In order to protect renters during the pandemic the government extended notice periods to 6 months, but a press release on 12 May announced that from 1 June this will be reduced to 4 months. This should continue to protect renters as the country moves through steps 3 and 4 of the Roadmap to Recovery. The intention is that, subject to the recovery proceeding according to plan, notice periods will reduce to pre-pandemic levels by 1 October this year. The government acknowledged that many landlords only own one property and rent arrears due to the pandemic has been hard on them.
The current ban on bailiff-enforce evictions will end 31 May, although bailiffs have been asked not to carry out an eviction if anyone living in the property has COVID-19 symptoms or is self-isolating.
The government will publish a white paper in the autumn that will set out proposals to create a private rental sector that works for both landlords and tenants. This will include proposals for a new ‘lifetime deposit’ to make it easier to move properties and the abolition of the section 21 ‘no fault’ eviction notice to give tenants more security.
Notice periods from 1 June
From 1 June the notice periods that are currently 6 months will reduce to at least 4 months. Notice periods for cases which are the most serious for landlords will remain lower. These are:
- Anti-social behaviour: immediate to 4 weeks’ notice
- Domestic abuse in the social sector: 2 to 4 weeks’ notice
- False statement: 2 to 4 weeks’ notice
- 4 months’ or more accumulated rent arrears: 4 weeks’ notice
- Breach of immigration rules ‘Right to Rent’: 2 weeks’ notice
- Death of a tenant: 2 months’ notice
The notice period where there is less than 4 months’ unpaid rent will reduce to 2 months from 1 August.
Can I claim the cost of evicting my tenant as a deduction from rental income?
When a tenant falls into arrears and the landlord has to pay to go through the costly eviction process it can feel as though the dice are loaded against the landlord, especially if work then has to be done to bring the property back to a fit state to be let. However, HMRC’s Property Income Manual states that “the cost of evicting an unsatisfactory tenant in order to relet the property” is an allowable legal and professional cost which can be set against rental income. In some cases, this may create a loss for the year. This loss can be carried forward to offset against profits arising in subsequent years. If your letting business ceases the losses are lost.
The majority costs of redecorating and making the property fit to let again can be claimed against rental income. Depending on the nature of the work undertaken, some of the costs may be deemed as capital expenses and these can be used to reduce any gain on the eventual disposal of the property.
Remember that if you sell UK residential property that you have not lived in as your home and a gain arises you will need to file a Capital Gains Tax return and pay the tax due within 30 days of the completion of sale.
For advice on rental income and expenses, assistance with personal tax returns or assistance with capital gains tax returns on the dale of UK residential property please contact the Private Wealth team at Child & Child
Denise Baugh – Tax & Trust Executive– International Private Wealth & Tax
T:020 7201 3575