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Everything Landlords Need to Know in 2022

The start of another year often means new rules and legislation for landlords to get to grips with – and 2022 is no different.

From the proposed Renters Reform Bill and energy efficiency, to changes to rules on pets and carbon monoxide alarms, this guide outlines everything landlords need to know in 2022…

1. The Renters Reform Bill

The Renters Reform Bill has been labelled the biggest change to the private rented sector since the 1990s.

Originally, the Bill was due to be heard in Parliament in the autumn of 2021, but this was delayed due to the Covid-19 pandemic.

However, the Bill is likely to gather pace in 2022 as consultation continues, with Martin & Co represented on the Letting Industry Council’s working group.

There are three main elements to the proposed Bill, which was launched as part of the Queen’s Speech in December 2019

The three main aspects of the Bill are:

The end of no-fault evictions

Currently, landlords can regain possession of their rental properties at the end of a fixed term tenancy or during a periodic tenancy by issuing tenants with a section 21 notice

This gives the tenant a period of not less than two months’ that the landlord requires possession of the property.

Under the Renters Reform Bill, however, ‘no-fault’ evictions and section 21 of the Housing Act 1988 would be scrapped, meaning you would need to regain possession of your property through the court system or a specialist ‘tribunal’.

As part of the proposed section 21 reforms, the Bill includes plans to also reform the section 8 eviction process, reforming landlords’ grounds for possession and improving the court system.

Lifetime deposits

The Bill proposes that tenants should be able to transfer their security deposit from property to property, meaning they don’t have to save for a new deposit when moving rental homes.

The landlord database

The government’s database of rogue landlords would be made available to tenants, agents, landlords and professional bodies under the Bill.

Consideration is also being given for a landlord register or a requirement for landlords to register with a redress scheme.

2. Mortgage interest tax credits

The introduction of a 20% tax credit to cover landlords’ mortgage interest has been phased in since 2017.

The 2020-21 tax year was the first where the credit fully replaced being able to offset mortgage interest against income tax – and tax returns for that year must be filed by the end of January 2022.

3. Further interest rate rises?

After nearly two years of historic low interest rates, the Bank of England increased its base interest rate from 0.1% to 0.25% in December 2021.

When the bank rate rises, mortgage rates generally follow, so if your buy-to-let mortgage deal is due to end this year, now is the time to start looking for a new deal.

Although nobody can predict what the Bank will do, most forecasts suggest further rate rises will come this year, potentially to 0.75% by the summer.

4. An increase in ‘green mortgages’

Climate change and energy efficiency is a major focus of the UK government, and a number of mortgage lenders are now incentivising landlords and property owners to become ‘greener’.

Green mortgages offer buyers and landlords lower interest rates on properties with a ‘C’ or above Energy Performance Certificate (EPC) rating.

The likes of NatWest, Nationwide and Virgin are already offering green mortgages and more lenders are likely to join them in 2022.

5. Changes to rules on energy efficiency

Under current rules, private rented properties in the UK must have a minimum Energy Performance Certificate (EPC) rating of ‘E’ to be legally let out.

In England and Wales, proposals are in place for the minimum rating to rise to ‘C’ by 2025.

So, if your rental property is rated ‘D’ or ‘E’, now is the time to start looking at how you can improve its energy efficiency before those new rules come into force.

In Scotland, rules requiring all rental properties to have a minimum rating of ‘E’ were due to come into force in April 2020 but were delayed by the pandemic.

The decision was then made to skip the ‘E’ requirement and move up to a ‘D’ requirement from April 2022.

However, the Scottish government has now decided to bring their proposals into line with England and Wales, meaning a ‘C’ rating will be required for new Scottish tenancies from 2025.

6. Minimum notice periods in Wales

In Wales, new minimum notice periods are set to come into force sometime in the spring of 2022.

The Renting Homes (Amendment) (Wales) Act 2021 was passed last year, with the law stating landlords must give a minimum of six months’ notice to tenants if they wish to regain possession of their property.

Because notice can’t be given during the first six months of a tenancy, the law means all tenancies in Wales will now be a minimum of 12 months.

Section 8 notices can still be used by landlords if a tenant has breached their agreement.

7. The Leasehold Reform Bill

The Leasehold Reform Bill is currently making its way through parliament and is likely to become law in 2022.

Under the Bill, ground rents for new leasehold properties would only be able to be charged and increased at a rate of ‘one peppercorn’.

The rules would also apply to existing leasehold properties where the lease is being extended and the freeholder has owned the building for at least two years.

‘Peppercorn’ ground rent is effectively zero, dating from the 16th or 17th century when although the spice was of high value, one single peppercorn was essentially worthless.

8. Tax changes for landlords in 2022

After so many tax-related changes in previous years, 2022 is looking like a year when landlords will be able to relax a little more when it comes to tax.

The personal tax allowance of £12,570 is expected to remain in place until 2026, while the capital gains tax allowance of £12,300 is also set to stay frozen.

Making Tax Digital

VAT-registered landlords with a rental turnover of more than £85,000 will need to switch to the Making Tax Digital (MTD) system this year.

The system means you would send four quarterly submissions on income and expenses rather than an annual tax return and then sign a declaration to confirm their numbers.

If your rental property business is VAT-registered and your turnover exceeds £85,000 per year, you’ll need to use the MTD system for your first tax return after April 2022.

If you’re a self-employed landlord and your annual income exceeds £10,000, you’ll need to follow MTD rules from April 2024.

9. Pet-friendly tenancies

The government has already taken steps to encourage more landlords to accept pets by amending their model tenancy agreement.

The agreement now offers consent for pets as a default and if you wish to object, you’ll need to do so in writing, providing a valid reason, within 28 days of the tenant’s request.

Of course, this only applies to landlords who use the government’s model agreement, but there could be further changes to pets in rentals coming during 2022 through the Dogs and Domestic Animals Accommodation Protection Bill.

This Bill is expected to have its second reading in parliament early in 2022 and could introduce further changes to rules around pets in rental properties if it becomes law.

Certificates of guardianship

The Bill states that tenants who wish to keep a pet in their rental property will need to provide their landlord with a certificate of responsible animal guardianship.

The certificates will be issued by registered vets, who will also check that:

  • The pet is microchipped if a cat or a dog
  • The pet has been de-wormed and deflead
  • The pet has had all required vaccinations
  • The pet can respond to commands from its owner

All pet details would also be held on a database.

Pet insurance

Under the Tenant Fees Act 2019, landlords or their letting agents are unable to charge additional fees to tenants, other than holding deposits, deposits and rent payments.

Under the Bill, however, landlords would be able to charge tenants a pet insurance fee if they wish to keep an animal.

No automatic right to keep a pet

Tenants don’t have an automatic right to keep a pet under the proposals in the Bill.

But landlords would only be able to decline requests from tenants in possession of a responsible guardianship certificate if the pet was deemed a risk or nuisance to other people.

Landlord exemption

Under the Bill, landlords would be able to apply for an exemption certificate if:

  • They, or another tenant, has a religious reason for not encountering domestic animals
  • They, or another tenant, has a medical reason for not encountering domestic animals
  • Their property is deemed unsuitable for domestic animals

10. Rules on carbon monoxide alarms

Under current rules, your rental property must have a carbon monoxide alarm fitted in every room where there is a solid fuel burning appliance.

However, under proposals revealed at the end of 2021, the government is looking to extend those rules to include any room used as living accommodation where there is a gas boiler or fire.

Meanwhile, updated rules in Scotland mean that every home north of the border must have interlinked fire alarms by February 2022 – including rental properties.

11. Short-term let licences in Scotland

Plans are under way in Scotland that would require landlords letting out properties for short periods of time to have a licence – including those let through online platform Airbnb.

The proposals are currently going through the Scottish parliament, but if passed as law later in 2022, existing landlords would need to have a licence in place by April 2023 and all short-term lets by July 2024.

A reminder of changes from 2021

Last year saw several key changes in the private rented sectors.

Here’s a reminder of what was implemented in 2021…

Stamp duty on buy-to-let property

In April 2021, new rules came into force meaning foreign property investors now pay an additional 2% stamp duty surcharge on UK buy-to-lets.

Stamp duty rules for property in England and Northern Ireland also reverted back to pre-pandemic rates in October 2021 following the stamp duty holiday introduced by the Chancellor in 2020.

Mandatory electrical safety

In April 2021, Electrical Installation Condition Reports (EICR) became mandatory for all tenancies.

EICRs must be carried out every five years.

Further reading…

The ultimate guide to being a good landlord

Rules you need to know before letting your property

Property market predictions for 2022

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