What Landlords Need to Know in 2022
Rental reform, tax deadlines, and energy change – oh my! We’ve got your questions answered on the biggest key challenges for investors in 2022.
Whether you’re looking to invest in buy-to-let property this year or simply want to manage your portfolio and get a glimpse of what to look out for, below is a recording of our webinar answering your questions and concerns going into 2022 and a compilation of the 10 key factors that landlords should look out for.
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- Eviction reforms and lifetime deposits. The Renters’ Reform Bill had been repeatedly delayed in the past due to the pandemic, with the proposal of abolishing Section 21. In 2019, the government had proposed to abolish this clause which allows landlords to end ‘rolling’ tenancies with two months’ notice without giving a reason. But that’s about to change. Landlords can keep their eyes open for updates because the House of Commons has announced a White Paper is expected in 2022 – covering the background and reactions to date. Other plans included in the bill are a proposal to replace rental security deposits with a ‘lifetime deposit’ that moves with the tenant, including the plan to make the rogue landlord database available to the public.
- Tax return deadline and tax relief changes. To avoid penalty fees, landlords should mark their calendars for Monday, January 31st as the deadline for online self-assessment tax returns in the 2020-2021 tax year. The 2020-21 return also marks the first in which the new mortgage interest tax relief credit applies. This controversial credit (which the government has planned for since 2017), means landlords can now only offset 20% of their mortgage interest payments when filing their returns.
- Extension to file Capital Gains Tax bills. A force of change is coming as during the Autumn Budget, the Chancellor announced changes to the filing deadline for reporting and paying capital gains tax (CGT) on the disposal of properties. The good news is you’ll have a 60 day extension rather than 30 days prior to reporting your bill whilst selling your buy-to-let property.
- Inflation and buy-to-let mortgages. Buy-to-let mortgage rates have fallen slightly in 2021, but that could all change in 2022. The likelihood of rising inflation and a hike in the Bank of England’s base rate changes for this year is quite high. The base rate can affect everything when it comes to lending and borrowing, so whether you’re a first time buyer or looking for a buy-to-let, it’s worth considering how this will affect you.
- Energy Efficiency. The government is set to go ahead with plans to improve on energy efficiency for the private rented sector in 2022. Landlords have until 2026 to ensure all newly-let properties achieve band C on Energy Performance Certificates (EPCs) – prior to the original deadline of 2025. So make sure you are up-to-date on EPCs and what your rating is!
- ‘Green’ Mortgage Growth. Is 2022 the year of green mortgages? It could very well be – with an increasing number of lenders launching specialist deals and offering lower rates for landlords who buy energy-efficient properties, ‘green’ lending remains a specialised niche in the buy-to-let market, but that could change in the horizon of 2022.
- Recovering Rental Market. With the pandemic and an uncertain economy, it’s understandable lathinking of selling rather than expanding their portfolios. But to those who do choose to invest further, you could benefit from an improving rental market. The property portal Zoopla predicts rental prices will rise by 4.5% in 2022. Zoopla says growth in London could reach 3.5%, exceeding the levels recorded before Covid-19. However, be wary of locations that are vital for the livelihood of local residents, as there is to be an upcoming consultation to look at introducing a national register in the UK for holiday lets, which will examine their effect on the local housing supply.
- More Local Licensing Schemes. Even though the government review in 2019 may have found some issues with the system – the licensing schemes are here to stay. Mandatory and additional licensing schemes apply to landlords who let out Houses in Multiple Occupation (HMOs), but a number of councils require some or all landlords in an area get a licence before they can let out a property. You can find out if you need a license to let a property in your area by contacting your local council.
- The New Model Tenancy Agreement. The government launched a new Model Tenancy Agreement, updated in January 2021, meaning landlords could no longer issue bans on tenants having pets in England. The change to legislation has made it easier to rent with pets. It’s important landlords be alert to the desire for more pet-friendly properties, as thanks to the pandemic, pet ownership thrived in 2020/21, resulting in half of UK households owning a pet. Landlords must now object in writing if they receive a pet request from a tenant and should only reject tenants with pets if there is ‘good reason’.
- Carbon Monoxide Requirements. During November 2021, the government announced new rules that require carbon monoxide alarms be fitted in both social and private rented properties with appliances such as gas boilers and fires. It’s important to check your smoke alarms regularly and work with qualified, well-reviewed tradespeople as even the tiniest adjustments make the biggest difference.
It can be perplexing and a bit complicated at times for landlords today, but with this list tucked under your belt of knowledge, we hope you’ll be better prepared for the duties that call when it comes to landlord life!