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2021 has several key dates that buy-to-let investors and landlords need to be aware of, as these changes to laws will impact the way landlords pay tax, manage tenants and ensure their properties are safe. Whether you’re an existing landlord or you’re looking to invest in a property this year, these are the updates you should be aware of.
At the end of May, the temporary requirement for landlords to provide tenants with six months’ notice before commencing evictions will come to an end. The standard ruling before this was two months and that is what it will revert back to from 31st May. This deadline was originally for March but was extended further given the impact of COVID-19. The regulations for eviction notices state that it’s illegal to attend a residential property to carry out an eviction or give notice of an eviction, unless there are exceptional circumstances. Previously, this would include substantial rent arrears but for much of 2020, these were excluded. The definition changed in January 2021 to specify that outstanding rent arrears should be defined as 6 months unpaid rent or more.
By 1st April, landlords will be required to have an EICR performed on buy-to-let properties in England. The EICR certificate stands for Electrical Installation Condition Report and it details the safety and condition of all electrical installations in the property. It will be a requirement for landlords to serve tenants a copy of this report within 28 days of the checks being carried out, and if any remedial work is required as a result, this will need to be booked in as soon as possible. It’s not just new tenancies that this law applies to - existing tenants are also required to receive a copy of the EICR report, so it’s an update to the laws that all landlords need to comply with.
The government’s job retention scheme, also known as the furlough scheme, was due to wrap up at the end of April. However, in the recent budget announcement, it was stated that it will now be extended until the end of September. Furlough applies across the whole of the UK and covers up to 80% of an employee’s salary for any hours they can’t work, up to the value of £2,500 per month. This is a key date for landlords who have tenants who have been impacted by COVID-19 - if tenants currently supported by the furlough scheme are not kept on by their employers, their income could end in September which will impact how they pay their rent. Landlords should stay in touch with their tenants ahead of this date to be sure that they won’t be affected and to make arrangements to support them if need be.
While it’s not been confirmed yet, it’s expected that Capital Gains Tax rates will be increasing in 2021, although it’s likely to be later in the year. Capital Gains Tax is paid on the increase in the value of properties sold and there are suggestions that it should fall into line with the rate of income tax - currently taxed at 20% for basic rates and 40% for higher rate individuals. Presently, CGT is set at 18% on properties for basic tax rate payers and 28% for higher rate payers, and has to be paid within 30 days of the sale completing. However, if it is increased to coincide with the rate of income tax, it will mean that higher rate payers would have a significant cost to pay when selling buy-to-let properties, making it harder than ever to buy investment properties.
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