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New Year, New Laws - What will 2018 have in store for landlords?

Article Posted - 9th January 2018

 

Looking back at the NLA's 2017 New Year blog, you would be forgiven to think that time stood still for a whole year. In reality, the snap general election called by Theresa May was the equivalent of smashing a big PAUSE button on the work many Government Departments were undertaking. As such, many of the changes listed last year are still yet to come to fruition!

Nevertheless, we will try again to predict the major changes you can expect/dread over the next 12 months (and beyond).

Section 24 Continues (England & Wales)

Despite our consistent insistence, the Government are yet to see the error of their ways and reverse George Osborne's soon-to-be calamitous policy of restricting landlords' finance cost tax relief (aka. Section 24).

The changes are being phased in gradually over 4 years, with the first stage having started last year. Section 24 continues this phased introduction from April this year, so by 2020 100% of finance costs will be restricted to 20% tax relief only.

Last year we commissioned Capital Economics to examine in detail the impact this policy is going to have, and they conclude:

You can find out more here: www.TaxingHomes.co.uk

Mandatory HMO Licensing Extension (England & Wales)

After initially consulting on plans in 2015, then again in 2016, the Government finally confirmed in the final days of 2017 that the scope of HMO mandatory licensing will be extended:

Minimum room sizes will also be introduced to mandatory HMO licenses, as well as duties on landlords to provide adequate facilities for the proper disposal and storage of domestic waste.

Read more about the announcement here.

Crackdown on Rogue Landlords – Database & Banning Orders (England)

After introducing some of the enhanced enforcement powers provided by the Housing & Planning Act 2016 earlier this year (civil penalties and extended rent repayment orders), DCLG has announced that Banning Orders and the Rogue Landlord Database will come into force from April this year.

Following a consultation the Government has confirmed which offences will be considered Banning Order Offences. From April 2018, someone convicted of these offences can be added to the database of rogue landlords and be barred from renting properties.

You can see the Government's response to the consultation here. A full list of Banning Order Offences can be found on the draft regulations here.

This leaves only a handful of powers introduced by the Housing & Planning Act that are yet to come into force, including electrical safety checks, mandatory client money protection for agents, and a new abandonment procedure. As discussed later on, these are in the works!

Minimum Energy Efficiency Standards (England & Wales)

The Energy Efficiency (Private Rented Property)(England and Wales) Regulations 2015 set out the requirement for domestic private rented properties in England and Wales to have a minimum Energy Performance Certificate (EPC) rating of E.

Currently the regulations allow landlords to register a 5-year exemption to the standards if they cannot fund necessary improvements through third-party funding (such as a Green Deal loan, Energy Company Obligation (ECO) funding, or a local authority grant).

The Government is currently consulting on plans to scrap this exemption and replace it with a “cost cap” of £2,500 from April 2019. This will mean that landlords of F or G rated properties will have to pay for the first £2,500 of improvements, although the vast majority of improvements are expected to be below this level.

Importantly, the method of assessing energy efficiency was amended late last year to account for new evidence showing solid walls were more energy efficiency than previously noted. This means new EPCs for solid walled F&G rated properties could give a better result than previously.

General Data Protection Regulation (GDPR)

The General Data Protection Regulation (GDPR) (Regulation (EU) 2016/679), which comes into force in the UK from 25th May 2018, is a regulation by which the European Parliament, the Council of the European Union and the European Commission intend to strengthen and unify data protection for all individuals within the European Union (EU).

Despite the intention to leave the EU, the Westminster Government has confirmed that the GDPR will be brought into UK law.

GDPR enhances the protection afforded to individuals and will require landlords to have a policy in place which they adhere to without fail. The vast majority of landlords will already be following best-practice, but may not be adequately documenting their efforts and could therefore be caught out by this change in public policy.

The NLA will be publishing a guide for our members shortly so they can ensure they are compliant well ahead of the regulation's May enforcement date.

Universal Credit Reforms (England & Wales)

The Autumn Budget last year provided for some minor amendments to the Universal Credit regime that is continuing to be rolled out across the country:

New Universal Credit choices were made available by the Scottish Government from 4 October 2017 to people living in Scotland making a new Universal Credit claim, in full service areas. The choices are to:

Keep an eye out for more changes….

The Government has indicated that a number of policies will be consulted on, while other consultations have already started. Additionally, some consultations have closed and we expect further action to be taken throughout the year, including:

Scottish PRS Reforms

Following the launch of the new Private Residential Tenancy regime last month, which replaces the previous tenancy system and ends “no-fault” repossessions, more changes are ahead for the Scottish PRS this year.

From early 2018 the Scottish Government will also commence the regulation of letting agents by bringing into force:

Going forward, the Scottish Government is also looking at amending the repairing standards to bring it closer to the standard required in social rented housing, as well as introducing a minimum standard for energy efficiency in the PRS. These plans were recently consulted on and you can read more about that consultation here.

New Welsh PRS Regime

Change is also afoot in Wales, where the Renting Homes (Wales) Act 2016 is expected to come into force in late 2018. The Act will bring in a new Welsh Standard Contract to replace the current Assured system. A consultation is currently underway on the requirements the Act places on properties to be “fit for human habitation” at the start of a tenancy and throughout.

In addition, the Welsh Government has announced that it too will be banning letting fees to tenants, and a consultation has already closed on this policy. Expect more details in the coming months.

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