The best time to start thinking about building or buying a new-build home is now. There are new UK property laws that will benefit new home-owners more than existing renters and tenants.
Following are the new laws that may affect those who rent or own a home in the UK in 2021:
1. End to Covid Stamp Duty Tax Holiday
The stamp duty tax holiday introduced in July 2020 to help homebuyers and stimulate the economy through the COVID-19 lockdowns ended on June 2021. Homebuyers did not have to pay any tax on the first £500,000 of the property price, instead of the usual first £125,000.
Though it may have ended, this and other stimulus did see an increase in housebuilding activity in some regions of the UK.
The following is a table on Affordable Housing Starts on Site delivered through programmes managed by Homes England:
This table shows where affordable new builds may be more available.
2. Ground Rent Ban
Ground rent will now be banned on new-builds, in an effort to protect them from escalating increases in rent that do not benefit the lease-holder at all. There were loopholes that allow rents to rise at regular intervals or increased costs from extending their lease, which can lead to some homes being unmortgageable or owners being unable sell their homes.
From now on, residential long lease will be given the right to extend their lease by up to 990 years, and all new retirement properties will be sold without a ground rent.
Other properties will have ground rent being banned from rising above a “peppercorn” rate. These are part of Law Commission Reforms to Transform Home Ownership in England and Wales.
These reforms will come in two parts with more provisions in 2023.
3. New Help to Buy Scheme
A new Help to Buy: Equity Loan scheme was launched on 1 April, 2021. This scheme is open for first-time buyers who are unable to afford loans to value mortgages due to having insufficient deposits.
This scheme replaces that 2013-2021 Help to Buy scheme, so anyone still going through the motions of a sale needs to be released by the developer or reapply through the new scheme.
The new scheme has loans capped at 1.5 times the average first-time buyer home in the area instead of a national limit. This makes the terms far more affordable and realistic.
4. End to the Covid Bailiff Ban
Since June of 2021, the ban on bailiffs being able to evict tenants have been lifted. Landlords again have the power to use enforcement tactics to remove tenants. According to the government, 45% of private landlords own just one property and are just as economically vulnerable to rent arrears.
Mortgage lenders are more able to accept changes in payment schemes during times of crisis. As long as the loan is paid, lenders are more willing to offer tailored support for your circumstances, as compared to landlords who need rent payments for their own spending.
There are more protections in place for rent to own housing and court orders for repossession can be suspended if you can afford to repay arrears.
5. Eviction Notice Reduced to Four Months
Eviction notices will now reduce to 4 months from 6 months, and in time reduce to pre-pandemic levels. Notice periods in England prior to the pandemic were up to 2 months.
Starting June 2021, a renter has only 4 months to leave the premises unless reasons for eviction are addressed.
Section 8 notices still apply for rent arrears. For these notices given after August 2021, these are the minimum periods:
- For arrears of less than 4 months = 2 months notice
- For arrears of 4 months or more = 4 weeks notice
Therefore, for arrears of more than 4 months during the pandemic, a renter may have only 1 month to repair the standing debts before being evicted.
This article is brought to you by Hadaway & Hadaway Property Solicitors in the North East UK.
6. Consent for Pets is now the Default Condition
Landlords may no longer give automatic bans on tenants from having common household pets on their property. Instead, consent for having pets will be the default position. If a tenant sends request to own a pet then the landlord will have to object in writing within 28 of said written request and provide a good reason.
They will still however be allowed to charge higher deposits for tenants who bring pets into a lease as long as it is within the cap of five weeks’ rent. Pet owner renters also tend to have higher lease terms.
7. Lifetime Deposits
In addition to the five week cap on tenancy deposits, ministers are consider a new scheme known as Deposit Passporting to enable tenants to automatically transfer deposits between landlords when they move to a new property. This would save much time, transferring the deposit electronically instead of waiting for a refund from their previous landlord.
This scheme will ease the pressure on renters who typically need up to five weeks rent in ready funds in order to move to a new home. A lifetime deposit such as this could be easily transferred on the day of the move, and portions of which be claimed for repairs and damages or topped up when necessary.
8. Mandatory electrical checks for tenants
Fire and electrocution hazards are now a priority for landlords, a new law grants renters tougher rights for safer homes. All rented properties now must see mandatory inspections every five years in a bid to reduce the number of hazardous homes in England. Renters who paid those deposits are owed whatever repairs are necessary to make their home safe.
Landlords that fail to comply with inspections or fail to do repair work highlighted by the electrical installation condition report (EICR) will face stiff fines and greater liability in case of a fire accident.
9. Replacement of Flammable Cladding
In addition to the above law, a new £3.5billion fund is being set up to replace flammable cladding in England. The example of the disastrous Grenfell fire which caused 77 deaths and the worst UK residential fire since WW2 reminds us that flammable cladding still exist for many properties.
Flammable cladding can make it more difficult to sell a property. Fortunately, private flat owners in buildings of over six stories will no longer need to pay for the replacement of dangerous materials. Property owners may no longer offload to them the costs of replacement for their own safety.
Unfortunately renters in blocks of four to six stories are not covered. However, they do have available a £50-a-month long term low interest loan that will cover the costs. The loan is attached to the property, so will no follow them should they decide to sell their flat.
New build homes should not have this problem.