2016 was a year of great change in the private rented sector especially for landlords and 2017 looks set to be another year of upheaval, here’s our list of some important areas of change:
Mandatory Client Money Protect
Client money protection is an insurance policy designed to protect clients’ money, such as rent, deposit or other monies, from theft or misappropriation by an agent. As it stands agents do not, by law, need client money protection, and unfortunately many landlords and tenants are still unaware that it exists. It is likely, in early 2017, that the Government will announce that client money protection will become mandatory throughout England, but it will unlikely to be made to the legislation before 2018. These changes will be positive in regulating the industry further and ensuring clients’ money is secure.
Wear and Tear Allowance
Another change commencing in 2017 is the Wear and Tear Allowance. Previously there was a 10% allowance for fair wear and tear on furnished let residential property. This has now been removed and to be eligible for any tax deductions you must prove any outlay you have incurred in maintaining the property. You can no longer simply deduct 10% as standard.
Concerning tax, there appears to be further changes in the New Year, especially as the government aims to review the private rented sector. The introduction of 3% stamp duty that has been added to the purchase of a second property has already increased the cost for landlords after it came into legislation in 2016.
As of April 2017, tax relief is also changing for landlords meaning that they are unable to use their income tax bills to offset interest only mortgage costs. Instead of being taxed on profit, landlords will now be taxed according to their annual turnover amount. Until now landlords could claim complete tax relief on mortgage interest payments, however, landlords can no longer take their mortgage interest away from their own rental income, now only permitted at a basic rate.