How are you feeling as a buy-to-let landlord in 2021? Wary perhaps of predictions in a property market still emerging from a pandemic, where Brexit remains unfinished business.
A world of uncertainty, where a cool head and an informed eye will be key. Key attributes that, with these 11 Tips for Buy-to-let investors (all things you need to know) will ensure you stay ahead as a landlord in 2021.
Just remember, the rules may vary between England, Scotland, Wales and Northern Ireland.
New Landlord Rules 2021(what’s changed & what’s not)
1. Eviction Rules in a pandemic (& what you need to know)
It’s May 2021 and you are considering evicting a tenant under the rules of Section 21 or Section 8.
Remember those temporary Covid-19 rules the government introduced at the start of the pandemic?
Rules requiring you to give the tenant 6 months notice? These remain in place. As do the exceptions to the rule – fraud, anti-social behaviour and at least 6 months rent arrears.
If you are a landlord in Scotland, Wales or Northern Ireland these temporary rules vary, but the message is similar.
2. Renters Reform Bill & Section 21: why you need to pay attention
As a landlord you are thinking the government’s Rent Reform Consultation of 2019 is going nowhere until the pandemic is over.
That for now Section 21, allowing landlords to abruptly end rolling tenancies with just two months notice, without good reason, remains in place
That’s true – but keep a watchful eye. This isn’t going away.
The government still wants security deposits payable by tenants to become a lifetime deposit that follows the tenant.
Rogue landlords will be named and shamed. Just not right now.
3. The Rules on Right to Rent (& what’s not clear)
On 1 January 2021 the government introduced a new points-based immigration system. Legislation on a new arrival’s Right to Rent has yet to catch up.
As a landlord, until the end of June at least, you should continue screening prospective tenants using passport and other photographic I.D.
How the system works after that remains unclear. Another to keep an eye on.
4. Client Money Protection Rules (& what’s very clear)
Are you using a managing agent to look after your portfolio? Then 1 April 2021 is a date that should have been in your diary.
This is when the new Client Money Protection Rules became law.
A law making it mandatory for your managing agent to be a member of one of 6 government approved schemes.
Schemes that require all client monies to be held in an account registered with the Financial Conduct Authority (FCA).
Unless you practice in Northern Ireland – where these rules don’t apply.
5. Tenants allowed pets: it’s official (almost?)
As a landlord you can include in any rental agreement a ‘no pets’ clause – but not for much longer.
On 5 February 2021 the government’s Dogs and Domestic Animals Bill had a second reading in parliament.
There’s a good chance it will pass – and tenants who for some time have been calling for the right to keep a pet in the property they rent will get their wish.
A wish the landlord will have to grant – as long as the tenant undertakes to be a responsible owner.
What constitutes a responsible owner is for both parties to agree.
6. End of Mortgage Payment Holidays: what now?
The holidays ended on 31 March – the Mortgage Protection Holidays that the government introduced at the start of the pandemic.
If you are struggling to meet your mortgage payments you can no longer rely on the government – you must talk to your lender and discuss measures to help, tailored to your circumstances.
This might include payment deferral for an agreed period, an extended period of reduced payments or an extension to your mortgage term.
A word of warning – any adjustments to your mortgage payments will feature in your credit report.
Landlord Tax Changes 2021 (& why not everyone’s smiling)
7. Capital Gains Tax: why you shouldn’t relax (too much)
The sigh of relief from landlords once the budget details became known could be heard across the United Kingdom.
Capital Gains Tax and Inheritance Tax thresholds are to remain where they are until 2026.
One to put in the diary and not forget.
8. Stamp Duty Holiday Last Call ( & why Overseas Investors need to pay attention)
If you are buying in England and Northern Ireland take advantage of the Stamp Duty Holiday – a flat 3% surcharge on property up to the value of £500,000, if you think you can complete before
Different rules apply in Wales and in Scotland.
For overseas investors (you live outside of the UK for more than 183 days a year) it’s no holiday at all from 1 April 2021. If you are intending to buy in England and Northern Ireland you can expect to pay an extra 2% surcharge – and that’s on top of the regular But-To-Let surcharge
9. Mortgage Interest Tax Relief: why specialist tax advice might be a smart move
In January 2022 landlord tax returns are due – and the final chapter of the government’s phased reforms of Mortgage Interest Tax Relief are played out.
The 2020/21 Tax Year saw the end of Mortgage Interest Tax Relief and from next year all landlords can expect is a 20% credit on all mortgage interest.
If you are a higher rate taxpayer you could be particularly affected – from now on you will be taxed on your total rental income, not rental income less mortgage payments as in times past.
The rules can be complex and you should seek expert tax advice.
10. Tax Return Deadlines: it’s all systems go
The 6 April 2021 has passed and If you are the model of efficiency you can file your tax return for the tax year 2020/21 any time from this date.
Buy-To-Let 2021: Health & Safety Changes (you really need to know)
11. Electrical Tests & what’s new
1 April is a date all landlords should have had in their diary. This is when it became mandatory for all electrical installations in a rental property to be checked in existing tenancies every 5 years.
Until this date an Electrical Installation Condition Report only applied to new tenancies.
Landlords also need to be aware they must submit a test report to their tenant (or tenants) within 28 days of the report being issued, a report that should be made available to the council if they request it.
Commercial lending and most buy to let arrangements are not regulated by the FCA
James Pedder, trading as Alfred James Financial Services, is an Appointed Representative of New Leaf Distribution Ltd
which is authorised and regulated by the Financial Conduct Authority: FCA Number 460421