April is the start of the new tax year, with new changes in the VAT threshold and Capital Gains Tax. Here’s what letting agents and landlords should know.
The beginning of April 2024 marks the start of the new tax year, with possible changes for letting agents and landlords this upcoming month. From the Capital Gains Tax to the Local Housing Allowance, here are the key things letting agents need to know this month.
What to look out for in April 2024:
- Local Housing Allowance
- Reduction in Capital Gains Tax
- VAT Registration Threshold
- The Leasehold and Freehold Bill enters the Committee Stage
And don't forget, you can download newsletter templates for your landlords to inform them of big changes ahead.
A recap of the past three months:
Local Housing Allowance
Local Housing Allowance (LHA) is used to calculate housing benefits for tenants from private landlords.
This is dictated by the Department for Work and Pensions and is based on the private market rents being paid by tenants in a Broad Rental Market Area (BRMA).
From the start of April 2024, the government plans to raise LHA which will benefit some of the poorest families on universal credit or housing benefit and will gain around £800 a year.
The amount of local housing allowance is dependent on the area where the property is based. You can find out the rates by postcode or local authority here.
Capital Gains Tax is reducing
From 6 April 2024, landlords who own properties in their name will have a smaller Capital Gains Tax.
Capital Gains Tax applies when someone makes a profit from selling a property that isn’t their main home. This includes selling buy-to-let properties, business premises, land, and inherited properties.
As mentioned in the Spring Budget, the tax will be reduced from 28% to 24%. This means that if landlords are really selling up, they will be charged less by this tax.
Find out the five key letting agents should know from the Spring Budget
VAT Registration Threshold for short-term lets
Residential properties are exempt from VAT. However, an increase in the VAT registration threshold may soon affect landlords with holiday accommodation and short-term lets.
As announced in the Spring Budget this year, the VAT threshold will increase from £85,000 a year to £90,000, starting on 1 April 2024.
This means that any landlords earning under the £90,000 threshold will not have to register for VAT, and can earn more without being taxed.
The Leasehold and Freehold Bill enters the Committee Stage
The Leasehold and Freehold Bill will enter the committee stage in April. Since being unveiled in November 2023, this bill has caused a lot of controversy within the private rental sector.
In March 2024, it was reported, following a consultation, it was reported that Michael Gove, Secretary of State for Levelling Up, Housing and Communities, may abolish the introduction of "peppercorn" rates, a key element of the Leasehold and Freehold Bill.
The Committee stage of the Bill should iron out the current issue on ground rents and how transparent service charges will be in the future.
Find out more about the Leasehold and Freehold Reform Bill
March 2024 - lettings recap
1. Scotland rent caps lift
On 6 September 2022, a rent freeze and moratorium on evictions was introduced to all private rental properties in Scotland as a way to stabilise the housing market following the pandemic. At the end of March, this rent cap and moratorium will be changing.
As part of the Cost of Living (Tenant Protection) (Scotland) Bill 2022, the Scottish Government capped rent increases at 3%, or 6% if the landlord has requested a higher increase for additional costs.
From 1st April 2024, private landlords can start to propose a rent increase between 6% to 12%, only in cases where the current rent is below the open market rent. If the tenants believe the increase is too high, they can apply to Rent Service Scotland (RSS) for them to decide what the rent should be.
Download our poster of key upcoming dates in Scotland for 2024
2. Spring Budget 2024
In the lead-up to what will be a big year for UK politics, the Chancellor of the Exchequer will be presenting his spring budget to parliament on 6 March.
Jeremy Hunt, Chancellor of the Exchequer, will present the Conservative’s key policy announcements, as well as the Office for Budget Responsibility (OBR) forecasts.
As part of the background research for the budget, the House of Commons Library has reported that fixed-rate mortgages started to increase in February 2024, meaning “that financial markets are not expecting as many rate reductions from the Bank of England in 2024 as previously thought”, affecting rental increases.
Find out the key takeaways from the Autumn Budget 2023
3. Further Industry and Regulators Committee Evidence sessions
The House of Lords Industry and Regulations Committee began its inquiry to determine whether there should be a new industry regulator in February of this year.
A further session will resume on 5 March and will include evidence from The Property Institute, Propertymark, The Property Ombudsman and National Trading Standards.
In February’s session, the Industry and Regulators Committee discussed conflicts between tenants and agents, and the current issues for leasehold and freehold within England.
February 2024 - lettings recap
1. Right to Rent fines increase
As part of the Immigration Act 2014, landlords and letting agents have a legal responsibility not to home tenants who don’t have the right to live in England. Those who knowingly rent their properties to lawful immigration status holders can face a civil penalty.
On February 13, these fines will be increasing significantly. For first-time breaches, fines will increase from £80 per lodger and £1,000 per occupier, to now a maximum of £5,000 per lodger and £10,000 per occupier. Repeat breaches can now face a maximum fine of £10,000 per lodger and £20,000 per occupier.
To check a tenant's immigration status correctly, landlords must view original immigration documents, make copies and keep them for 12 months after the tenancy expires. Letting agents must check that all tenants who occupy their properties have a legal status to live in the UK.
This Right to Rent scheme fines can be served to landlords or letting agents and is only currently mandatory in England and for properties within that country.
2. Government payments for communities affected by flooding
Communities who experienced ‘exceptional localised flooding’ by Storm Henk (2 to 12 January) will be able to apply for funding through the Flood Recovery Framework.
Over 30 flood warnings were given from Storm Henk which damaged around 2,000 properties and caused over 150 million of insured losses.
The government is providing available help for:
- Flooded households can apply for up to £500 to help with immediate costs
- Households significantly affected will be eligible for 100% council tax relief for at least 3 months
- Eligible flood-hit property owners can apply for up to £5,000 to make their homes more resilient to future flooding
The government plans to deliver a £5.3 billion investment to protect properties to prevent future flooding damages. Support and further details on eligibility are available through your councils.
Find out how to prepare your rental property for storms and flooding.
3. Welsh Labour Leadership Elections
With the news that Mark Drakeford stepped down as the Welsh Labour leader in December 2023, an election will start in February to determine the new leader of the Labour Party.
In December, two candidates received enough nominations to get on the membership ballot, Vaughan Gething MS and Jeremy Miles MS, and are now in the running to be the new leader of the Welsh Labour Party.
Jeremy Miles is currently serving as Minister for Education and Welsh Language, and Vaughan Gething is acting as Minister for the Economy of Wales.
Ballots will open on February 16, and close on March 14, with the new Labour Leader to be announced on March 16.
4. Greater Manchester Good Landlord Charter consultation closes
Greater Manchester Mayor, Andy Burnham launched the Good Landlord Charter on January 8 to bring together landlords and renters to improve the standards of homes in the the private rental sector, as well as social housing.
As part of this Charter, landlords with properties in Greater Manchester are invited to take part in a focus group to discuss how to make homes more affordable, safe, inclusive and well-managed.
The consultation period will close on February 26, and the focus group will be on Tuesday 20 February. If you are a landlord who owns a property in Greater Manchester, you can register to attend here.
4. The Leasehold and Freehold Reform Bill
Originally introduced in November 2023, the Leasehold and Freehold Reform Bill will apply to England and Wales to “improve consumer choice and fairness in leasehold to crack down on unfair practices in leasehold’.
The government will also look to introduce a ground rent cap through this bill.
The Labour Party has put forward amendments to the Leasehold and Freehold Reform Bill during the committee stage in January. The amendments include a Leasehold Reform Bill within Labour’s first King’s Speech if the bill doesn’t go ahead in the Conservative government. They have also pledged to adopt proposals from the Law Commission to make it easier for leaseholders to buy or extend their lease.
The Bill will continue to develop over the next few months.
January 2024 - lettings recap
Awaab’s Law proposed for rogue social landlords
Social landlords will need to complete emergency repairs within 24 hours of identification, following a consultation launched by the Department for Levelling Up, Housing and Communities.
Landlords who don’t follow this timescale can be taken to court and pay possible compensation to tenants.
Awaab’s Law is named after two-year-old Awaab Ishak, who died due to direct and prolonged exposure to mould in their home.
2. CONSULTATIONS ON ROGUE LANDLORDS AND HOMELESSNESS
A consultation in Greater Manchester will open this week to discuss the Good Landlord Charter, a scheme to help renters distinguish between accredited and rogue landlords. Mayor of Greater Manchester, Andy Burnham, says he is committed to boosting inspections and enforcement of landlords in 2024.
3. COnsultation to end homelessness in Wales
A white paper will be released in early 2024 setting out proposals to reform the existing core of homelessness legislation and the role of the Welsh public services in preventing homelessness.
Find out more about what to expect in Wales this year.
4. Check your Property Licences
New year, new licence? With a new property licensing scheme launching every 10 days, it’s easy to get caught out. Last year saw new selective licensing schemes in areas such as Birmingham, Nottingham, and Manchester, so if you live in a city make sure you're covering your back.
For example, from 1 of January 2024, The Royal Borough of Greenwich has added an additional HMO licence for certain properties, so it's wise to keep an eye out for what could come up in your area. Failure to do so can lead to a £30,000 fine or even prosecution.
5. Rents prices rising
Despite the fall of inflation and lower housing prices, the price of rents still continues to rise. According to the ONS, there was a 0.1% increase in the price of rent from October to November in 2023, with Wales seeing the largest increase to 7.3%.
Goodlord CEO, William Reeve, expects “Tenant demand will remain extremely high and rents are likely to continue increasing for some months before hitting their ceiling”.
Find out more about Predictions for our rental housing trends in 2024
6. Funding packages Proposed for councils
A package of £64 billion was announced in December of 2023 to help aid frontline services by the Levelling Up Secretary, Michael Gove.
“We recognise they are facing challenges and that is why we have announced a £64 billion funding package to ensure they can continue making a difference, including through our combined efforts to level up”, says Michael Gove.
Councils will be able to increase council tax by up to 3%, however, it is at their discretion and be mindful of the cost of living crisis when making any decisions.
A consultation of the suggested package will be open for 4 weeks and closing on the 15th of January.
