What will 2021 mean for landlords?

What will 2021 mean for landlords?

After such a tumultuous year in 2020, the entire UK will be hoping for an easier ride in 2021.

For landlords, though, there’s always something to think about – and 2021 will be no different, with a range of legislation changes potentially set to come into force.

In this piece, we’ll run through everything landlords can expect in the new year, including the new Renters Reform Bill and how the housing market could perform…

 

Landlord changes for 2021

As a landlord, you should be prepared for some important regulation and legislation changes in 2021, including:

 

The Renters Reform Bill

The Renters Reform Bill was launched as part of the Queen’s Speech in December 2019.

However, despite the Bill intending to pass through parliament in 2020, it was delayed due to the coronavirus pandemic.

The expectation, however, is that the Bill will be heard in 2021, so landlords should prepare for three major changes that could come into effect:

 

The end of ‘no fault’ evictions

Under the Renters Reform Bill, landlords will no longer be able to regain possession of their rental properties through a section 21 notice.

Currently, section 21 notices can be issued at the end of a fixed term tenancy agreement or during a periodic tenancy, giving tenants notice to leave the property.

Section 21 of the Housing Act 1988 would be removed under the Bill and landlords will need to go through the court system to regain possession of their properties.

 

Lifetime deposits

Currently, tenants must provide a new security deposit each time they rent a property, and this can often result in ‘crossover’ between them receiving their deposit back and having to pay a new amount to a new landlord.

Under the Renters Reform Bill, tenants would be able to transfer their deposit from tenancy to tenancy, meaning they don’t have to save for a new one each time they move.

 

The ‘rogue’ landlord database

Under the Renters Reform Bill, the government is proposing to make its database of rogue landlords available to tenants, letting agents and professional bodies.

 

The end of the stamp duty ‘holiday’

Since July, buyers in England have been exempt from paying stamp duty on the first £500,000 of a property’s purchase price.

Although landlords are still subjected to the 3% additional property surcharge, this has still meant huge potential savings when purchasing buy-to-let properties.

However, the stamp duty ‘holiday’ is set to end on March 31, 2021, when the exemption rate could return to its previous figure of £125,000.

 

Covid-19 eviction rules

Emergency eviction legislation brought in because of the coronavirus pandemic means landlords currently have to give tenants six months’ notice to vacate their rental properties.

Under previous rules, landlords could give two months’ notice under section 21, but the six-month notice period is set to remain in place until at least March 2021.

 

Right to Rent changes

The UK’s transition period for Brexit ends on December 31, 2020 and from January 1, 2021, immigration rules will revert to a new, points-based system.

All adults living in rental properties in the UK must be able to prove, through documentation, that they have a right to remain in the country.

Landlords should continue to use existing methods under Right to Rent in 2021, with new rules set to be outlined in the spring.

 

Electrical safety in buy-to-lets

Since July 1, 2020, landlords starting new tenancy agreements must have an Electrical Installation Condition Report (EICR) carried out and supply a copy of the report to all tenants.

From April 1, 2021, EICRs will become mandatory for all tenancies.

 

Digital tax regulations

If the turnover from your rental property, or properties, is more than £85,000, you may already be using the Making Tax Digital (MTD) system.

If you’re not using MTD and your turnover exceeds £85,000, there will be a deadline to do so at some point in 2021, although this date is unknown currently.

 

Capital gains tax

Tax changes are widely expected in 2021 as the government looks to recoup its spending on dealing with the coronavirus pandemic.

That means changes to capital gains tax (CGT) could be on the cards, although this has not yet been confirmed.

 

What will happen to the housing market in 2021?

Despite property market growth for 2020 peaking at 6.6% according to Rightmove, most commentators are approaching 2021 with more cautionary predictions.

Rightmove itself has forecast 4% price growth for 2021, while PriceWaterhouseCoopers (PwC) suggests 1% is more likely.

The Office for Budget Responsibility, meanwhile, sides with Rightmove in suggesting 4% growth.

 

Further reading…

As a landlord, there’s nothing more important than staying compliant and keeping your tenants safe and our guide outlines a number of key things you need to do.

And if you’re thinking of undertaking work at your rental property to boost its energy efficiency, you should consider a Green Homes Grant.

We’ve got all the details on the scheme right here.