Government must exercise common sense with new rules and regulations for rental sector says Property Consultancy

The picture of new legislation for the private rented sector is largely positive for landlords and tenants, but there is a wave of legislation expected this year that could overwhelm landlords as they struggle to understand and implement new rules.

Gavin Perrett, Director, Hawkhurst invest 

Among the legislation expected as White Papers or implementation this year are:

Capital Gains Tax

Announced in last year’s budget and coming into effect in October 2021, the reporting time for Capital Gains Tax has been extended from 30 to 60 days.

Making Tax Digital for VAT

 All VAT-registered businesses trading below the VAT threshold of £85,000 will be required to keep tax records and submit their VAT returns digitally from April 2022.

Renters’ Reform Bill: End of Section 21 & Introduction of Lifetime Deposits

The White Paper for this was expected last year, but will likely appear in the Spring. The bill is expected to abolish Section 21 of the Housing Act 1988 which allows tenants to be evicted in a rolling periodic tenancy, or at the end of a fixed-term tenancy without a reason. The changes proposed will strengthen the grounds for possession in Section 8, and improve the current court process. Lifetime Deposits also form part of the bill, which would mean tenants have a moveable “deposit passport” that would transfer from one landlord to the next without being returned to the tenant.

Regulation of Property Agents (RoPA)

This follows on from the regulatory framework for property agents published in 2019 and could include a Code of Practice and minimum entry requirements for property agents. RoPA has been delayed thanks to Coronavirus, but the white paper is expected at the end of this year or early 2023.

End of Temporary Right to Rent Checks

Introduced in March 2020 to protect buy to let landlords and tenants from Covid, this is expected to end on 5th April 2022. The service is due to move to an online service, but may be delayed.

Smoke and Carbon Monoxide Rules

New rules will require all social landlords to install and maintain a smoke alarm on every floor of a property, and a carbon monoxide alarm in any room with a fixed combustion device like a gas fire or boiler.  

Pet-Friendly Tenancy Agreements

As part of the new model tenancy agreement introduced by the Government in 2021, landlords were prevented from issuing blanket bans on pets. The default position now is that pets are allowed, and a landlord must provide a good reason for not allowing pets within 28 days of a request from a tenant.  

Regulation of Holiday Lets

A consultation is expected from the Government later this year looking at issues such as the impact of short-term lets on local communities, a mandatory register for holiday lets, and increased council tax.

Read our latest blog New Landlord Rules for the Private Buy to Let Sector

Energy Efficiency Changes

Incoming changes to energy efficiency ratings for rented properties are likely to be the most costly of the new regulations incoming over the next few years.

The highest cost is likely to be changes to energy efficiency ratings to rental properties, with landlords renting older properties likely to be the hardest hit. The Government must put in place measures to help landlords finance and deliver improvements so that the sector doesn't come under a disastrous financial burden over the next few years.

Gavin Perrett Director Hawkhurst Invest

The current standard is “E”, with a spending cap of £3500 for renovations. The cap is expected to increase to £10,000 per property given that landlords are expected to have to undertake larger renovations to meet the standard.This could be costly for landlords, especially for those with older properties with lower energy ratings, but there could be funding available from local authorities and some charities in due course. The formal announcement for this is expected later in 2022.