Legislation Update…The Year Ahead (2021)
22nd February – Lockdown Roadmap
The PM outlined the relaxation of the current lockdown
1st April – Electrical Installation Condition Reports – Applicable for ALL Tenancies in Existence
The penalty for non-compliance can be up to £30k per property which is levied upon the landlord to include where remedial works is not undertaken. As previously warned, really important to have evidence if unable to undertake a EICR for any reason i.e., Covid 19 issues.
1st April – Stamp Duty Increase for Non-UK Residents
This will increase by 2% in addition to current stamp duty requirements for non-resident owners.
1st April – Deadline for Letting Agents to have Client Money Protection in place
This was extended by one year as issues with client only bank account came to the fore
4th May – Debt Respite Scheme (breathing space)
Tenants and guarantors will be able to apply for with a standard breathing space or mental health breathing space for incurred debts for a period of time if a debt advisor believes that they are eligible. This does not remove the right for the tenant to pay ongoing contractual rent.
31st May – Eviction Ban Terminates
The current eviction ban will expire for possession orders. However, as the bailiff needs to issue 14 days’ notice of their arrival to the tenant/occupier, no evictions will physically take place until 15th April at the earliest.
31st May – Extended notice Periods for Section 8 and Section 21 Terminates
The current six months’ notice period for Section 21 and Section 8 (for most grounds) will no longer apply. However, be mindful, that this date might be pushed back, so explain that to any landlord. IMHO, I would still serve notice ASAP if needed.
1st July – EU/EEA/Swiss Nationals and Right to Rent
The automatic right to reside in the UK for new EU/EEA applicants will no longer apply. All new applicants except those from Ireland will need prove a right to rent (pre settled or settled status evidence). This will not be retrospective so current tenants will not need to provide evidence.
1st July – Stamp Duty threshold changes (England and Northern Ireland)
Residential property purchases since 8 July 2020 have been subject to a stamp duty holiday where no Stamp Duty Land Tax (SDLT) is paid on any property worth £500,000 or less.13 This holiday has been extended from 31 March to 30 June. From 1 July, the exemption will only apply to property worth £250,000 or less. On 1 October, stamp duty tax will revert back to previous rules and apply to all property purchases over £125,000, or £300,000 for first-time buyers.
30th September – Job Retention (Furlough) Scheme set to end
The Government’s Coronavirus Job Retention Scheme has allowed companies to furlough employees and apply for a grant to cover 80% of the cost of their salaries for hours they have not worked, up to a maximum of £2,500 a month. The scheme has currently been extended until the end of September, however with some changes. From 1 July, employers will be required to cover 10% of the cost with the Government contributing 70%.14 From 1 August until the end of the scheme on 30 September, they will need to cover 20% of the cost with the Government contributing 60%.
In the Pipeline
Carbon Monoxide Alarm Requirement
Where there is a gas appliance (not cooker) such as a gas fire a carbon monoxide alarm will be needed in the room – Introduction maybe later this year.
Renter Reform Bill
The abolishment of section 21 notices – unlikely to happen for a few years at least. However….
The Renters’ Reform Bill has been on the government’s to-do list for a long time. Its last update saw it delayed due to the COVID-19 pandemic, but it is likely to be brought up again this year. In a parliamentary debate on 11 January, Parliamentary UnderSecretary of State at the Ministry of Housing, Communities and Local Government Kelly Tolhurst said a bill would be introduced “very soon”.
Briefing papers for the bill have proposed the following changes:
• The removal of Section 21 of the Housing Act 1988, which allows for an occupier to be evicted during a tenancy with no fixed end-date or after a fixed-term tenancy ends without giving a reason
• The strengthening of Section 8 of the Housing Act, allowing for improved and clearer grounds for possession
• Improved deposit protection for occupiers, the closing of avoidance loopholes and a reduction of the time it takes to resolve disputes
The bill’s proposals have been a hotly-debated topic. The National Residential Landlords Association (NRLA) emphasises that there must be clear grounds for possession under Section 8 to account for when landlords wish to regain possession when there has been a ‘fault’, or for business decisions. Housing and Homelessness charity Shelter, meanwhile, thinks the bill should be used to strengthen renters’ rights and tackle discrimination.
Minimum Energy Performance
The drive towards energy efficiency has intensified with some suggestions that the minimum rating for lettings will be *C* by 2025. A potential 50% of properties fall into the D and E bracket, so that could be a hard and expensive target to reach for many landlords. Could well lead to un uplift in numbers of Exempt properties.
Letting Agent Qualifications
The obligation to have trained and qualified staff is still on the horizon but will take a number of years to set up and operate. In theory, the UK government could copy the Welsh version, which required those managing rented sector property to undertake training whether online or physically. Unlikely to be exactly as per the Welsh scheme since it is not as comprehensive as the English proposal.
Temporary right to rent adjustments end
Temporary changes to the right to rent checking process during COVID-19 have allowed occupiers to show their original documents over a video call and to send scanned copies or photos of these documents instead of the originals. Once this period ends, retrospective checks will need to be carried out on every occupier who was unable to produce original documents. These checks will need to be carried out within eight weeks of the temporary measures ending. Feedback from the industry means the Government is currently reviewing its process, so these details might change and there is currently no confirmed end date for this temporary measure.
Dogs and Domestic Animals (Accommodation and Protection) Bill
This bill was introduced in October 2020 to ban landlords from rejecting occupiers who wish to live with their pets, provided they can prove they are ‘responsible and caring’. The bill is scheduled to have a second reading, allowing MPs to debate it. In January, Housing Minister Christopher Pincher announced changes to the Government’s recommended tenancy contract, the Model Tenancy Agreement, to prohibit landlords from offering blanket bans on pets. Under the updated agreement, landlords with objections to having a pet must put their concerns in writing within 28 days, citing a good reason, such as a large pet in a small property. Landlords’ use of this tenancy agreement is not mandatory. The UK’s leading pet care provider and retailer group reported a staggering profit of 17.6% year-on-year, crediting soaring trends in pet ownership during lockdown.15 The rise of remote working has allowed renters to prioritise outdoor space over urban locations, making it possible for many to become pet owners. This means agents and landlords will likely encounter more prospective renters with pets in the future.
Prospective capital gains tax changes
The Government has expressed an interest in raising the capital gains tax rate to combat the financial effects of the pandemic. A report in November 2020 proposed lifting the current top rate of 28% to be more in line with income tax rates, where the highest rates in England and Wales are 40% and 45%. As this will affect the selling of second homes and buy-to-lets, this could have a substantial impact on the property market as landlords face much higher tax bills when they sell properties.
Changes to EPC regulations
The Government opened a consultation on improving the energy performance of privately rented homes in September 2020. This ended on 8 January 2021, meaning we can expect to see the results of feedback in the year.
Conclusion….the implications for all property managers.
With a wide number of changing laws and new statutory requirements expected in 2021, agents will need effective tools to be able to stay on top of their duties and avoid penalties for noncompliance. Compliance automation can give letting agents the assurance that mandatory tasks will not slip through the cracks and a specialist repairs & maintenance management system can keep an audit trail evidencing the completion and progress of such requirements. The ongoing effects of COVID-19 require the digitisation of property management processes with a focus on accurate diagnosis and efficient triage of property maintenance issues.
Growing needs to adapt to remote working amid the pandemic have also made the use of cloud-based systems a necessity for many property management teams.
As teams transition to different home working arrangements to allow for childcare and curb transmission of the disease, there is a growing need to maintain service levels for occupiers, contractors and landlords. The details and progress of repair issues and planned safety checks must be available, in real-time, to staff working anywhere and anytime.
26th March 2021