11 things landlords need to know in 2022

Buy-to-letpropertyinvestorsfaceaseriesofchallengesin2022,fromtheprospectofreformstoevictionanddepositrulestoproposedenergyefficiencychanges.

It’sacomplextimetobealandlord,butwe’reheretohelpyougetyourheadaroundtheruleswheninvestinginbuy-to-letpropertyandmanagingyourportfolio.

Hereareour11toptipsonwhattowatchoutforthisyear.

1.Evictionreformsandlifetimedeposits

In2019,thegovernmentconsultedonabolishingSection21–aclausewhichallowslandlordstoend‘rolling’tenancieswithtwomonths’noticewithoutgivingareason.

TheproposaltoabolishSection21ispartoftheRenters’ReformBill,theprogressofwhichhasbeenrepeatedlydelayedbythepandemic.

Thegovernmentsaysitwillpublishawhitepaperontheproposalsinthenewyear,solandlordswillneedtokeeptheireyespeeledforupdates.

Thebillalsoincludesplanstoreplacerentalsecuritydepositswitha‘lifetimedeposit’thatmoveswiththetenant.Anotherproposalistomaketheroguelandlorddatabaseavailabletothepublic.

2.Taxreturndeadlineandtaxreliefchanges

Monday31Januarymarksthedeadlineforyouronlineself-assessmenttaxreturnforthe2020-2021taxyear.Don’tmissthedeadline,oryoumighthavetopayapenalty.

The2020-21returnisthefirstonwhichthenewmortgageinteresttaxreliefcreditapplies.

Thecontroversialcredit,whichthegovernmenthasbeenphasinginsince2017,meanslandlordscannowonlyoffset20%oftheirmortgageinterestpaymentswhenfilingtheirtaxreturn.

3.Moretimetofilecapitalgainstaxbills

IntheAutumnBudget,theChancellorannouncedchangestothefilingdeadlinesforreportingandpayingcapitalgainstax(CGT)onthedisposalofproperties.

Thechange,whichhasnowcomeintoforce,meansyou’llhave60daystoreportandpayyourCGTbillwhensellingabuy-to-letproperty,ratherthanthe30dayspreviouslyimposed.

Thegovernmentrecentlyconsultedonchangingcapitalgainstaxrates,buthassinceconfirmeditwon’tbemakingsignificantalterationstothecurrentrules.

4.Inflationandbuy-to-letmortgages

Buy-to-letmortgagerateshavefallenslightlythisyear,butthelikelihoodofrisinginflationandahikeintheBankofEngland’sbaseratecouldchangethingsin2022.

Thebaserateaffectshowmuchitcostslenderstoborrowmoney,soanincreasetothecurrentrateof0.1%wouldalmostcertainlyresultinhighermortgageprices.

Onthepositiveside,lendersmayfindotherwaystoattractinvestors,suchasbyofferingfee-freedealsandcashbackincentives.

5.Energy-efficiencyrules

Thegovernmentissettopressaheadwithitsplanstoimproveenergy-efficiencyintheprivaterentedsectorin2022,buttherearestillmanyunansweredquestions.

Landlordswillhaveuntil2026(ayearlongerthantheoriginaldeadlineof2025)toensureallnewly-letpropertiesachievebandConenergyperformancecertificates(EPCs),and2028forexistingletstomeettherequirement.

Aconsultationontheproposedchanges,whichrecommendeda£10,000caponthecostslandlordsmustpaytomakeupgrades,closedinJanuary2021,butthegovernmentisyettoprovideafurtherupdate.

Fornow,it’sacaseof‘watchthisspace’forlandlords,whoremaininthedarkaboutspecificupgradesrequiredorifanyfundingwillbemadeavailable.

6.Thegrowthof‘green’mortgages

2022couldbetheyearofthe‘green’mortgage,withanincreasingnumberoflenderslaunchingspecialistdealsandofferinglowerratesforlandlordswhobuyenergy-efficientproperties.

Greenlendingremainsnicheinthebuy-to-letmarket,butthatcouldsoonchange.

Inadditiontocheaperratesforinvestorsbuyinggreenproperties,we’rebeginningtoseebanksofferadditionalborrowingtolandlordsatreducedratesiftheyusethemoneytofundsustainableimprovements.

7.Arecoveringrentalmarket

Atatimeofeconomicuncertainty,it’sunderstandablethatmostlandlordswillbethinkingofstickingorsellingratherthanexpandingtheirportfoliosin2022–butthosewhodoinvestfurthercouldbenefitfromanimprovingrentalmarket.

ThepropertyportalZooplapredictsrentalpriceswillriseby4.5%in2022.ThiswillbeinpartfuelledbythereturnofrenterstoLondonafterthepandemic.ZooplasaysgrowthintheEnglishcapitalcouldreach3.5%,exceedingthelevelsrecordedbeforeCovid-19.

8.Morelocallicensingschemes

Licensingschemeshavelongbeenasourceofconfusionforlandlords,withcomplaintsthatcouncilsadoptinconsistentapproachestowhoschemesapplyto,howthey’reimplemented,andhowmuchlandlordsmustpaytoregister.

MandatoryandadditionallicensingschemesapplytolandlordswholetoutHousesinMultipleOccupation(HMOs),butanumberofcouncilsrequiresomeoralllandlordsinanareatogetalicencebeforetheycanletoutaproperty.

Despiteagovernmentreviewin2019findingissueswiththesystem,itappearsthatlicensingschemesareheretostay.Tofindoutifyou’llneedalicencetoletapropertyinyourarea,contactyourlocalcouncil.

9.Rulesonpet-friendlytenancies

InJanuary,thegovernmentlaunchedanewModelTenancyAgreementmeaninglandlordscouldnolongerissueblanketbansontenantshavingpetsinEngland.

Instead,landlordsmustnowobjectinwritingiftheyreceiveapetrequestfromatenantandshouldonlyrejecttenantswithpetsifthereis‘goodreason’,forexampleinsmallerpropertiesorflatswhereowningapetcouldbeimpractical.

Whilenofurtherlegislativechangeshavebeenmooted,landlordswillneedtobeawareofthegrowinginterestinpet-friendlyproperties.

10.Changestocarbonmonoxiderequirements

InNovember,thegovernmentannouncednewrulesrequiringthatcarbonmonoxidealarmsmustbefittedinsocialandprivaterentedpropertieswithappliancessuchasgasboilersandfires.

Therulesmeanalarmsmustbefittedwhennewappliancesareinstalled,andthatlandlordsmustrepairorreplacesmokeandcarbonmonoxidealarmsiftheyaretoldtheyarefaulty.

11.Clampdownonshort-termlets(inScotland)

LandlordsinScotlandmaysoonneedtogetalicenceforanypropertytheyletoutonashort-termbasis,forexamplethroughplatformssuchasAirbnb.

UndernewproposalswhichmustfirstbepassedbytheScottishparliament,localcouncilswilldrawuplicensingschemesbyOctober2022.ExistinglandlordswouldthenneedtoobtainlicencesbyApril2023,withtheintentionforallshort-termletstobelicencedbyJuly2024.