A Clearer View

Lisa Simon, Partner and Head of Residential Division, offers a practical view on residential letting issues currently in the news.

The impact of Making Tax Digital 

In two years’ time, from April 2024, residential landlords with business and/or property income over £10,000 will be required to use HM Revenue & Customs’ online tax collection service, the Making Tax Digital initiative. Some are already transitioning to the new system. 

However, the change, which has already been delayed by a year because of the Covid-19 pandemic, may not go ahead as planned. The Public Accounts Committee of the House of Commons has produced a report which calls into question why it is necessary for landlords, many of whom may have no other business interests, to make this considerable change to their accounting procedures. 

Carter Jonas will continue to advise its clients on the progress towards Making Tax Digital.

Right to Rent changes

As of 6 April this year, landlords and lettings agents must comply with new Right to Rent Guidance for Landlords. This applies to all residential tenancy agreements on property in England. It does not apply in Wales, Scotland or Northern Ireland.

The legislation, originally introduced in November 2020, requires landlords and lettings agents to determine the immigration status of all prospective adult tenants by checking tenants’ ID prior to signing a tenancy agreement. It is part of the digitisation of the immigration system but was paused because of the pandemic. 

Currently, checks can be carried out using scanned documents, emails, apps and video calls. From 6 April however, landlords and letting agents must use the Right to Rent Online Checking Service or Digital Identity Document Validation Technology (IDVT).

Retrospective checks will not be required on those prospective tenants with biometric residence cards who, before 6 April 2022, used a physical document to demonstrate their Right to Rent. If retrospective online checks reveal that a tenant no longer has a Right to Rent, a report must be made via the Homes Office website.

The Government has also updated its guidance for landlords, homeowners and letting agents affected by the introduction of Right to Rent immigration checks: Right to Rent Immigration Checks: Landlords' Code of Practice.

Landlords advised to check for local HMO licensing schemes

Increasingly, landlords are being required to ascertain a license under new additional HMO licensing schemes which operate at the discretion of local authorities throughout the country. 

The London Borough of Ealing is the latest to launch a scheme which commenced on 1 April 2022. The additional HMO licensing scheme applies throughout the borough and covers all HMOs that are occupied by three or more persons of more than one household who share amenities such as kitchens and bathrooms. Certain converted blocks of flats are also included in the scheme. Landlords and agents will be able to make multiple licence applications via an online application form. 

Many similar schemes are already in place throughout out the country, Manchester saw the introduction of a HMO licensing scheme in February, and further schemes are likely to be introduced nationwide over the coming year.