The residential lettings market in the UK is a myriad of constantly changing rules and regulations. Staying on top of these changes can be a time-consuming affair for landlords. Thankfully, with the help of Sheards Chartered Accountants, we have put together a list of all the key changes you should be aware of so far in 2021. What is more, we have highlighted how you can use both your accountant and Landlord Vision to best adapt to these changes.
Stamp Duty Changes Due in 2021
- Stamp duty surcharge on non-UK residents – 1st April 2021
- End of the stamp duty holiday – 30th June 2021
- Reduction of the stamp duty threshold in England & Wales – 1st July 2021
- Stamp duty threshold returns to pre-covid level – 30th September 2021
As of the 1st of April 2021, an additional stamp duty surcharge was introduced to overseas buyers. Any non-UK residents purchasing properties now face an additional two percent stamp duty charge. Whilst those buyers who proceed to become a UK resident within 12 months of the purchase may be eligible for a refund, this charge will still affect a significant number of overseas landlords. The change may also affect the prices of properties located in areas popular with foreign buy-to-let investors, such as central London and Manchester.
The stamp duty holiday will end on the 30th of June 2021. The government introduced the stamp duty holiday in 2020 to support economic activity during the height of the pandemic. The deadline for the scheme was originally the 31st of March 2021, however it was extended to the 30th of June in the Spring budget.
Landlords in England and Northern Ireland need to complete on their purchases before the 30th of June to avoid paying stamp duty on properties priced up to £500,000. However, landlords purchasing properties for less than £250,000 will have until the 30th of September to complete before their properties become eligible again for stamp duty charges. After this date, stamp duty will return to its pre-covid levels.
Landlords in Scotland and Wales face a slightly different timeline. Scottish buyers typically pay the Land and Buildings Transaction Tax (LBTT) – a somewhat less catchy term for stamp duty – on purchases above £145,000. During summer 2020, the threshold was increased to £250,000. However, it returned to its pre-covid levels in March 2021. Welsh landlords liable for the Land Transaction Tax (LTT) will see a reduction in the threshold on the 1st of July 2021. These changes are best demonstrated in the tables below:
Kevin Winterburn, director at Sheards Accountants advises: “We would recommend that all property landlords be very mindful of all upcoming dates related to stamp duty and work closely with their accountant and legal team to plan around these deadlines. We are seeing the legal profession struggling under the volume of property transactions in 2021, so this will be a big challenge for all property investors.”
Client Money Protection Comes into Force
On the 1st of April 2021, the government introduced legislation requiring agents in England holding money on behalf of landlords or tenants to be registered as part of a client money protection (CMP) scheme. Although it may sound similar, this is different to the tenancy deposit scheme (TDS). The aim is to safeguard money held by an agent on their clients’ behalf, protecting landlords and tenants from the risk of the agent misappropriating funds. Registered schemes include:
- Client Money Protect
- Money Shield
- Safeagent (previously NALS)
- UKALA Client Money Protection
As part of the scheme, agents are required to hold their client’s money in an account with a bank or building society which is authorised by the Financial Conduct Authority (FCA). Agents are also required to display a certificate confirming the scheme’s membership in their offices and on their websites. They should also be able to provide access to the certificate free of charge should anyone request it.
Kevin Winterburn elaborates: “This new legislation provides added protection for landlords, especially during these uncertain times when tenants may be having issues with their income. If you have already missed this deadline, you need to deal with this as a matter of urgency as you may be fined up to £5,000 if you do not display a certificate of membership or provide it when asked.”
Landlords managing properties on behalf of others should seek advice to confirm whether or not they fall under this scheme, in case of potential liability.
Deadline for Electrical Compliance
As of the 1st of April 2021, landlords should have an electrical safety compliance certificate for every property they own. The certificate proves that fixed electrical installations have been safety tested by a qualified electrician, ensuring the safety of tenants. Anyone found to be without a certificate after the 1st of April will be breaking the law.
From this date, all existing specified private tenancies will need to comply with the Electrical Safety Standards in the Private Rented Sector. Landlords must ensure all electrical wiring and fixed electrical installations are inspected, tested and signed off by a qualified electrician every five years, including wiring, sockets, fuse box and other fixed electrical parts.
Kevin commented: “Property landlords must ensure the safety of their tenants, and have the electrical systems tested a minimum of every 5 years. Regulations came into force on the 1st of June 2020 for compliance by the 1st of April 2021, so this is definitely something landlords should have in place now.
“A copy of the report must be provided to the tenant within 28 days of the inspection and test, and to any new tenants. Any remedial work must also be completed within 28 days or less as specified in the report. Financial penalties on landlords in breach of duties are up to £30,000 so we can’t stress enough the importance of complying with the new regulations.”
A detailed breakdown of the requirements and costs associated with this legislation is covered in another of our Landlord Vision blogs. Landlords fortunate enough to use the Landlord Vision software can store a copy of safety certificates online and set expiry dates and reminders. Just as importantly, copies of Gas Safety Certificates (CP12) and Electrical Installation Condition Reports (EICR) can be automatically printed as part of the automatically generated welcome pack.
Changes to Eviction Legislation
Due to COVID-19 and government restrictions, landlords with Assured Shorthold Tenancies must give tenants six months’ notice when serving a Section 21 notice for possession. This eviction ban has since been extended by the government from 31 March until 31 May 2021. Even after this date, landlords in England will still be required to provide four months’ notice up until the 1st of August.
The regulations state that it’s unlawful to attend a residential property to either carry out an eviction or give notice of removal unless specific exceptional circumstances apply. Exceptional circumstances include:
- anti-social behaviour (immediate to 4 weeks’ notice)
- domestic abuse in the social sector (2 to 4 weeks’ notice)
- false statement (2 to 4 weeks’ notice)
- over 4 months’ accumulated rent arrears (4 weeks’ notice)
- breach of immigration rules ‘Right to Rent’ (2 weeks’ notice)
- death of a tenant (2 months’ notice)
Helen Hollingsworth, Partner at property specialists Bramleys said: “The changes to the legislation mean it is now vitally important to choose the correct tenants, ensuring that references are collated at the start. If you end up in the unfortunate position of having to go through the eviction process, you will also need to have the correct paperwork in place. The best way to do this is to employ the services of a competent and regulated lettings company, which can deal with these proceedings on your behalf”.
Scottish landlords will still be unable to forcefully evict tenants in areas under level 3 and level 4 restrictions until the 30th of September. Landlords will continue to have to provide 6-months’ notice for evictions, except in cases of serious anti-social or criminal behaviour where notice is 28 days.
In Wales, the 6-month notice period is set to remain in place at least until the end of June. Legislation also prevents ‘attendance at a property for the purpose of executing a writ or warrant of possession’ – bailiff enforced repossessions – until the same date.
Landlords in Northern Ireland are required to give 12 weeks’ notice when evicting a tenant. However, there is no ban on eviction enforcement.
Tenant Eviction Timeline
The timeline below shows you how and when legislation will be changing throughout the UK.
Changes to Right To Rent
Currently in the UK, if you are a landlord, you must check all tenants’ immigration status to find out whether they can legally rent your property. This ruling applies to all tenants, irrespective of ethnicity or nationality.
With Brexit bringing in a points-based system from 1 January 2021, new regulations will allow non-UK nationals in England to evidence their status for Right to Rent through a digital Home Office check. The new system means that digital checks can be conducted permanently via video call, with no need for letting agents to review documents. As an interim measure, landlords have been told to continue using passports and national ID cards until 30 June when the new regulations come into play.
The tenancy management module on Landlord Vision allows landlords to store and access tenancy related documentation, including confirmation of right to rent. This feature can also be used to note down time related descriptions of the documents such as those necessary with right-to-rent checks conducted digitally during covid. Any digitally scanned documents received during the pandemic should be kept as proof and be marked with the phrase “an adjusted check has been undertaken on [insert date] due to COVID-19”.
Advice From Sheards Accountants
Kevin Winterburn, director at Sheards Accountants commented: “There have been many changes to legislation and guidelines over the past 12 months, especially with new grants and support measures brought in by the government. So it’s more important than ever for landlords to keep an eye on these upcoming dates, as failure to comply or obtain the relevant documentation could result in a hefty fine.
“We recommend all property landlords speak to their accountants to prepare for these dates and make sure they have everything ready well ahead of time. Some of the new legislation involves new paperwork, so be sure you’re fully aware of your responsibilities and if you’re unsure, check and check again!”
Disclaimer: This ‘Landlord Vision’ blog post is produced for general guidance only, and professional advice should be sought before any decision is made. Nothing in this post should be construed as the giving of advice. Individual circumstances can vary and therefore no responsibility can be accepted by the contributors or the publisher, Landlord Vision Ltd, for any action taken, or any decision made to refrain from action, by any readers of this post. All rights reserved. No part of this post may be reproduced or transmitted in any form or by any means. To the fullest extent permitted by law, the contributors and Landlord Vision do not accept liability for any direct, indirect, special, consequential or other losses or damages of whatsoever kind arising from using this post.
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