Known new legislation in 2020 for Oxford's landlords

With 10 days to go until the General Election all eyes are on which party will form the next Government, it is easy to lose sight of the new legislation what is already due to become law in 2020.  The top 4 known changes that Oxford landlords need to focus on for 2020 are:

1) Minimum energy efficiency standards (MEES)

The minimum energy efficiency standards (MEES) came into effect in April 2018, 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.

By April 1, 2020, however, the 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.

It is worth noting that there are already whispers that these standards could rise again in another couple of years, at which point ‘D’ will be the minimum EPC rating, so it’s worth getting your properties up to scratch now to prevent even more work later.

2) Electrical installation checks

Last January, the Ministry of Housing, Communities and Local Government (MHCLG) announced that mandatory five-year electrical installation checks on private rented housing in England would be introduced over a transitional period of two years. The implementation date has not yet been clarified so, it is still unconfirmed as to exactly when this will begin.  This author believes that it is likely that the legislation will be introduced  in 2020.

3) New tax relief rules

In 2015, the government made property rentals a much less viable option for many when they announced that Mortgage Interest Rate Relief was to be phased out.

From April 2020, Oxford's landlords will receive a 20% tax credit on their interest payments; not great news for those in the higher tax bracket – which could catch more landlords as they now have to declare the rental income that they previously used for interest payments.

Many landlords are now setting up limited companies when buying new rental properties in order to avoid the higher individual rates.

4) Changes to Private Residence Relief

From April 2020, changes to Private Residence Relief will result in Oxford landlords losing nine months’ worth of Capital Gains tax relief when they come to sell.

Currently landlords can claim Private Residence Relief for all the time they lived in their property before letting it to tenants, plus an extra 18 months after moving out, which will be reduced next April to the time they lived in their property plus just nine months post-moving out.

Landlords who rent out a property that was once their main home will lose the £40,000 worth of lettings relief they currently enjoy scrapped rom April onwards. Landlords who share an occupancy with their tenants will still be able to claim. And, the deadline for payment of  Capital Gains Tax  will be reduced to within 30 days of the completion of the sale.

It seems almost certain also that during 2020 Section 21 Notices that allow landlords to access an accelerated process to regain vacant possession of their properties will be abolished.  Whilst Section 8 Notices will still be available to landlords, there is widespread concern about the long-winded process to get a confirmed court date, and the fact that many Section 8 criteria allow for court discretion.

Whichever party wins the 2019 General Election, the private rental sector will continue to experience reform.  Cynics would claim that is merely a reflection of the parties trying to ingratiate themselves with the millions of tenants who rely on private rented accommodation.  However, I regard that as over-simplistic.  Some reform that seeks to professionalise the sector and improve the quality of accommodation is to be welcomed.  Where Government intervention is less welcome is in factors that seek to artificially impact the functioning of the market, and which appear to seek to punish residential landlords.  Such measures risk undermining the supply of good quality private rented homes at the very time when peak demand is being reached.

If Oxford's landlords are forced to sell their properties due to unviable financial returns, then rents will rise further as the supply of good quality rented homes reduces.