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Regulation Changes: A Need to Know Guide for Landlords

December 6, 2018

2018 saw a year of changes for the lettings market. These changes came in the form of new legislation, and affect all parts of the letting process, from the property itself to the way that the home is taxed. From a boost to personal allowances to EPC ratings adjustments, we’ve compiled our need-to-know guide of some of the legislative changes that landlords should be aware of now, and changes that are likely to come into force in 2019 and beyond.

Licensing Changes for Houses of Multiple Occupation

On 1st October, new licensing regulations were enacted for houses of multiple occupation (HMOs). An HMO is defined as a property of three or more stories that is occupied by five or more individuals who are not related to one another. The owners of these homes must now be licensed and adhere to regulations of room size and occupancy.

What landlords need to know:

Minimum room sizes and occupants were defined, as were new definitions for floor areas. Rooms occupied by one person must be larger than 6.51 square metres, and rooms occupied by two people must be larger than 10.22 square meters. Contact your local council for more information about HMO requirements in your area.

Lettings Relief for Owner/Occupiers

Under current rules, the government offers £40,000 worth of private residence tax relief (£80,000 for a couple) to owners who are letting out a property that was once their main residence. The 2018 Autumn Budget announced that this perk would no longer be available after April 2020, unless the owner is sharing the home with a tenant.

What landlords need to know:

Should the owner be sharing with the tenant, the owner is still eligible for relief. However, if the landlord is not an owner-occupier and chooses to sell the property, the tax bill could be considerably higher.

EPC Regulation Changes

As Britain becomes more sustainable in terms of its energy use, changes to the built environment were inevitable. In 2018, new regulations were passed stating that properties must have an EPC rating of E or higher to be used as rental properties. Properties with an EPC rating of F or G are illegal to let.What landlords need to know:

Should your investment property have an EPC rating of F or G, consider insulating the roof and walls, upgrading the boiler, or installing low-energy lighting to increase the rating. There is the potential for the rating to increase to a D or C within the next 5-10 years.

Tenant Fees Bill

The Tenant Fees Bill is part of a government commitment to deliver a private rental sector that is more transparent, competitive, and affordable for tenants. 2018 saw the removal of chargeable fees for landlords and lettings agencies.

What landlords need to know:

Landlords must now absorb fees for small repairs, such as replacing smoke alarms, instead of passing those fees along to tenants. This could have an impact on your rental property income. Further changes are expected throughout 2019, so be sure that you keep an eye out for further updates.

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