Only a month into 2023, and there’s already plenty of letting’s news that you’ll need to keep an eye on in the coming months.
The results of an ongoing court case appeal will have implications for defining who’s legally responsible for property compliance in a rent-to-rent contract. A petition to reinstate tax relief for finance costs under section 24 is gaining signatures by the day. And the rent cap in Scotland will be extended for at least another six months – albeit with some amendments. You can read more about these changes in our overview below.
Debate around who’s liable in a rent-to-rent agreement
An appeal in the Rakusen v Jepsen case was raised to address who is the liable landlord in a rent-to-rent agreement. In this instance, the property under a rent-to-rent agreement needed an HMO licence from the local council, but a licence wasn’t obtained.
The question now being debated in the Supreme Court is whether the property-owning landlord or the intermediate landlord renting to the occupying tenant should be liable for the offence. The results of this appeal, when announced, will have lasting implications on liability in rent-to-rent contracts going forwards. You can read more about the details of the case and advice on what you can consider to avoid any confusion over liability in this overview.
Petition to reinstate finance cost tax relief
A petition asking the government to reconsider its stance on tax relief relating to finance costs such as mortgage interest rates has received over 30,000 signatures. This tax relief was restricted under section 24 of the Finance Act 2015, to make sure that top-earning landlords don’t receive “the most generous tax treatment”.
The government has responded to the petition, saying that it will “continue to set mortgage interest relief against rental income at the basic rate of tax” to make sure that the tax system is “fair”. However, if the petition reaches 100,000 signatures, the issue will be debated in parliament.
The rent cap in Scotland has been extended
The Scottish government has confirmed plans to extend the rent freeze and moratorium on evictions in Scotland in the private rented sector for another six months. The freeze will be modified, however, to set a rent increase limit at three per cent in most cases, with the possibility of a six per cent increase for certain prescribed costs.
The social housing sector will see the freeze lifted, but with an agreement in place that rent increases sit below inflation. The ban on evictions enforcement will stay in place, as will the extra damages to be paid for any unlawful evictions.