In the first quarter of the year – we summarise the newest landlords laws, updates and regulations for 2024 so far. Here’s a quick summary of interesting updates that have happened recently:
Renter’s reform U-turn
The Housing Minister’s recent decision to reverse proposed reforms in the rental sector marks a significant shift in policy, favouring landlords. Originally, the reforms aimed to enhance tenant rights, including the introduction of lifetime deposits and a requirement for landlords to provide a valid reason for eviction. However, following consultations with landlord associations and industry stakeholders, the government opted to scrap these plans. Landlords welcomed the U-turn, citing concerns about potential financial burdens and hurdles associated with the proposed changes.
The decision reflects a recognition of the vital role played by landlords in the rental market and acknowledges the need to strike a balance between tenant protection and landlord rights.
Complexities with landlords using limited companies to operate buy-to-lets
Landlords are being cautioned about the complexities of operating buy-to-let businesses through limited companies following a surge in enquiries to HMRC regarding tax implications. HMRC has begun sending letters to landlords who own rental properties through limited companies, urging them to review their tax arrangements. The surge in inquiries suggests that landlords are unaware of the tax implications and compliance requirements associated with operating through limited companies. Landlords must carefully consider the financial and administrative implications before transitioning to a limited company structure. Seeking professional tax advice is recommended to ensure compliance with tax regulations and to mitigate potential risks associated with incorrect tax arrangements.
Reduction in higher rate of Capital Gains Tax
Landlords have secured a victory with the reduction of the higher rate of Capital Gains Tax from 28% to 24%, aimed at promoting sales. This adjustment provides landlords with greater motivation to sell lower-yielding properties and explore more profitable options like HMOs to maximise their portfolios. Effective from 6th April, the Government anticipates that the increased availability of properties on the market will facilitate more opportunities for potential buyers to enter the housing market.
Major tax shock for furnished holiday and short-term let owners
The government has said that it will do away with the furnished holiday lettings (FHL) tax structure in April 2025. FHLs will no longer receive the preferential tax status that they currently enjoy since they will be treated as businesses and subject to a less favourable tax regime than regular long-term rentals, or buy-to-lets.
Higher rental rates had made short-term Airbnb style rentals more profitable, even though they require more work – as well as the favourable tax regime that bases the rental income on a business operation rather than being taxed as an investment, as is the case with standard buy-to-lets (BTL).
Last full year of lower stamp duty
In his notorious mini budget, then-Chancellor Kwasi Kwarteng made a number of announcements on September 23, 2022, including the “permanent” raising of the residential nil-rate tax threshold from £125,000 to £250,000.
But in his Autumn Statement on November 17, 2022, Jeremy Hunt subtly included a sunset provision, meaning that this stamp duty cut will now expire on March 31, 2025. This implies that starting in the next year, all purchasers will have to pay the entire stamp duty sum.
Similar to previous stamp duty modifications, this might lead to a spike in landlord transactions between the close of 2024 and the start of 2025, just before the reduced stamp duty expires.
How Belvoir Can Help
Unsure about any of the latest updates to concern landlords and what they mean? Get in touch with us – our experts can help give you peace of mind and smooth over anything you are unsure about.
