What will 2020 bring for landlords?

It’s a tricky time to be a landlord. 2019 was a busy year full of changes and as we head into the new year, you may be wondering what 2020 will bring.

At Bunk, we’ve analysed upcoming changes in legislation and key dates to put together a short guide on what buy-to-let landlords need to know in 2020. 

Here are our top tips on changes for landlords to look out for in 2020: 

1. Changes to Section 21

In July last year, the government opened its consultation into proposed section 21 reforms to abolish no-fault evictions and strengthen section 8 grounds for repossession. 

What the proposal means is that all landlords – private and social – will be bound to either fixed-term tenancies or contractual periodic tenancies

A fixed-term tenancy not ended by either party can either be renewed to another fixed-term or automatically become a contractual periodic tenancy. Tenants would still be able to give one month’s notice to end tenancies. Notice could only be given at the end of a tenancy or during a periodic tenancy unless a break clause was included in the initial agreement.

The planned proposals had been met with widespread scepticism and the RLA found that 96% of landlords considered section 21 notices ‘vital’ to their lettings business. 

The NLA stated their belief that the proposals were “ill-thought-through”, however, in the run-up to the election, the Conservative manifesto reaffirmed plans to abolish Section 21. 

As of yet, there is yet to be any news on final proposals from Boris Johnson’s government, although we can expect there to be plenty of movement this year. 

2. Minimum Energy Efficiency Standards

From April 2020, landlords will need to ensure their properties meet the criteria for Minimum Energy Efficiency Standards (MEES). This requires all rented homes to have a minimum Energy Performance Certificate (EPC) rating of E

These rules were first introduced in April 2018, but originally only covered new tenancies and renewals. From April, this will be extended to apply to existing tenancies. 

Landlords whose properties do not meet these standards will be required to carry out energy efficiency measures on their homes, up to a cap of £3,500 per property. 

3. Electrical Safety Checks

Last January, the Ministry of Housing, Communities and Local Government (MHCLG) announced that mandatory five-year electrical installation checks on private rented housing in England would be introduced over a transitional period of two years.

This means that landlords would be responsible for arranging an Electrical Installation Condition Report (EICR) to ensure that all electrical systems and installations within the property are safe

Houses in Multiple Occupation (HMOs) already have to meet these standards, but the government recommended expanding this to all rented properties. 

So far, a start date for these checks to be introduced has yet to be announced. This could be 2020, but it is likely that landlords will be given a six-month notice period before implementation and will most likely only apply to new tenancies in the first instance.

4. Mortgage Interest Tax Relief Changes

Since April 2017, the government has slowly been reducing the tax relief that can be claimed by landlords on mortgage interest. 

As of April, this will be fully phased out at the start of the 2020/21 tax year and landlords will only be able to subtract a flat 20% of mortgage expenses from rental income when filing tax returns. 

These changes have been somewhat controversial and have frequently been cited as a primary reason as to why landlords are looking to sell their portfolio. 

5. Letting Fee Ban

June 2019 saw the implementation of the long-awaited Tenant Fees Act which banned landlords and letting agents from charging any fees to tenants when securing a property that is not a holding deposit, security deposit or rent payment. 

Tenant fees were already banned in Scotland, but the legislation made it illegal to charge fees in England and Wales also. 

This legislation has had a considerable impact on the market and many landlords have seen their fees increase. 2020 will be the year that we start to fully understand the impact that this piece of legislation has had and how it will shape the future of the lettings industry. 

6. Continued Rent Increases

Some good news for landlords: rent prices are forecast to increase, and at a faster pace. Most forecasters believe that 2020 will continue to see the rise of rent prices across the country as more and more people enter the private rental sector. 

This, according to RICS, is primarily due to a lack of supply in the sector with their data indicating that rent prices could increase by 2.5% nationwide.

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