has been an expectation that capital gains tax would increase and the CGT tax allowance would be reduced. This is following the recommendations made by the office of tax implications. However, at the start of December 2021, it was announced they were rejecting these proposals and made it clear they are likely to be implanted in the near future.
This is good news for buy to let investors. However, it is worth reviewing your future plans with an independent financial advisor and tax specialist to make sure you are going to be in the most tax efficient position you can be when you come to sell or dispose of your property or portfolio.
Plans to ensure that your property portfolio is more energy efficient
The current proposals are for a minimum “C” rating to be introduced by 2025 for new tenancies and 2028 for existing tenancies. We should know at some point in 2022 whether these are going to be implemented.
If you are therefore thinking of doing any form of refurbishment and have a void period within your property and you have a rating less than C. It may be worth considering what improvements can be made to improve this rating.
These can be seen as an investment as it can help reduce utility bills and the more money you can help tenants save on their heating and hot water the more than likely they will be able to afford their rent. If you can raise your EPC rating to an A or B you may be able to get better mortgage rates.
Where can I find the improvements that are necessary to improve my rating?
Your energy performance certificate will have a list of improvements that can be made in an order you can follow and focus on.
They also give an indication on how this can improve your energy performance of the property. It is very important that you follow the guidelines and talk to your energy assessor who carried out the report for you.
Is it time to review your mortgage finance?
Financial changes are very dependant on how the pandemic develops. There are definitely two factors this year that will take place.
An increase in mortgage rates?
In December 2021, after almost two years of historically low interest rates the bank of England raised its base rate. The current forecast are for this to steadily increase further possibility reaching a higher figure in the summer of 2022.
Base rates if they rise almost go hand in hand with mortgage rates. They normally then start to increase. You might find that your buy to let deals currently available might not be around for much longer and you should talk to your financial advisor.
Lower interest rates are most energy efficient – Properties
Energy efficiency is now going to be the main focus this year and the Bank of England has also started to subject UK banks and insurers to “climate – relate stress tests”. The proposals are that lenders may soon have to provide information on the energy efficiency of their mortgage portfolios. Some lenders may now begin to give incentives to property owners to be greener.
These “green mortgages” can provide more attractive deals for properties rated “C” or above on the energy performance certificate. This means landlords with less energy efficient properties will potentially be paying higher premiums in future.
There are already lenders offering green incentives. Including Natwest, Nationwide and Virgin money but we expect to see a lot more follow suite in 2022.
If you have any queries in relation to the above article please do not hesitate to contact. 01273 724000.