The controversial Renters Reform Bill has taken a long time to pass through the House of Commons. After making some concessions in favour of landlords, the Bill must proceed through the House of Lords before becoming law.
So, what are the concessions, and how are leasehold properties affected? Here’s what landlords can expect if the Renters Reform Bill becomes law.
Changes to the Renters Reform Bill
Though it is meant to protect renters, the primary changes to the original Bill sway in favour of landlords rather than tenants. The concessions include:
- Section 21 notices for existing tenancies will not be abolished until the county court system functions properly – though reforming this could take years.
- Tenants will not be able to end tenancies during the first 6 months, despite the abolition of fixed-term tenancies (just like the existing system).
- Landlords must accept requests for tenants to keep a pet unless there is a valid reason not to, but landlords can request they have pet insurance.
Additionally, the abolition of leasehold properties has been cut back, arriving at the compromise of capping annual ground rents at £250 for the next 20 years.
This would be good news for landlords whose leasehold flats have escalating ground rents, but the government has not formally announced this decision yet.
Will the Renters Reform Bill become law?
The Bill had a good chance of becoming law – before Prime Minister Rishi Sunak made an announcement on 22nd May that a snap general election will take place on 4th July.
Unfortunately, this decision meant that the government had to rush the passing of outstanding legislation before the dissolution of Parliament at the end of May. This resulted in many bills being shelved, including Renters Reform.
However, while this Bill has fallen from the parliamentary timetable, the Leasehold and Freehold Reform Bill was passed. While this law will help leaseholders become freeholders, there are currently no provisions for capping ground rent.
Whichever party wins the general election in July will effectively have to start from scratch if they want to introduce reforms for renters and landlords.
Tax planning for landlords
In the meantime, landlords should make sure they are staying on top of relevant policy developments – and if you decide to sell up amidst the ongoing uncertainty, consider careful Capital Gains Tax planning for buy-to-let sales.
If you need help with this or Service Charge Account management, why not get in touch with our accountants in Barnsley to find out how we can assist you?
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