Landlord legislation changes to look out for in 2019

Landlord Advice

31 March 2019

Whether it’s sorting out gas safety certificates or keeping on top of repairs, life as a landlord is jam-packed with responsibility. And when you’re busy making sure things are ticking over nicely, it’s easy to take your eye off the ball when it comes to keeping up to speed with the latest changes to landlord legislation.

We understand that keeping so many plates spinning can be a struggle, so we want to help make things easier for you with our guide to landlord legislation changes to look out for in 2019.

Spanning changes to electrical safety standards to new rules detailing minimum bedroom size requirements, read our guide to learn what landlord legislation updates to keep on your radar in 2019 to avoid any nasty surprises and stay one step ahead of the game.

Tenant Fees Bill comes into effect in June

Set to become law on 1st June, the Tenant Fees Bill will see deposits being capped at five weeks’ rent (or six for tenancies that cost more than £50,000 a year). The bill is designed to prevent landlords and letting agents charging fees for services – such as tenant referencing and inventories – other than the following:

  • Contract changes or termination when requested by the tenant
  • Utilities, communications services and council tax
  • Issues for which the tenant is at fault, such as the replacement of lost keys

Given that these red tape services tend to come at the beginning of a tenancy when tenants have already had to pay a deposit and their first month’s rent in advance, it could save renters a substantial amount. In fact, according to government analysis, this bill could save private renters an average of £300 every time they move to a new house.  

However, given that the bill could make it more expensive for landlords to use letting agents, the update could leave some landlords with no option but to increase rent fees to cover the added expenses.

The Tenant Fees Bill will apply to all tenancies in England signed after June 1st but won’t affect pre-existing tenancies until 2020. Letting fees are already banned in Scotland and a ban is currently being considered by the Welsh Assembly.

Find out more about this legislation in our Tenant Fees Bill FAQ-buster.

Mortgage interest tax relief decreasing

Landlords will continue to feel the impact of cuts to mortgage interest tax relief. At the beginning of the 2019-20 tax year in April, landlords will only be able to claim 25% of their mortgage tax relief when filing their taxes – down from 50% for the 2018-19 tax year.

The mortgage interest tax relief will continue to decrease until April 2020, when landlords will no longer be able to deduct their mortgage costs from their rental income before calculating their tax liability. Following this, landlords will be given a tax credit worth 20% of the mortgage interest cost to offset against income tax. Read our guide to the landlord tax relief changes to help ensure your bills are adding up as they should.

Five-year electrical safety checks being introduced

In July 2018 the government announced that it’s introducing five-year electrical safety checks for landlords. These upcoming changes will make it a legal requirement for landlords to get qualified individuals to carry out electrical installation safety checks every five years.

It’s still to be announced when these updates will come into effect but if landlords fail to comply or are found to be in breach of the new rules, they could receive fines of up to £30,000 and banning orders for repeated or serious offences.

Minimum energy efficiency standards extended

Launched in April 2018, minimum energy efficiency standards (MEES) mean that newly-rented homes and those with renewed tenancies must have an energy performance certificate (EPC) rating of E or above.

However, from 1 April 2020 these rules will extend to cover existing tenancies too, meaning landlords can no longer rent out homes with an EPC rating of F or G – or face fines up to a maximum of £5000 if they continue to do so.

So, if you’ve got a long-term tenant, it could be worth spending some time this year getting your property’s energy efficiency up to scratch ahead of next year’s deadline. Where upgrades are needed, the average cost to improve an F or G rated property to a band E is expected to be around £1,200 but if upgrades will cost more than £3,500, landlords will be able to register for an exemption.

Section 21 controversy

Under Section 21, landlords can give notice to let tenants know they’re taking back possession of their property at the end of a fixed term or any time of an agreed break clause. However, campaigners against the current laws argue that this legislation can result in homelessness. While there’s nothing set in stone that section 21 rules will be revamped this year, it’s a topic to keep tabs on.

Landlords legally required to join redress schemes

Since 1st October 2014, all letting and managing agents in England have been legally required to become members of a redress scheme. It was announced at the beginning of this year that soon all private landlords will also be required to register with a compulsory redress scheme to help solve tenant disputes – or face a fine of up to £5,000. No date has been set for the introduction of these new rules, so keep your eyes peeled for any updates.

Homes (Fitness for Human Habitation) Bill comes into effect in March

The Homes (Fitness for Human Habitation) Bill came into effect on 20th March and has made it a requirement that all social and private landlords (or agents acting on their behalf) in England to ensure their property is fit for human habitation at the beginning and throughout the duration of the tenancy. Failing to do so gives tenants the right to take legal action against their landlords.

This bill will only apply to tenancies made after 20th March, so any tenancy agreement created before this won’t be covered by the legislation.

Letting agents legally required to join client money protection schemes (CMPS)

From April 2019, all property agents need to register with an approved client money protection scheme (CMPS). Whether it’s a tenancy deposit, rent, or funds to cover property maintenance, this scheme gives landlords and tenants added protection if, for example, a letting agency goes into administration. Any agent failing to join a CMPS will face a penalty of up to £30,000 for non-compliance.

Although at first glance these rules may help landlords breathe easier, the Residential Landlord Association has warned that these schemes might not cover the full value of rent as operators will be able to cap the money they pay out for a claim.

Minimum space requirements for bedroom sizes introduced

Regulations that came into effect on 1 October last year mean that landlords face new restrictions governing the minimum size of bedroom sizes in buy-to-let properties. The regulations for the minimum standard of bedroom sizes are:

  • One person (under 10-years old) – minimum of 4.64 square metres
  • One person (over 10-years old) – minimum of 6.51 square metres
  • Two people (over 10-years old) – minimum of 10.22 square metres

To stick with the new rules, landlords must stop letting rooms that fall below the size requirements listed above. Those who continue to do so could face criminal charges and will have up to 18 months to set the situation right.

Brexit and landlords

Even though there’s been no official word on how Brexit will impact landlords, keeping up to speed with the latest updates could be wise move to make sure you’re not left out of pocket by any of the changes.

Finding time to stay on top of the latest changes to landlord legislation can be tricky. That’s why AXA are there to help you at every step of your landlord adventure – from providing comprehensive cover to advice on how to follow the latest rule changes. We’re working to make landlording simpler, so you can have a few less things to worry about and more time to spend on what matter most to you.

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