Landlord & Tenant – new rent laws for 2020

The recently-formed National Residential Landlords Association, the NRLA, announced changes to UK letting legislation earlier this year. There are five key issues that have arisen from this new government legislation that will affect the UK property rental market. They will affect issues such as the way landlords rent out their properties and the standard of maintenance that is required at the accommodation.

Homes (Fitness for Human Habitation) Act Extension

The Association says that the original Act is being extended from 20 March 2020 to include existing statutory periodic tenancies. This Act states that landlords or agents acting on their behalf can be forced to carry out improvement works to properties, or risk being sued.

Minimum Energy Efficiency Standards

As of 1 April, all existing tenancies will now fall in line with the existing law first introduced in 2018. This means that landlords or agents cannot let a property to new tenants unless it has an EPC rating of E or better. Now anyone whose rentals have F or G ratings will no longer be able to let them out legally. As a result, landlords will have to pay up to £3,500 towards energy-efficient improvement works. If the cost of carrying out this exceeds this amount, landlords can apply for an exemption.

Capital Gains Tax changes

Historically, Capital Gains Tax has been paid on profits made through the sale of any property that isn’t the owner’s principal home. Owners can also have lettings relief if they once lived in the non-principal home themselves. As of April, this has been scrapped and landlords will only be able to claim lettings relief if they share the property with their tenant. Landlords will also be required to pay the entire amount of Capital Gains Tax owed from a sale within 30 days, instead of until the next tax year.

Mandatory Client Money Protection (CMP) for agents

New rules introduced by the government to cover money laundering have been extended to include letting agents. As of April 2020, agents have to join an official Client Money Protection scheme. This has resulted in the end of a 12-month leniency period agreed, following technical problems over the original 2019 deadline.

Tenant Fees Act Extension

As of June 2019, letting agents were prohibited from charging fees apart from rents, deposits, holding deposits and charges for defaulting on contracts. Until now this has only applied to new tenants. But from June this year, this is now applied to all existing tenancies. Deposits were limited to a maximum of five weeks’ rent, where the annual rent is below £50,000. If the annual rent exceeds this, the maximum is six weeks, with holding deposits limited to a week.

These five changes are extensive and are probably the biggest amendments to landlords and tenants’ rights since the Landlord and Tenant act 1985 that set out the rights of tenants against their landlords. The NRLA, which has made these major changes, was formed in January 2020 following a merger of the Residential Landlords Association and the National Landlords Association.

The new legislation will affect all landlords and tenants in different ways, and offers added protection to tenants on the condition of accommodation. Importantly, the extension of the Homes (Fitness for Human Habitation) Act applies in England only, with responsibility for these living standards in Wales falling under the scope of the Renting Homes (Wales) Act. At Forge Property Consultants, we work across the border of England and Wales, and are seeing the new legislation affecting some properties differently in the same close vicinity – those in Wales will be unaffected, whilst England will have to comply with the new rules, in a literal postcode lottery.

If you are a landlord or tenant, and are concerned about how the new legislation will affect you, then get in touch today to talk to one of our property experts.