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10 things landlords need to know in 2021

From evictions resuming, to a new debt respite scheme and enhanced safety requirements, here’s everything you can expect as a landlord in 2021.

Guest Author
Words by: Nicky Burridge

Contributing Editor

This year got off to a tough start with further lockdown restrictions introduced.

But with the vaccine rollout continuing apace and a roadmap out of lockdown in place, there is some return to pre-pandemic ‘normality’.

Here are 10 things landlords need to know in 2021.

1. Debt respite scheme

The government's new debt respite scheme came into force on 4 May 2021. The scheme, which covers a range of different debts including rent arrears, enables people who are struggling financially to apply for breathing space or a moratorium – namely a period when they do not have to make repayments.

People across England and Wales who are struggling to repay their debts could be eligible, and the government expects 700,000 people to benefit in the first year of the scheme.

There are two types of breathing space that can be applied for: a standard breathing space, known as a Breathing Space Moratorium, and a mental health crisis breathing space, known as a Mental Health Crisis Moratorium.

A Breathing Space Moratorium gives people legal protection from creditors, such as landlords, taking action for up to 60 days, with most interest and penalty charges frozen, and enforcement action halted.

A Mental Health Crisis Moratorium is available to people receiving mental health crisis treatment. It offers the same protections as above but lasts for the length of the treatment plus 30 days.

2. Evictions 

Evictions in England can resume from 1 June 2021 but landlords will have to continue giving their tenants extended notice periods.

The only evictions that can happen before this date are ones due to anti-social behaviour, illegal occupation, fraud or rent arrears of more than six months, as well as cases of domestic abuse in the social sector.

Even once the ban is lifted, bailiffs cannot carry out evictions if anyone in the property has Covid-19 symptoms or is self-isolating.

The government said in lifting the ban it recognised that 45% of private landlords owned only one property and were highly vulnerable to rent arrears.

Landlords can start eviction proceedings by issuing either a section 21 or section 8 notice once the ban is lifted.

As a landlord, you do not need to give a reason to evict tenants under a section 21 notice, but you must provide a warning period. You can only issue a section 8 notice if there are legal grounds, for example if tenants are in rent arrears.

A free mediation service has also been set up to help landlords and tenants resolve disputes without having to go to court, in a bid to help more people stay in their homes.

The ban on evictions will remain in place in Wales until 30 June.

3. Notice periods

While evictions can resume, landlords will have to continue to give tenants longer notice periods until at least October.

The extended notice period of six months, up from the usual two months, which was put in place as part of emergency measures introduced during the pandemic, will expire on 31 May.

But it is being replaced with a new four-month notice period, which will remain in place until 1 October, after which notice periods should return to normal, subject to public health advice and progress with the roadmap out of lockdown.

It is worth noting that there are some exceptions under which shorter notice periods can be given.

For example, from August 1, if your tenant has accumulated rent arrears of more than four months, you will only need to give them four weeks’ notice.

If a tenant has made a false statement the notice period is reduced to two to four weeks, and in the case of anti-social behaviour, eviction can be immediate or up to four weeks’ notice given.

Landlords in Scotland have to give notice of 28 days, three months or six months depending on the reason for the eviction, while in Northern Ireland they must give 12 weeks’ notice up from a normal notice period of 28 days.

4. New safety requirements

In a bid to improve tenant safety, the government has introduced new requirements for landlords to demonstrate that any electrical installations, such as wiring and electrical sockets, have been tested by a qualified electrician. 

Landlords previously had to have an Electrical Installation Condition Report for every property they owned for new tenancies, and since 1 April 2021, they also need to have one for existing tenancies. 

In addition, landlords need to ensure inspections are carried out at least every five years and the tenants are given a copy of the report within 28 days of it being issued.

Landlords in Scotland have been given an extended timeline in which to install heat alarms in kitchens, smoke alarms in living rooms, halls and landings, which must all be interlinked, and carbon monoxide alarms near any carbon-fuelled boilers, fires or heaters.

The new measures, which are in response to the Grenfell Tower fire in 2017, had been due to come into force on 1 February 2021.

However, the Scottish Parliament has delayed the requirement until February 2022.

5. Stamp duty holiday extension

Investors thinking of expanding their property portfolios have until 1 October 2021 to take advantage of the stamp duty holiday after the deadline for the tax break was extended.

While landlords buying properties are still liable for the 3% stamp duty surcharge on additional homes, they are exempt from paying basic stamp duty on the first £500,000 of property until 30 June. The holiday will then continue on the first £250,000 until 30 September.

When the stamp duty holiday ends on 1 October, normal stamp duty obligations will resume, with this sum paid in addition to the stamp duty surcharge.

6. New tax year changes

The 2020/21 tax year kicked in on 6 April 2021. Among the property-related things worth knowing about in the new tax year is mortgage interest tax relief, which has been phased out and replaced with a 20% tax credit for mortgage interest. 

Although the change came into force on 6 April 2020, its impact will be felt from April 2021, as most landlords pay income tax through self-assessment, which is only completed once the relevant tax year has ended.

Other items to keep an eye on include the Making Tax Digital rules. Investment landlords with VAT-registered businesses that generate a turnover of more than £85,000 are already required to have a digital tax account, as part of HM Revenue & Customs’ (HMRC) Making Tax Digital initiative. 

From April 2022, all businesses, regardless of their turnover, will have to follow the Making Tax Digital rules. They will require landlords to send HMRC quarterly updates on their income and expenses through their digital accounts, rather than completing an annual tax return, meaning they have 2021 to gear up for the change. 

Landlords who have not registered their properties as a business but earn income of more than £10,000 a year from rent will have to comply with the rules from 6 April 2023.

7. Right to Rent checks

Landlords have to carry out Right to Rent checks to verify that their tenant can legally rent a property.

While they normally require landlords and letting agents to check a tenant's identity documents in person, since 30 March 2020, the government has allowed them to be conducted by video or online due to the pandemic.

The Home Office had previously suggested the checks would also have to be carried out in person retrospectively within eight weeks of the temporary procedures expiring on 17 May 2021.

But it has recently clarified that landlords will not have to carry out in-person checks on existing tenants after all, although they will still need to do so on new ones.

Meanwhile, checks continue in the same way for tenants from the EU, Switzerland and the European Economic Area until 30 June 2021. New guidance is expected soon.

8. Tenants with pets

The government has revised its standard tenancy agreement to make it easier for ‘responsible tenants with well-behaved pets’ to rent a home.

Under the amended model tenancy agreement unveiled by the government on 28 January 2021, consent for pets will be the default position.

This means that landlords who opt for this particular tenancy agreement - the government’s recommended contract for landlords in England - will no longer be able to issue blanket bans on pets.

While landlords are not legally required to accept pets, the government hopes they will do so.

9. Protecting clients’ money

New rules for letting agents on the protection of clients’ money have come into force. 

Under the legislation, any agents in England who handle clients’ money, whether it belongs to tenants or landlords, had until 1 April 2021 to join a client money protection scheme.

They must also display a certificate in their offices showing which scheme they are part of. 

While it is letting agents rather than landlords who must comply with the legislation, it is still something investors need to be aware of, to ensure both their own money and their tenants’ money is protected.

10. Renters’ Reform Bill

The introduction of the Renters’ Reform Bill has been delayed due to the pandemic, with housing minister Christopher Pincher saying it will be taken forward when the urgency of responding to the pandemic has passed. 

If it does come into force this year, it will have a wide-ranging impact on landlords.

Measures in the bill, which only applies to England, include ending landlords’ ability to evict tenants without a good reason (through the scrapping of section 21 evictions), giving landlords more rights to remove tenants if they have a valid reason and introducing a lifetime deposit scheme and enabling tenants to transfer their deposit from one property to another.

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