Trying times for buy-to-let landlords

Buy-to-let investors must keep on top of new government regulations as well as tax changes, says Emma Lunn.


New rules will enable tenants to sue slum landlords
(Image credit: Credit: D. Callcut / Alamy Stock Photo)

Buy-to-let investors must keep on top of new government regulations as well as tax changes.

The past few years have seen the introduction of a number of new rules affecting landlords, covering both the treatment of tenants and the financial side of renting out property. Here's a rundown of what you need to know.

First, landlords found to be renting out substandard properties now face tougher consequences, with the introduction of a national database of rogue landlords and letting agents. The database includes landlords and letting agents who have been convicted of a range of housing and immigration offences, such as unlawful eviction, and breaching gas and fire safety measures.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Local authorities can share information with one another, but the register is not accessible to the public. Under the new rules the worst offenders can be banned from letting property for anything from 12 months to life. If a landlord ignores a banning order, he or she will face criminal sanctions, from six months in prison to an unlimited fine.

Landlords should also be aware of a bill going through parliament the Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill. Currently, tenants need to complain to the council if their house isn't safe or fit to live in, and rely on the local authority to take action. But under the bill tenants will have the right to bypass the council and sue landlords who rent out properties in a poor state of repair.

The bill will apply to all areas of a building in which the landlord has an interest. This includes communal areas, such as stairwells, and covers other vital aspects such as fire alarms, sprinklers and gas pipes. You should also be aware that since 1 April newly let properties are required to have a minimum energy performance certificate (EPC) rating of E. This will apply to all rental properties from 1 April 2020. Landlords can be fined up to £4,000 if their property doesn't meet the standard.

Talk tough with your letting agent

Landlords should also get ready for some tough conversations with their letting agents, if they use one. As it stands, agents can charge tenants for services such as contract renewal. But the Tenant Fees Bill now working its way through parliament will ban agents from charging tenants fees. Once this is law, it's expected that agents will try to pass the fee on to landlords, who can swallow it, try to add it to the rent they charge, negotiate harder or if that fails, find a cheaper agent. The bill will also cap tenancy deposits at six weeks' rent.

The new tax year has also seen landlords' profits hit by taxation changes. Section 24 of the Finance Act introduced a tapering down in the tax relief that allows landlords to offset the cost of mortgage interest against their rental income. The start of the 2018-2019 tax year saw this cut further to 50% (eventually this will fall to 0%, to be replaced by a tax credit worth 20% of mortgage interest).

Finally, if you plan to take back a property, make sure you keep up to date with rules on how "section 21" notices can be used. (You can issue a section 21 notice if you want your property back after a fixed term ends.) The Deregulation Act 2015 changes when and how section 21 notices can be issued and comes into force for all tenancies on 1 October 2018 (it's been in effect for new tenancies since 2015). The Act introduced new conditions that must be met before the service of such a notice can be valid, and deadlines for issuing proceedings, among other changes.

Emma Lunn

Emma Lunn is a multi-award-winning journalist who specialises in personal finance and consumer issues. With more than 18 years’ experience in personal finance, Emma has covered topics including mortgages, first-time buyers, leasehold, banking, debt, budgeting, broadband, energy, pensions and investments. Emma’s one of the most prolific freelance personal finance journalists with a back catalogue of work in newspapers such as The Guardian, The Independent, The Daily Telegraph, the Mail on Sunday and the Mirror. As a freelancer she has also completed various in-house contracts at The Guardian, The Independent, Mortgage Solutions, Orange and Moneywise. 

She also writes regularly for specialist magazines and websites such as Property Hub, Mortgage Strategy and She’s particularly proud of her work writing about the leasehold sector and a Guardian front-page story about a dodgy landlord. She has a real passion for helping people learn about money – especially when many people are struggling to get by in today’s challenging economic climate – and prides herself on simplifying complex subjects.