What are the new rules for landlords?16-03-2023 | Legal Issues
It looks to be another ever-changing year for landlords. With rental reforms being actioned, you’ll want to know what are the new rules for landlords.
As well as understanding the basics of what is required from you as a landlord when you set up your property for renting out, you’ll need to know the new rules. These new rules are currently running in Wales and will soon (if not already) sweep through England too.
What rules should you already know as a landlord?
As a landlord, it’s important to stay up-to-date with the latest rules and regulations that affect your rental properties. Here are some of the new rules for landlords that you should know about in 2023:
Tenant Fees Act
The Tenant Fees Act came into effect on 1st June 2019 and prohibits landlords from charging certain fees to tenants. This includes fees for referencing, credit checks, and inventory checks. Landlords are also restricted from taking more than five weeks’ rent as a security deposit unless the annual rent exceeds £50,000.
Electrical Safety Standards
From 1st July 2020, landlords in England are required to have the electrical installations in their rental properties inspected and tested by a qualified electrician every five years. The inspection report must be provided to tenants within 28 days of the inspection and a copy must be kept by the landlord.
Gas Safety Regulations
Landlords in England are required to have a Gas Safe registered engineer inspect their rental properties every 12 months to ensure that gas appliances, fittings and flues are safe to use. A copy of the Gas Safety Certificate must be provided to tenants within 28 days of the inspection and a copy must be kept by the landlord.
Right to Rent
Landlords in England are required to check the immigration status of their tenants to ensure that they have the right to rent a property in the UK. This applies to all tenants over the age of 18, regardless of whether they are named on the tenancy agreement. Failure to comply with these regulations can result in fines and even imprisonment.
If you are renting out a property that is occupied by three or more tenants who are not members of the same household, you may need to obtain a House in Multiple Occupation (HMO) licence. This requirement applies to properties that have three or more storeys and are occupied by five or more tenants.
Landlords are required to provide an Energy Performance Certificate (EPC) for their rental properties, which shows the energy efficiency rating of the property. From 1st April 2020, rental properties in England and Wales must have an EPC rating of at least E. Failure to comply with these regulations can result in fines of up to £4,000.
Smoke and Carbon Monoxide Alarms
Landlords in England are required to install smoke alarms on each floor of their rental properties and carbon monoxide alarms in any rooms that contain a solid fuel-burning appliance, such as a coal fire or wood-burning stove. These alarms must be tested and checked at the start of each tenancy.
What are the new rules landlords need to know?
So if you’re feeling pretty confident with all the existing rules on the landlord checklist, make sure you’re up to date with all the new rules and adjustments which are listed below.
Your local authorities are having more of a say over landlord conduct and tenant agreements. In particular landlord licensing.
More local authorities are broadening their landlord licensing rules to include standard, single-tenancy buy-to-lets.
Traditionally, additional and selective licensing schemes have only applied to Houses in Multiple Occupation (HMOs).
However, you might find your local council requiring you to apply for a license in the near future.
Minimum Energy Efficiency and EPC changes
Make sure you get on board with the government’s push toward net zero by 2050. This movement includes changes to rules on the Minimum Energy Efficiency Standard (MEES) for privately rented homes in England and Wales.
Currently, the MEES is an Energy Performance Certificate (EPC) rating of ‘E’. However, expect to see this change to a higher rating.
At present, properties with an ‘F’ or ‘G’ rating can’t legally be let.
Going forward, from 2025, you’ll need to ensure your property has an EPC rating of ‘C’ to comply with MEES. New tenancies will be impacted by this new rule right away. The rules apply to all tenancies from 2028.
The Renters Reform Bill
We’ve previously run through the changes you might expect to see as a consequence of the new rental reform in one of our advice pieces. In case you missed it, we’ve listed the top changes you should take note of.
The end of section 21 evictions
Landlords won’t be able to end a tenancy for no reason. These types of evictions are currently called section 21 evictions. These types of evictions would be banned.
How can you end a tenancy instead?
You can still regain possession of your property. Landlords need to apply for possession of a property through section 8.
You’ll need to prove why the tenancy can not continue with sufficient communication. Within the correspondence, you’ll have to prove reasonable time scales in place that give the tenant the chance to correct any wrongdoing.
The Bill also proposes to support landlords more. It sets out to offer more support for grounds for repossession over properties. This should make it easier for landlords who wish to sell or move into their rental properties. The bill looks to help landlords who are dealing with antisocial tenants or tenants in arrears.
All tenancies will be periodic
The Bill proposes to end fixed-term tenancies – with all tenancies instead becoming periodic from day one.
Tenant notice periods of longer than two months would also be banned.
No blanket tenant bans
As a landlord, you won’t be able to blanket ban tenants who claim benefits, or those wishing to rent with children.
A new landlord ombudsman and property portal
There’ll be a creation of a mandatory Private Renters Ombudsman.
As it stands, letting agents are required to belong to one of two ombudsman schemes but landlord membership is voluntary.
The Bill proposes a single ombudsman for all landlords, whether they use an agent or self-manage, and membership would be mandatory.
A new property portal would also be created, aimed at giving tenants more detailed information about a property before they commit to a tenancy.
Making Tax Digital
Although Making Tax Digital for landlords was due to come into force from April 2023, this has now been put back until 2026.
Landlords with an annual rental income of more than £50,000 will need to use Making Tax Digital from that point.
This involves filing digital tax returns every quarter instead of annually.
Capital gains tax
Capital gains tax may be due if you decide to sell a rental property for more than you paid for it.
The current tax-free allowance for capital gains tax is £12,300 per person – but this is changing from April 2023.
Instead, the new allowance will be £6,000, before reducing to £3,000 from April 2024.
This could see some landlords paying more in capital gains tax if they decide to sell into the new tax year.
Even if you’re an experienced landlord, these updates may mean that you have to make adjustments. If you happen to have any more questions, you can always visit our advice page. Make sure you have your insurance policy set up from the get-go. Call us on 01788 818 600 to discuss your landlord insurance needs. Let us deal with your landlord contents insurance and buildings insurance so you can carry on with what matters.
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