The property market never sleeps. On top of being a thriving investment (particularly if, as a landlord, you opt to buy-to-let), there are always changes to stay abreast of – otherwise you risk not meeting your legal requirements, or fully capitalising on the venture.
Join us as we detail the things you need to know in 2019.
- The ban on letting fees
Forbidding landlords and letting agents from charging specific fees to tenants has been talked about for quite some time now. In January 2019, the House of Lords announced that a ban on these fees will be rolled out on 1st June of the same year. It is expected to go ahead as planned. As time is ticking on, you’ll need to guarantee you don’t unintentionally demand payment for anything you shouldn’t be.
The likes of administration fees for drawing up contracts, referencing, credit checks and any renewal or inventory costs can no longer be passed on to the tenant. The only things that they can be charged for are requesting a change in their lease, terminating it early or something they are at fault for (such as lost keys).
Also under the Tenant Fees Act is the refundable deposit – you can still receive this from tenants, but the amount will be capped at five weeks’ rent.
- New laws around multiple occupation lettings
There are specific legal requirements to be aware of if you’re letting to multiple people. The house in multiple occupation (HMO) licensing rules reclassifies HMOs as any property with shared facilities which is leased to at least five people. The classification requires an HMO licence, and if you don’t have one, you could be fined – this could also happen if you don’t have any mandatory additional or selective licensing. Whether either of these is necessary will depend on the stance your local authorities or council take.
The HMO licensing rules came into effect in October 2018, as did the minimum room size requirements around sleeping accommodation. A bedroom will legally need to be at least 4.64 square metres to sleep one person under 10, or 6.51 square metres if they are over this age. For two people that are both over 10, the room should be no less than 10.22 square metres.
If a bedroom in your HMO doesn’t meet these conditions, you’ll have 18 months to rectify the situation. And if the problem still exists after this time has passed, you’ll be fined.
- Changes to mortgage interest rate relief
Owning a buy-to-let property requires you to pay tax on rental income, as well as submit a Self Assessment tax return. Stamp duty will likely be due, but property owners have always benefitted from claiming relief on mortgage expenses. This tax advantage has been phased out in recent years, with 2019/20 seeing the amount you claim reduce from 50% to 25%. However, you’ll receive a 20% tax credit on 75% of your mortgage-related finance costs. By April 2020, the tax credit can be used for 100% of these, but you won’t be able to claim relief at all.
Having to keep on top of tax requirements is something you might not have initially considered as a buy-to-let landlord. But it can be outsourced, in addition to other aspects like tenant finding and property management.
Kingsley Hamilton Estates can assist. Our broad range of services ensure buy-to-let landlords meet their various responsibilities, and have a much easier experience.
To find out more, give our team a call on 020 7078 0214 or email firstname.lastname@example.org.