There have been many tweaks, changes and reforms to the rental sector over recent years. 2023 is set to be no different. In our latest blog, we break down what the year ahead has in store for landlords and tenants alike.
Second Homes
Relevant to landlords with residential rental properties, it’s important to be aware some councils have started to introduce a double rate on council tax if a property is vacant for more than a few months.
Locally speaking, there’s possibility Bedfordshire councils may introduce a 200% or even 250% council tax for homes empty for just three months. This is good reason to make sure your rental property is in good order and priced correctly, so there are fewer, shorter void periods.
If you own a second home as a holiday rental, you can pay business rates instead of council tax if it’s available as a for 140 days or more, regardless of how many days it’s actually let out for. From April, to qualify for business rates, and to ensure only genuine holiday lets benefit from tax relief, second homes will need to be available for at least 140 days a year, and actually let out for 70.
Capital Gains Tax
As of April, landlords selling a property will see a change in the tax-free allowance for doing so, meaning a higher Capital Gains Tax bill depending on when you sell.
Currently, sellers can earn profit of £12,300 before Capital Gains Tax, but the threshold will be reduced to £6,000 from April 2023, before a further reduction in April 2024 to just £3,000.
EPC ratings
Currently, rented homes must sit at an EPC rating of E and above, only for new tenancies and renewals. This will apply to all rental properties from April.
There are proposals to raise the minimum standards to ‘C’ from 2025 for new tenancies, and all tenancies from 2028, so it’s wise to prepare your property in due course in readiness for these plans to take effect.
Licensing
In certain areas of the UK, landlords must apply for a licence in order to rent out a home. Luton in Bedfordshire began licensing in 2022, but this was scrapped just before applications closed. Interesting and noteworthy, as this alludes to the possibility of the scheme reopening again soon.
In 2022, new licensing schemes and consultations were launched in Greenwich, Oxford, Leicester, Nottingham, the West Midlands and other areas. There are plans for new or expanded schemes in Warwick, Wandsworth, Manchester and Gedling.
Birmingham City Council is set to introduce the UK’s largest licensing scheme in June, applicable to over 40,000 rented properties, targeting areas where rentals make up over 20% of properties, or where there are high levels of deprivation and crime.
Selective and additional licensing schemes allow councils mandate that landlords in a specific area apply for a licence if they want to rent out a property. Increased licensing will help Government targets to halve the number of non-decent homes by 2030.
Renters Reform Bill
The Renters Reform Bill was announced in June 2022 as part of the A Fairer Private Rented Sector white paper. A shake-up of the sector, it proposes changes including:
A new Ombudsman and better dispute resolution.
A digital property portal.
Improving property safety with the Decent Homes Standard.
Replacing ASTs in favour of ‘periodic’ tenancies.
Limiting rent rises to once a year, with tenants able to challenge these.
Abolishing Section 21s.
Allowing pets, unless there’s good reason to refuse.
Adam Barker, Director, advises on what these changes may mean for you:
“Reforms in the rental sector is one of the biggest reasons managing agents should be involved. We’re passionate about seeing rental reforms that lead to more robust regulations to remove rogue landlords and to protect well-intentioned landlords and their tenants. Last year, we started a free online compliance test for landlords to see if their rental properties were let in line with the latest legislation. Not a single landlord was found to be fully compliant. It’s increasingly concerning for us that landlords may be unaware of where they fall foul, opening themselves up to massive fines and increased difficulty of regaining possession of their own properties, which is why we’re offering all landlords a free rental health check.”
For how we can help you with your own rental property and the relevant regulations, or for any information on the current buy-to-let market, contact us on 01525 40 22 66 or email ampthill@orchards.co.uk
