New Landlord Rules to Know in 2017 – Legislative Update
We’ve had feedback to write our own version, as other sources can get taken down suddenly or the selling angle is too distracting. Here it is, including as much useful hyperlinks as possible that you may want to bookmark for the future.
1. Immigration Act 2016
What? The Right to Rent legislation has been in force since last year but since 1 December 2016, it has become a criminal offence for breach and there is also a new ground for possession.
So what? The penalty is now unlimited and/or 5 years in prison. This is on top of £3k civil penalty. If you have been notified to terminate the tenancy of someone who does not have the Right to Rent, this is the prescribed form of notice to serve. 7B is a new mandatory grounds for possession.
- The Home Office has provided a very helpful visual on acceptable documentations and checklist.
- PRADO (Public Register of Authentic travel and identity Documents Online) is the source to check for all countries’ travel documentations if you’re doing it yourself.
- Read more about it from Guild of Residential Landlords.
2. Mortgage interest relief
What? From 6 April 2017, the tax will be on your turnover, not profit. It will take 4 years to phase in. There are many websites that explains this but not as clearly and succinctly as Accounting IT.
So what? Unless you are mortgage free, this change can drastically change your mind about being a landlord. There has been a lot in the media about landlords scrambling to incorporate their portfolio but this may not be the right solution. Speak with other landlords and get their recommendation on tax advisors or accountants. If you’re stuck, Micro Business Team seems to know what they are doing.
More info: Tax calculator – Check what you’d be paying via this Residential Landlord Association tool.
3. Housing & Planning Act 2016
What? The idea is to capture rogue landlords more effectively and is expected to come in by 6 April 2017. It seeks to introduce higher fines for repeat offences, rent repayment orders, fixed penalty notices, and Tenancy Deposit Protection data given to councils.
- illegally evicting a tenant
- renting out a property decided to be unsafe as a dwelling by local authorities
- failing to carry out works required by local authorities to prevent health and safety risk to tenants
- renting out a property to an illegal migrant
- using violence, or threatening violence against a tenant
- making fraudulent applications for housing benefit, or committing identity theft
- using the property to cultivate cannabis
- theft or criminal damage
- colluding with the tenant to commit a criminal offence, such as tax evasion or the supply of illegal drugs.
So what? The above offences are illegal anyways so if you are an honest landlord, there is nothing to worry. Currently, nothing stops rogue landlords from renting out again and a way to identify it has been introduced, already, by most local authorities in the form of licensing schemes. Wales has already introduced Landlord Registration so although this is a long way ahead, the road is paved towards it being potentially introduced in England.
More info: London Property Licensing – Our favourite place to find out and keep on top of new licensing schemes.
4. Banning Orders
What? Expected to come in 1 October 2017, this is part of the above but specifically, to create a rogue landlord and agent database to be used by the DCLG and Local Authorities. If convicted, landlords and agents will be banned from letting for at least 12 months. Individuals may be banned for:
- Housing Offen