Landlords should be aware of regulations which have come in effect in April and October 2018 in addition to announcements in the Autumn Budget announced on 29 October 2018.

April 2018

New energy regulations for landlords came into force in April, meaning any new or renewed tenancy entered into after 1 April 2018 must carry at least an E rating on the Energy Performance Certificate. This regulation will roll out across all tenancies in the next two years, with fines of up to £4,000 for non-compliance.

1 October 2018

Houses in Multiple Occupancy (HMO)

From 1 October 2018 HMO licencing has significantly changed. Previously a licence was only required if the property had at least three storeys and was occupied by five or more individuals, not all related to each other. Some local authorities could also previously require licences for HMO properties in specific areas, even if they fell outside those requirements.

From 1 October, the minimum property size is removed, therefore any HMO properties with five or more occupants requires a licence.

Additionally, the minimum size for a room used as a bedroom has changed, with any room smaller than 4.64㎡ unable to be used as a bedroom. If any room within the house is smaller than 4.64㎡, irrespective of use, the landlord must inform the local housing authority.

●      4.64㎡ for any room in which one child under the age of 10 sleeps

●      6.51㎡ for any room in which one person over the age of 10 sleeps

●      10.22㎡ for any room in which two people over the age of 10 sleep

Eviction via s.21 notice

A Section 21 notice can be issued by a landlord for possession of rental property without reason for the claiming back of possession but must be properly served giving at least two months notice. Tenancies agreed on after 1 October 2015 were subject to the rules of the Deregulation Act 2015 and from 1 October 2018 this is being extended to all tenancies.

From 1 October 2018, Section 21 notices cannot be issued during the first four months of a tenancy (though this doesn’t apply if a tenancy has been renewed) and the notice is only valid for six months from the date on which it was issued. If this is not followed up with possession proceedings within that six month period, a further Section 21 notice will need to be served.

So called ‘revenge evictions’ are now being addressed by these changes: if a tenant makes a legitimate complaint about the property, such as repairs that are needed, and they aren’t dealt with then the tenant can take the issue to the local housing authority. The council can then issue an improvement notice or emergency work notice ordering the improvements to be carried out. If that happens, the work will need to be carried out before issuing a Section 21 notice for the notice to be valid.

Changes to mortgage interest relief (ongoing)

Prior to April 2017 landlords essentially paid tax on their profits, not turnover. Concerned that buy-to-let landlords were gaining tax benefits homeowners were not, the government has been making changes.

From April 2017, landlords could claim relief on 75% of their mortgage interest. This reduced to 50% in April 2018 and will continue to fall until it reaches 0% in 2020 when it will be replaced by a tax credit equivalent to 20% of mortgage interest.

Changes announced in the Autumn Budget which will affect landlords

●      The income tax personal allowance will rise to £12,500, and the higher rate threshold to £50,000, by April 2019. From this point, they will both be indexed to inflation

●      From April 2020, letting relief on Capital Gains Tax will be limited to properties in which occupancy is shared between owner and tenant