With a new Labour government in place, they have committed in their election manifesto to a major "overhaul" of private rental sector regulations.
For landlords, adapting to change has become routine, and 2024 was anticipated to bring even more adjustments in England, as various housing policies were set to become law.
This anticipated change included the Renters Reform Bill, which was initially promised in the Conservative’s 2019 Election Manifesto but was abandoned after Rishi Sunak dissolved Parliament in preparation for the General Election on July 4.
Now, the Labour government is poised to introduce rental reform through a new Renters’ Rights Bill, while also advancing leasehold reform with a new Leasehold and Commonhold Reform Bill.
In addition to these reform bills, several other changes will impact landlords this year.
Here is a guide to 7 key changes landlords should be aware of in 2024.
7 Changes Landlords Should Track in 2024
- The Labour Government’s New Renters’ Rights Bill
- The Leasehold and Freehold Reform Act 2024 Becomes Law
- The New Leasehold and Commonhold Reform Bill
- The Final Year of Lower Stamp Duty
- Abolition of Pension Lifetime Allowance from April 6, 2024
- Reduction in Tax-Free Allowance for Capital Gains Tax
- New Guidance from the Competition and Markets Authority on Letting?
1. The Labour Government’s New Renters’ Rights Bill
Landlords are facing a period of significant change and uncertainty. The Labour government has pledged to "overhaul the regulation of the private rented sector," as outlined in their manifesto. This will be addressed through a new Renters’ Rights Bill.
This Bill is expected to mirror many aspects of the Renters Reform Bill, which was nearly passed before the general election was called. It will abolish Section 21 and introduce new grounds for possession under Section 8 (specific grounds not yet detailed). It will also allow tenants to contest rent increases, ban “rental bidding wars,” grant tenants an implied right to keep pets, and incorporate other changes from the Renters Reform Bill.
Details will be confirmed once the Renters’ Rights Bill is published. Although Labour promised to abolish Section 21 "immediately," this will not occur instantly. The Bill must pass through both Houses of Parliament before becoming law.
2. The Leasehold and Freehold Reform Act 2024 Becomes Law
The Leasehold and Freehold Reform Bill was fast-tracked through Parliament and received Royal Assent on May 24. While it is now law, it has not yet come into effect, and it will be up to the Labour government to implement it.
For the 38% of landlords owning leasehold properties, this Act fulfills a promise from Boris Johnson’s 2019 Conservative manifesto. It allows leaseholders to extend leases to up to 990 years, abolishes marriage value, and limits ground rent. These measures will simplify and reduce costs for leaseholders wishing to extend leases or purchase the freehold or a share of it once implemented.
However, we are still awaiting the outcome of consultations on ground rent restrictions. Although there was speculation about capping ground rent at £250 annually, the Act does not include such a cap.
3. The New Leasehold and Commonhold Reform Bill
According to the King’s Speech, Labour will introduce the Leasehold and Commonhold Reform Bill to "reform the leasehold system," incorporating remaining Law Commission recommendations related to leasehold enfranchisement and the Right to Manage. It will address unregulated and excessive ground rents and eliminate the disproportionate threat of forfeiture for lease breaches.
The new Bill will focus on commonhold revitalization, abolition of forfeiture, and regulation of ground rents. The government plans to consult on addressing "fleecehold" and strengthening the right to manage using powers from the Leasehold and Freehold Reform Act 2024.
The details on capping ground rents remain vague, reflecting the non-committal language in Labour’s manifesto. The government will consult on the best approach to regulate existing ground rents for leaseholders to avoid unaffordable costs.
4. The Final Year of Lower Stamp Duty
In his mini-budget on September 23, 2022, Chancellor Kwasi Kwarteng announced a “permanent” increase in the residential nil-rate tax threshold from £125,000 to £250,000. However, Jeremy Hunt later introduced a sunset clause, ending this reduction on March 31, 2025. As a result, buyers will revert to paying the full stamp duty amount next year.
Landlords may rush to complete transactions before the lower stamp duty ends, creating a potential surge in activity towards the end of 2024 and early 2025.
The Labour government’s stance on stamp duty remains unclear.
5. Abolition of Pension Lifetime Allowance from April 6, 2024
In a rare piece of good news for investors, the government announced the abolition of the pension lifetime allowance (currently £1,073,100) in the Spring Budget 2023. This change, starting from April 6, 2024, means that pension withdrawals exceeding this amount will no longer incur additional tax charges.
For landlords, this is relevant because many draw up to 25% of their pension tax-free for buy-to-let investments after age 55. While the maximum withdrawal remains £368,275 (25% of the current allowance), there will be no additional tax penalties for exceeding the previous limit.
Although Shadow Chancellor Rachel Reeves indicated last year that Labour might reverse this change, it was not included in Labour’s election manifesto.
6. Reduction in Tax-Free Allowance for Capital Gains Tax
Landlords with properties in their own name will face a reduced capital gains tax allowance from April 6, 2024. The annual exempt amount will decrease from £6,000 to £3,000 for the 2024-25 tax year, increasing the capital gains tax payable by unincorporated landlords.
The Spring Budget 2024 also announced a slight reduction in the top capital gains tax rate from 28% to 24%. However, the reduction in the annual exempt allowance will offset this benefit, giving with one hand and taking away with the other. The rate for basic rate taxpayers remains unchanged at 18%.
7. New Guidance from the Competition and Markets Authority on Letting?
The Competition and Markets Authority (CMA) is investigating the “rented housing sector,” focusing on zero-deposit schemes, fraudulent licenses, and guarantees. The CMA is expected to release a report in spring 2024 and update its 2014 guidance for letting professionals.
The updated guidance aims to clarify rights and obligations for landlords, tenants, and letting agents regarding consumer protection law and might shed light on unfair contract clauses between letting agents and landlords.