There are a whole host of changes landlords can expect in 2022 – including what’s been described by many as the biggest private rented sector shake-up in decades.
We’re here to help you through it and this guide outlines everything you can expect this year…
1. The Renters Reform Bill
The biggest change you can expect this year undoubtedly comes from the Renters Reform Bill.
The Bill’s passage through parliament towards becoming law was delayed by the pandemic.
But it’s now looking likely 2022 will be the year the Bill’s proposals are implemented.
The main parts of the Bill you’ll need to be aware of are:
No more ‘no fault’ evictions
The Bill proposes to abolish section 21, meaning if you wish to regain possession of your property at any time, you’d need to do so through a section 8 notice and the courts, or a specialist tribunal.
You’d also need to provide the tenant with a notice period of not less than two months’ stating that you wish to regain possession of the property.
While the change is largely to provide tenants with greater security, section 8 processes would also be reformed under the Bill – with more grounds for possession and an improved court process.
Lifetime deposits for tenants
One of the biggest issues for tenants is having to save a new deposit each time they move, due to the gap between receiving their existing deposit back and having to provide one for their new tenancy.
You’ll still need to ensure your tenant’s deposit is lodged with a deposit protection scheme, but more details are expected on exactly how lifetime deposits will work in practice.
Database of landlords
The Renters Reform Bill would see the government’s database of rogue landlords made available to tenants, agents, landlords and professional bodies.
The Bill is also considering the introduction of a landlord register, or the requirement for landlords to join a redress scheme.
2. Taxation and mortgage interest payments
Returns for the 2020-21 tax year are due before the end of January.
And this is the tax year where you now claim a 20% tax credit instead of offsetting your mortgage interest payments against your tax liability.
3. More interest rate rises?
The Bank of England increased interest rates for the first time since 2018 in December 2021 – and more rises are expected throughout 2022.
After a record low base rate of 0.1% for almost two years, rates increased to 0.25% at the end of last year.
And with predictions of more rises to 0.75% this year, now could be the time to start looking for a new deal if your existing buy-to-let mortgage is due to end soon.
4. More green mortgages
With such strong focus on climate change across the world, lenders are doing their part to incentivise homeowners and landlords to make their properties more energy efficient.
So-called ‘green’ mortgages offer more attractive interest rates for those borrowers whose properties are rated ‘C’ or higher on their Energy Performance Certificates (EPCs).
The likes of NatWest and Nationwide are already offering these mortgages and more lenders are expected to do the same this year.
5. Minimum Energy Efficiency Standards (MEES)
Currently, only rental properties with an Energy Performance Certificate (EPC) rating of ‘E’ or higher can be legally let out.
But in 2025, that minimum rating is set to rise to ‘C’ – meaning now is very much the time for you to explore improvements if your rental property is rated ‘D’ or ‘E’.
6. The Leasehold Reform Bill
Landlords who rent out leasehold properties often find ground rent increases eating into their rental profits.
But the Leasehold Reform Bill is aiming to help both landlords and homeowners hit by ground rent bills by effectively banning the practice altogether.
The Bill proposes to put in place laws that state only a ‘peppercorn’ ground rent can be charged on new leasehold properties – basically zero.
‘Peppercorn’ rates date from the 16th or 17th
century when although the spice was of high value, one single peppercorn was essentially worthless.
7. 2022 tax changes for landlords
Income tax and capital gains tax allowances were frozen until 2026 in the last Budget, meaning the biggest tax change you’ll need to factor in this year is Making Tax Digital (MTD).
If you’re operating your rental property, or properties, through a limited company, are VAT registered and your turnover is more than £85,000, you’ll need to move to MTD systems for your first return after April 2022.
Under the MTD system, you’ll file four quarterly submissions digitally rather than a single, annual tax return.
Self-employed landlords earning more than £10,000 through rental income will need to switch to MTD in April 2024.
8. Rules on pets in rental properties
The government updated its model tenancy agreement to make allowing pets in a rental property the agreement’s default position back in January 2021.
This year, the Dogs and Domestic Animals Accommodation Protection Bill could take that change further.
The Bill proposes to make it easier for responsible tenants with pets to find a rental property, while also adding a layer of protection for landlords…
Certificates of guardianship
To promote responsible pet ownership, the Bill would introduce certificates of responsible animal guardianship for tenants to show landlords.
The certificates would only be issued by qualified vets, who would undertake an assessment of both owner and pet, ensuring:
- The pet is microchipped if a cat or a dog
- The pet has been de-wormed and deflead
- The pet has had all required vaccinations
- The pet can respond to commands from its owner
- These details would also be held on a national database.
The Bill also proposes to allow landlords to charge a pet insurance fee as a condition of accepting a pet request from a tenant.
Under the Tenant Fees Act 2019, landlords and letting agents aren’t allowed to charge tenants fees, but the Bill could amend this to allow permission for pet insurance charges. This would help to protect landlords from costs that arise should a tenant’s pet cause damage to their property.
No automatic right for tenants
Under the Bill, landlords would need to show that a pet was a risk or nuisance to others to decline a request from a tenant with a guardianship certificate
However, tenants wouldn’t have an automatic right to have a pet
Under the Bill, landlords would be able to apply for an exemption certificate if:
- They, or another tenant, has a religious reason for not encountering domestic animals
- They, or another tenant, has a medical reason for not encountering domestic animals
- Their property is deemed unsuitable for domestic animals
9. Rules on carbon monoxide alarms
Under current rules, you must ensure that a carbon monoxide alarm is fitted in any room with a solid fuel burning appliance.
New proposals, however, would widen that scope to include rooms with gas burning appliances, including boilers and fires but excluding gas hobs or ovens
A reminder of changes from 2021
Several major changes to landlord legislation were introduced in 2021, including:
Stamp duty surcharges for foreign investors
Landlords from overseas investing in UK buy-to-lets must now pay an additional 2% stamp duty surcharge.
Meanwhile, stamp duty rates are now back at their pre-pandemic levels, following the end of the Chancellor’s stamp duty holiday
Mandatory electrical safety
Electrical safety checks became mandatory for all tenancies in 2021 and you’re now required to provide an Electrical Installation Condition Report (EICR) every five years.