Legislation for Landlords page 3

Legislation for Landlords

by Hurford Salvi Carr

August 2015
Changes to Tenancy Deposit Protection and the use of Section 21 Notices for landlords and letting agents. 

On 26th March 2015 the Government passed the Deregulation Act to remove or reduce the burdens on businesses, individuals and the taxpayer. The new law places an emphasis on economic growth and replaces outdated legislation.

The Deregulation Act amends the Housing Act 2004 to clarify deposit protection requirements following two court rulings. The Superstrike v Rodrigues 2013 case said that a renewal or Periodic Tenancy (when the fixed period ends) was a new tenancy and the deposit must be re-protected and the Prescribed Information (information about the tenancy deposit protection scheme, the deposit and tenancy related details) re-issued on renewal or if the tenancy became Periodic.

The Charalambous v Ng 2014 court case determined that where a deposit has been paid by a tenant before 6th April 2007 (the date when the tenancy deposit legislation came into force) the deposit does not need to be protected. However, the landlord won’t be able to issue a Section 21 Notice unless the deposit has been protected or returned to the tenant.

  • Deposits received before 6th April 2007 (which became a Periodic

    Tenancy before that date).

  • Deposits paid before 6 April 2007 (which became Periodic Tenancy after

    that date).

  • Deposits received on or after 6th April 2007.

July 2015
HMRC Consultation on Reform to ‘Wear and Tear Allowance ’for landlords

In the Summer Budget 2015 the Government confirmed its intention to introduce measures intended to improve how landlord’s businesses are taxed. The new measures are designed to provide consistency and fairness in the taxation of rented properties. The current 10% Wear and Tear Allowance which allows landlords to reduce the tax they pay, regardless of whether they replace the furnishings in their property, will be replaced. From April 2016 landlords will only be allowed to deduct the costs they actually incur for replacing furnishings in their rental properties.

Landlords will no longer need to decide whether their property is sufficiently furnished to make a claim as the relief applies to all rented properties no matter the level of furnishing. With the current 10% allowance, the higher the rent, the larger the tax relief. In some areas of the country, 10% is not sufficient to cover the actual costs incurred. The proposal will ensure landlords can claim their actual costs and provide a level-playing field for landlords wherever they operate in the country. However, there will be a significant administrative and record keeping burden placed on landlords in order to claim the tax relief.

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