Things landlords need to know in 2022
What will 2022 have in store for the landlords?
A new year often means new rules and new legislations that a landlord should get to grips with - from rental reforms to eviction and deposit rules to new and increasing requirements for energy efficiency.
It’s certainly a complex time to be a landlord. However, we’ve gathered our ideas to help you get your head around the rules and to give you some need-to-know tips and guidance to watch out for.
1. Eviction reforms
One of the most awaited changes for landlords in 2022 is the abolition of section 21.
The UK government proposed on abolishing Section 21 of the Housing Act 1988 – a provision which permits landlords to end ‘rolling’ tenancies and recover possession with 2 months’ notice to end a fixed term or periodic tenancy without giving a reason.
The proposal is part of the Renters’ Reform Bill, which has been delayed repetitively by the pandemic. The government has stated that it will publish a white paper on the proposals this year - so, landlords should keep their eyes open for updates and changes in the proposal.
In this reform, a landlord will no longer be permitted to evict a tenant at short notice and without good reason. It was significant for the renters that this was made as it consents them to avoid unfair eviction from their homes.
The bill also comprises plans to replace rental security deposits with a ‘lifetime deposit’ that will move with the tenant.
2. Lifetime Deposits for tenants
Lifetime deposits for tenants have also been proposed as part of the Bill.
Every time a tenant moves into a new rental property, they will be required of another deposit for tenancy security. The bill will allow tenants to have a moveable tenancy deposit or to transfer their security deposit from property to property.
The idea of a lifetime deposit is that- it will be transferred from one landlord to the next without being returned to the tenant. The advantage is that tenants don’t have to save for a new deposit when moving rental homes.
3. New energy efficiency rules
As the threats of global warming continuously increase, lawmakers are taking concrete steps where possible to hopefully turn the tide.
Currently, private rented properties in the UK must have a minimum Energy Performance Certificate (EPC) rating of ‘E’ to be legally let out. A new law states that all rental properties must have an EPC rating of ‘C’ or above.
As a landlord, you will have to meet this requirement for any new rental agreements from 2025 and any existing tenancies from 2028. To help achieve this goal, the government has increased the cap on the amount landlords can spend to ensure their property is energy efficient - from £3,500 to £10,000.
From June this year, an interim uplift to standards will be introduced to improve the combination of insulation, energy efficiency and low-carbon heating technology within new properties. This new standard uplift hopes to provide the foundation for hitting its 2025 target of a 75% reduction in CO2 emissions from all new homes.
With the longer-term target in mind, all new homes in England from 2022 will require a 31% reduction in emissions to coincide with these new standards.
4. Capital Gains Tax filing
Another change to BTL legislation is the extension of the time landlords have to report and pay capital gains tax, following the sale of a property.
The Chancellor announced modifications to the deadlines for reporting and paying capital gains tax (CGT) on property disposals in the Autumn budget. The change, which took effect immediately, means that you will now have the grace period of 60 days to declare and pay your CGT bill on the sale of BTL properties- rather than the 30 days previously imposed.
5. Growth of ‘green’ mortgages
Green mortgages are products that offer property owners incentives to take out borrowing on eco-friendly homes. It offer buyers and landlords lower interest rates on properties with a ‘C’ or above EPC rating. The benefits could range from a more favorable interest rate than a standard loan, to cashback.
As the climate change and energy efficiency is a main attention of the UK government, a number of mortgage lenders are now motivating and incentivizing landlords and home owners to become ‘greener’.
An increasing number of lenders are now launching deals and offering lower rates for landlords who own energy-efficient properties. Banks will also provide additional borrowing at reduced rates if they use the fund for sustainable improvements.
2022 will likely see more implementation of green mortgage as climate change is being addressed more seriously in the property sector. We suppose this to become widely held over the next few years as the country’s standards progress.
6. Enhanced carbon monoxide safety rules
Carbon monoxide is known as the silent killer as it is smokeless, tasteless and odorless.
In November 2021, the UK government announced new rules requiring that carbon monoxide detectors must be installed in all homes and in all rented properties in places where there are new or existing appliances - including gas boilers or gas fires.
The rules also specify that it is the landlords’ responsibility to repair or replace smoke and carbon monoxide alarms if they are faulty. Landlords must implement this precautionary measure to help tenants be protected from accidental carbon monoxide poisoning and prevent deaths.
7. Changes to pet-friendly tenancies
In the UK, over 40% of people have a pet that is domesticated that lives at home with them.
The growing interest in pet-friendly properties is something landlords need to keep in mind during this year. Though landlords can’t officially ban pets in their properties. If the tenant submits a pet request, the landlord has the right to present a written refusal to the request, though only if they can provide sufficient reasoning.
The UK government now encourage more landlords to accept pets by amending their Model Tenancy Agreement. It offers consent for pets as a default and if you wish to object, you’ll need to do so in writing - providing a valid reason within 28 days of the tenant’s request.
There could be changes to pets in rentals through the Dogs and Domestic Animals Accommodation Protection Bill. It could further changes to rules around pets in rental properties if it becomes law.
Certificates of guardianship
The Bill states that tenants who wish to keep a pet in their rental property will need to provide their landlord with a certificate of responsible animal guardianship. The certificates will be issued by registered vets, who will also check that:
· 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
· All pet details would also be held on a database
Pet insurance
Under the Tenant Fees Act 2019, landlords would be able to charge tenants a pet insurance fee if they wish to keep an animal. This could be used for any identifiable defects, including additional cleaning or damage, that maybe caused by having a pet in the residence.
8. More local licensing schemes
Licensing schemes have long been a source of confusion for landlords as the government found some issues with the licensing system – but, it still supported its use.
In this year, landlords may need to comply with more additional local licensing schemes. It is mandatory to have a license if a landlord lets Houses in Multiple Occupation (HMO).
To find out if you’ll need a license to let a property in your area, contact your local council.
9. The Leasehold Reform Bill
The Leasehold Reform Bill received Royal Assent on 8th of February 2022 and the Act will be brought into force within six months of this date, making it a law.
Under the Bill, ground rents for new leasehold properties would only be able to be charged and increased at a rate of ‘one peppercorn’. A ‘peppercorn rent’ has no financial value. The term refers to the traditional practice of providing a peppercorn as a form of token consideration to make a binding contract.
The rules also include:
· Existing leasehold properties where the lease is being extended and the freeholder has owned the building for at least 2 years.
· The purpose of the cap is to protect leaseholders from becoming trapped by fast-growing rents and to create a fairer, more transparent ownership for leaseholders.
· The act also prohibits administration charges for peppercorn rents as an anti-avoidance measure.
10. A recovering rental market
In the time of economic uncertainty, it’s reasonable that most landlords will be thinking of sticking or selling rather than expanding their portfolios specially this year 2022.
But with all COVID restrictions lifted, tenants are once again looking for a place to call ‘home’. The rental market has returned to “full swing” from the pandemic low as stock levels fell dramatically from this time last year.
The property portal Zoopla predicts that - by the end of 2022, rents are predicted to climb another 4.5% in the UK, showing strong signs of a recovering market. Experts predict that now is a great time to start investing in the BTL sector.
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