Published: 21 May 2019
A new tax year general brings a round of changes with it, some of these changes will be major and others minor, some will be welcome and others definitely not, but all will need to be heeded if landlords are to manage their investments effectively. Here is a quick round up of what lies ahead for landlords in 2019-2020.
While this arguably no longer counts as news, it is important and so deserves a mention. This is the last year landlords will be able to claim any Mortgage Tax Relief and then only at 25% from their buy-to-let investments. As of 2020-2121, Mortgage Tax Relief will cease to exist and will be replaced by a 20% tax credit which can be applied to a maximum of 75% of mortgage interest.
The government is giving with one hand by increasing the capital gains tax allowance from £11,700 to £12,000, per owner (meaning that couples who own properties jointly could claim an allowance of up to £24,000). The government is, however, taking away with the other hand, or at least proposing to do so. Specifically, the government has suggested halving the period during which you can let out a former residence before becoming liable for Capital Gains Tax on any profits made from a subsequent sale. This is currently 18 months. Assuming the changes are approved (which is still not guaranteed), they would only take effect from April 2020, however those in this situation may wish to keep an eye on how it develops and consider how it may affect them.
From 1st June this year it will be illegal for tenants to be charged any fees by either landlords themselves or by their representatives such as lettings agents. Landlords should therefore take extra care to ensure that they are clear about what costs can be expected to arise as a result of letting the property and that these costs are covered by the rent charged.
This requirement came into force on 1st April 2019 and it should be reasonably expected that lettings agents will already be aware of it. Landlords, however, may wish to double-check for reassurance and also to confirm whether this change is likely to have any impact on their fees as landlords will now have to make sure that all costs are absorbed by rent rather than charged directly to tenants in the form of additional fees.
Again, this should not really qualify as news given that the updated requirements have been in force since October 2018, however it has been indicated that only a small minority of landlords have complied with the new licensing requirements, which suggests that unless there is a significant increase in landlords self-reporting to local authorities in the very near future, local authorities may decide to take enforcement action. Landlords are, therefore, strongly advised to contact their local authority if they have any property which is let out to five or more unrelated households.
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