Start with These Updates for 2019
There’s no question that these are bewildering times for landlords, property investors, and anyone interested in comparing buy to let costs. So to help clear some of the muddle, we’ve compiled a list of the most pressing updates in buy to let news for 2019.
Launched in April 2018, Minimum Energy Efficiency Standards (MEES) dictate that newly rented homes – and those with renewed tenancies – must meet a minimum EPC (Energy Performance Certificate) rating of E. As of April 1 this year, those same properties are also subject to certain amendments to the energy efficiency regulations. New buy to let rules mean landlords are liable to pay up to £3500 to bring their F and G-rated properties up to the minimum rating. Those currently exempted, however, will remain so until the end of March 2020.
A tenant fees bill was approved earlier this year and is expected to become law by this summer. Although it will only apply to new tenancy agreements, the bill effectively:
Buy to let property landlords will still be permitted to charge tenants for late payments and the replacement of lost keys, however.
If you already have a buy-to-let mortgage, you probably know that – thanks to the new tax system that’s being phased in – buy to let tax relief on mortgage interest is being phased out. You’ll still be able to claim 25% of your mortgage tax relief for the 2019/2020 tax year. But by April 2020, you’ll no longer deduct your mortgage expenses from your rental income to reduce your tax liability. Instead, everyone will receive a tax credit based on 20% of their mortgage interest payments.
In March, the Housing, Communities and Local Government Committee issued a report summarising key recommendations for leasehold reform. In brief, the report:
We’ll learn more about the effect of such changes on the UK buy to let market as the government responds over the next couple of months.
Effective April 1, England’s letting agents are required to maintain membership in a government-approved Client Money Protection (CMP) scheme. CMPs are designed to compensate landlords and tenants in the event that an agent absconds with their funds, or an agency goes bust.
According to ARLA Propertymark, some £700 million of the estimated £2.7 billion held by letting agents at any one time has historically been unprotected. Buy to let first time buyers working with agents can breathe easier knowing rents, maintenance funds, and other amounts will be held in a designated account.