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Landlords Regulatory Briefing

Richard Blanco comments

The ironically named 2015 Deregulation Act brought us revisions to Section 8 and Section 21 possession proceedings and deposit protection, plus measures to prevent retaliatory eviction. Since then, we have seen compulsory licensing and accreditation across Wales and a raft of provisions in the 2016 Housing & Planning Act including civil penalties, banning orders and the sharing of deposit protection data. You’ll have read acres of copy on tax changes and the regulation of buy to let mortgages since January 2017. Or have you? Research last year found that only 40% of landlords knew that the failure to provide tenants with the Government’s How To Rent guide could render a Section 21 notice invalid. Landlords are trying to stay abreast of the changes by joining associations, membership at the NLA is up by 30% over the past three years.

So what’s coming down the tracks over the next 12 months? The first thing to note is that some proposed changes could well be shelved. Brexit is stealing the limelight and leaving government with little time to draft yet more regulation for the PRS. Extending the scope of mandatory HMO licensing was due to be implemented from April or October 2017 but there has been no update from the government on this. Currently all properties with five or more people living in two or more households over three or more stories are classed as an HMO. Under the new proposals, the storey criteria was to be removed and all flats above and below business premises were to be brought in scope. Additional HMO licenses where such schemes exist were to be ‘passported’ into the mandatory licensing scheme.

Where I have four sharers in one house, I have warned tenants that they must not move a fifth person in as this would trigger the need for a costly and burdensome HMO license. My main beef with the definition of an HMO, old or new, is that it does not differentiate between three or four sharers on one AST effectively living as a family and people living in lockable rooms with anonymous communal areas. These are two totally different management propositions. In another property, two related couples sharing a house have asked to move a friend in, but because it’s a three story house I can’t let them. If the person were related to them it would be permissible, which shows how absurd the rules are. For now the removal of the storey criteria has been shelved, but watch out as the proposal may regain momentum.

The government announced on 13 July 2017 that the introduction of making tax digital would also be postponed – another sigh of relief. In previous plans, all landlords with a turnover of £10,000 or more were to make digital quarterly tax returns using prescribed software from April 2018. The good news is that only businesses with a turnover more than the VAT threshold – currently £85,000 - will be required to complete tax returns digitally from April 2019 and only for VAT.

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