9 December 2020
Residential and rural property update - December 2020 – 4 of 4 Insights
The UK government has stepped in to ensure that owners of flats in those buildings without any cladding will no longer need an EWS1 form in order to be able to sell or mortgage their property.
An EWS1 form covers an assessment of the fire risk of the external wall system of a building. There had been widespread concern that EWS1 forms were being required by lenders and valuers in relation to wholly brick built blocks with no cladding.
The knock-on effect was that those living in these buildings (estimated to be 450,000 homeowners) were unable to sell or mortgage their homes. The problem was exacerbated by a lack of available fire engineers to undertake the required assessments.
This announcement does not assist those in buildings that do have cladding and which will remain subject to the EWS1 process. The government has set aside funding to train 2,000 assessors to speed up the inspection process.
Consultation is ongoing regarding proposals to further raise the minimum EPC requirements for privately rented properties to Band C before 2030. The intention is for the new requirement to apply to all new tenancies from 2025 and to all existing tenancies from 2028.
Currently Band E is the minimum band that is required to be reached. This new requirement is going to be much more of a challenge for private landlords to meet, and penalties of up to £30,000 have been mooted for non-compliance. Substantial upgrades are likely to be required to a significant section of the private rented sector in order to achieve the required Band C rating.
At present, landlords have a reasonable excuse for not upgrading a property to Band E if the cost of doing do would exceed £3,500. Under these new proposals, that threshold is expected to be increased to £10,000.
The consultation continues until the end of December. Not surprisingly, concern has been expressed that these proposals are not realistic and won't be affordable for many landlords, potentially resulting in a significant loss of properties from the private rented sector.
Build to rent may be seen as filling some of the gaps but that is unlikely to be the case in all areas of the country, particularly in rural areas with older housing stock.
HMRC has issued a reminder that if CGT is payable by a UK resident tax payer on the sale of a residential property, the deadline to notify and pay the CGT changed from 6 April 2020. UK residents must now report and pay the CGT through HRMC's online system within 30 days of completion.
This is a change from the previous rules in force before 6 April which required the submission of details and payment of the tax in line with the self-assessment return deadlines.
These new reporting requirements mean that sellers will need to have their paperwork in order and ensure they have all relevant information available to file the return and pay the tax promptly after completion of the sale.
To discuss any of the news stories covered in this article in more detail, please contact a member of our Residential & Rural group.
by Lisa Bevan