2020: A year of change, but not too much
Any New Year comes with change. However, with some political stability in the air, let’s hope that the government will not target landlords further – in terms of additional regulatory reforms or tax changes.
Although, it’s prudent to point out that we are operating in a sector that continues to come under increased scrutiny. Change is potentially never too far away, which means that anyone operating in the BTL sector has to maintain a certain degree of adaptability.
Whilst there is nothing to suggest that the BTL market will come under further government fire in 2020, landlords should be aware of planned changes or legislation that could happen sooner rather than later. So, let’s highlight a selection of these.
New tax relief rules
In 2017-18 claimable tax relief was reduced to 75 percent, and this reduction continued through 2019-20. In 2020-21, landlords won’t be able to claim any tax relief on mortgage interest payments at all. Instead, from April 2020, landlords will receive a 20% tax credit on their interest payments.
Minimum energy efficiency standards (MEES)
The minimum energy efficiency standards (MEES) first came into effect in April 2018, which stated that new tenancy agreements and renewals (other than some HMOs such as bedsits) must have an energy performance certificate (EPC) rating of E or above.
However, by April 1, 2020 (or April 1, 2023 for commercial property) these regulations will be extended to also cover existing tenancies. This means that, under the new legislation, properties with an energy performance certificate (EPC) rating of F or G will be classed as unrentable from that date on.
Electrical installation checks
The implementation date for this has not yet been clarified but there is a good chance that legislation could be introduced at some point in 2020.
As always, landlords need to fully understand all existing and impending regulatory, policy and legislative demands. And if you are in any doubt then always seek professional advice.