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17th February 2020
Property Owners – What 2020 Holds in Store (Part 1)

2020 is shaping up to be a big year for property owners, with the imminent introduction of some significant legislative changes that could drastically increase their costs. At the same time, property insurance premiums are on the rise, fuelled mainly by the increasing frequency of weather-related property damage and a resulting hike in claims. Combined, these two factors mean that high-quality cover on the one hand, and competitive premiums on the other, are set to become significant priorities this year.

Here at Focus, our appetite for property owners business has been steadily growing, and we’ve been keeping a weather eye on the horizon for the issues set to have an impact on the sector this year. With this in mind, we compiled a top 10 list which will be split over two weeks – look out for the second instalment next week!

  1. Bigger tax bill for landlords

In April 2017, it was announced that the existing system of tax relief on buy to let mortgages was to be phased out. Under the old system, landlords could deduct all mortgage interest payments from their tax bill, meaning they were only taxed on their profits. From April 2020, however, the new system will fully take effect, with landlords to be taxed on their entire rental income and given a 20% tax credit. While this will have no impact on basic-rate taxpayers, higher and additional-rate taxpayers could see their tax bill shoot up.

  1. The fallout of the Tenant Fees Ban

June 2019 saw the Tenant Fees Act come into force, which prohibited landlords from charging tenants any fees that were not a) a holding deposit, b) a security deposit or c) a rent payment. As with any new legislation, it will take a while for the full ramifications to be felt; commentators believe that 2020 will be the year that we will fully understand the effect the Act has had on the market.

  1. Section 21 Notices to be repealed

The Conservatives’ election manifesto reaffirmed the party’s intention to abolish the contentious Section 21 Notice, which gives landlords the right to evict tenants without providing justification, and instead revise and strengthen the fault-based Section 8 process. Following the outcome of a consultation which concluded in October 2019, it is expected that we will see significant movement in this area in the year to come.

  1. New energy efficiency obligations for landlords

On 1 April last year, new legislation was introduced obliging landlords to comply with more stringent energy efficiency standards for new lettings or tenancies. This April will see the rules extend to all tenancies, old and new. From this date, landlords will have to ensure their property has at least an energy efficiency rating of ‘E’, with failure to do so resulting in their properties being classed as ‘unrentable’. What’s more, landlords will have to pay out of their own pocket (up to a cap of £3,500) for works to increase their rating to the required standard – another potential cost to factor into their outgoings.

  1. Electrical checks regulations

 Lettings agents and landlords will soon be obliged to carry out electrical checks on their rented properties or face a fine of up to £30,000. The legislation will require property owners to ensure that electrical installations are inspected from 1 July 2020 for new tenancies, and by April 2021 for existing tenancies. Once the first check has been completed, landlords will then be expected to carry out checks every five years.

Look out for second half of our extended blog next week, when we’ll be outlining five more big issues set to shake up the property owners sector this year. In the meantime, if you have any queries about the content of this blog or would like to discuss our appetite for property owners business with our team of Underwriters, please call 0345 345 0777 or email sales@focus-insurance.com.

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