If you’re planning on letting a property in 2022, there are some recent important changes to rules and regulations you need to be aware of. Whether your property is freehold or leasehold and you want to let out a single room or entire house, read on so you don’t get caught out…
A few years ago you could deduct mortgage expenses from your rental income to reduce your tax bill. In this way, some landlords renting out a property were able to get 40% tax relief on their mortgage payments.
However, since 2017 a new system has been phased in to stop this, meaning landlords in higher tax brackets can’t claim back the tax paid on their mortgage repayments. This is likely to push lots of landlords into higher tax brackets once other sources of income are taken into account.
In 2021, the government introduced a new model tenancy agreement which stops landlords banning pets by default. The current rules state that pets are allowed unless you object in writing with a good reason within 28 days of your tenant’s written request to keep one. It’s important to know that this isn’t required by law, just a recommended version to use.
A record increase in global gas prices prompted an energy price cap rise of 54% in April 2022. Some customers will notice an increase of up to £693 over the year.[i]
When renting out a property, if you include gas and/or electricity then be sure to take the energy price cap increase into account when setting the rent.
The rules around Right to Rent checks were changed during the pandemic to keep physical contact to a minimum. Tenants were allowed to show their Right to Rent documents over video and use scanned copies instead of originals with landlords and agents.
An online Right to Rent service, which lets tenants see and share their Home Office Right to Rent record, was also made available to certain non-British citizens and those with a BNO (British National Overseas) visa.
The government is now planning to make all Right to Rent checks online and that should happen very soon. Until then, the changes made for British nationals during the pandemic are likely to remain in place.
If you’re selling a property, there has been a rule change which could be to your benefit. Since 27th October 2021, the deadline for filing and paying Capital Gains Tax has been extended from 30 days to 60 days. So, you’ve got more time to get your accounts in order and get that paperwork submitted.
At the moment, landlords letting a property must ensure they meet a minimum Energy Performance Certificate rating of E. However, it’s very likely this will change in the near future and, from 31st December 2025 for new tenancies and from 31st December 2028 for existing tenancies, you’ll have to meet EPC Band C unless you’re exempt.[ii]
This means many people involved with property lettings will have to make costly improvements such as installing double glazing, cavity wall insulation or solar panels. Although you may be able to claim financial help, it’s worth keeping in mind that you could face extra costs to meet energy rating criteria when renting out a property.
Inflation is predicted to rocket this year and this affects everyone, including landlords. Alongside the increased costs of property maintenance, insurance premiums and energy bills, your buy-to-let mortgage repayments may well rise with interest rates.
It’s prudent to make sure your rental income covers your mortgage repayments, or at least the interest on your mortgage to make buy-to-lets worthwhile.
While 2022 is likely to bring challenges for those involved with property lettings, there is plenty to be excited about. By keeping up to date, you can ensure your rental property follows relevant regulations and remains a profitable asset.
If you’re interested in letting a property or are a current landlord, we’re here to help. At Charters we have years of experience in the rental market and will be happy to answer all your questions and discuss how we can support you.
Please get in touch to find out more.
[i] https://www.ofgem.gov.uk/publications/price-cap-increase-ps693-april
[ii] https://bills.parliament.uk/publications/42300/documents/572
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