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As we move into a new year, plenty of us make lots of resolutions. Gym memberships soar, healthy food fills our fridges and exciting new hobbies fill our time.
However, as a landlord starting a new decade, what are the key rental resolutions that you should be making, and making sure that you stick to in 2020 (and beyond)!
Property maintenance
The newly announced Renters Reform Bill focuses heavily on improving standards of accommodation for tenants, with large penalties for landlords who do not provide properties that are safe and healthy. Whilst the majority of landlords obviously would never consider providing sub-standard living accommodation, this legislation is designed to crunch down on the few rogues that give the industry a bad name.
Winter weather can wreak havoc on property maintenance, so to ensure that your property is maintained and ticking all the letting legislation boxes, there are a few vital points that you need to remember:
- Make sure all heating and hot water is well maintained and in full working order. The cold winter months are miserable enough without adding a boiler breakdown into the mix.
- Everyone wants to come home to a warm toasty house at this time of year. If the radiators in your property need bleeding, they won’t be getting up to temperature, and your tenants will be feeling very chilly. A few minutes per radiator is all it takes to remove any air-blockages.
- Damp in a property is one of the most common tenant complaints, and is often much worse in the winter when windows are kept shut against the chill. But managing ventilation in the property, with airbricks or extractor fans will help minimise the risk of damp and mould causing havoc in a home. You can read more top tips on how to manage mould here.
- Rain, wet leaves and damp, chilly nights are a recipe for disaster when it comes to blocked gutters, leaks and potential damp. Making sure the exterior of your property is maintained and kept clear of debris is a (damp and messy) but necessary winter maintenance job that can pay dividends.
Refresh your contracts
As we woke up on January first, plans to clear cupboards, refresh wardrobes and declutter the day-to-day started to form. But why should you stop at the physical? Now is a perfect time to have a long hard look at all the contracts that are overseeing your landlord life, and question whether they are still working well for you.
As your letting lifestyle changes, you may find that your current letting agent no longer delivers the requirements that you are looking for. You may have decided that you want to take a more active role in 2020, or even want to take more of a back seat, and be looking for an agent that allows you to do just that.
But can you make the decision to switch?
You are perfectly within your rights to make the decision to end the contract with your existing letting agent, should you decide that there is a better option for you elsewhere. The contract that you have in place is a legal agreement, so there are steps that you have to take in order to exit the contract correctly, however it absolutely can be done.
You can read more about how to make this change here, or speak to a member of the Howsy team, who will be happy to offer you advice on the process. Give us a call today on 0330 999 1234.
Get your paperwork in order
In the land of lettings, a clean and concise paperwork trail is key. Making sure you have all the relevant documents in order is very important.
As part of your rental resolutions, going over all the documentation relating to your property, from gas safety certificates to right to rent forms and making sure they are all in date and nothing has slipped will stand you in good stead for the year ahead, and help you plan your key dates and ‘to-dos’ for the coming months.
Understand tax changes
2020 is a big year for tax changes, and some of them are likely to have a real impact on landlords. Whilst not exactly a resolution, identifying tax changes that could directly affect your bottom line is something that is important to understand.
Back in 2015, changes were announced surrounding tax relief on mortgage interest payments and fees, as well as fees and interest on any loans to buy furnishings for properties, with plans for the changes to be phased out over a five-year period. These changes were introduced in the tax year 2017/2018, with claimable relief being reduced to 75%, then down to 50% in 2018/2019, 25% in 2019/2020. By the final stage of the change, tax year 2020/2021 (which starts in April), landlords will be unable to claim any tax relief on mortgage interest payments at all.
From then, landlords will only be able to subtract a flat 20% tax credit on any interest payments from rental income when filing a tax return.
In addition to this change (which has been five years in the pipeline) there are significant changes to Private Residence Relief being introduced, which is bad news for any landlords looking to sell a rental property.
Currently, if a landlord wants to sell a rental property that was once their home, they are able to claim Private Residence Relief for all the time that they personally lived in the property before letting it to tenants, plus an additional 18 months after moving out. This means that landlords have the potential to claim up to around £40,000 in Capital Gains Tax relief upon the sale.
Come April, this final 18-month period will be reduced to just nine months – cutting the available period in half. The landlord also has to be able to prove that they were living in the property at point of sale to be eligible to claim.
Additionally, the period for payment of the Capital Gains Tax bill will change from January 31st in the year after the sale, to just 30 days after completion.
Be environmentally aware
Many people have made new year’s resolutions to be more environmentally aware, and it’s certainly a great way to start a new decade.
For landlords, there is even more reason to be highly aware of the green routine, as any every residential property will be required to have an EPC rating of E or above from 1st April 2020, including those with existing tenancies.
The Minimum Energy Efficiency Standards (MEES) were introduced in March 2015, but came into force on April 1st 2018, when in order to legally grant a new tenancy, renewal or extension to a tenancy, the property had to have an EPC rating of E or above. Landlords were encouraged to make relevant changes to their properties to boost their EPC rating to avoid a hefty fine, however there are a number of exemptions available should it be impossible to crack the rating ceiling in your property.
Change your thinking around deposits
No matter whether it is 2020 or 3020, making sure your property is properly protected has got to be high on the list for most landlords.
Following the introduction of the Tenant Fees Act back in the summer of 2019, deposits are a hot topic. As part of the changes, come June 1st 2020, landlords will only be able to take a security deposit equivalent to five weeks’ rent (or six weeks’ when the annual rent exceeds £50,000).
Landlords with existing deposits held with schemes will have to reduce the amount held by this date, and failure to do so can be a pricy mistake – with fines of anything from £5,000 to £30,000 expected.
There is no doubt that there is a lot to consider, and there is plenty to go wrong. With deposits being removed, returned, re-registered – it’s a recipe for disaster! However, there is another way…
Here at Howsy, we think it’s high time that deposits were turned on their head. Despite the five-week cap being introduced last year, the average deposit still sits at over £1,000 (£2,000 in the capital!) – a huge sum of money for tenants to stump up and often the barrier for great tenants to get their foot on the private rental ladder.
We’ve launched an innovative new system destined to change the way deposits work for everyone. Replacing the outdated lump sum payment with a small monthly fee paid by the tenant (or household), the insurance-based scheme guarantees a simple, stress-free system for the landlord, and a financially seamless option for the tenant.