AMI Chief Executive Robert Sinclair gives his February update, discussing the latest issues in the industry and how we can tackle them…
As well as the usual changes to tax thresholds and allowances, there are a few other changes that will take place this Spring.
As part of the government’s efforts to raise standards in the rental market it has set a new minimum level of energy efficiency for privately rented property. Landlords in England and Wales have less than a month to ensure that their properties reach at least an Energy Performance Certificate rating of E before granting a new tenancy to new or existing tenants. As this is a legal requirement, if landlords do not comply they will not only be liable to pay fines but they will also be unable to remortgage. Lenders are still working out how they will approach the new requirement. If more lenders ask for a copy of the EPC, might they start collecting this data for residential mortgages? Might they use the ratings to grant higher loan amounts to those with more energy efficient properties?
This has been looked at by the government-funded LENDERS project which includes mortgage lenders and UK Green Building Council. In its report last year it found that lenders’ estimates of energy costs could be significantly improved by considering a property’s EPC rating, as those currently used in calculating affordability are very broad. Taking into account property-specific data could allow lenders to grant larger mortgages on energy efficient properties.
Last year the government introduced requirements for firms with 250 employees or more to report their gender pay gap data annually. The deadline for the first publication is 4 April, with many businesses having already reported. It will be interesting to see how employers engage with this, in particular how they approach any disparities, and whether we will see a progressive culture shift. Publishing and monitoring pay gaps should help employers understand the reasons for any gap and whether they need to develop action plans to tackle the causes. For example, if women are predominantly at lower-paid levels in the organisation, an active employer might develop a positive action programme to encourage and support women to develop towards more senior roles.
Support for Mortgage Interest will no longer be a benefit that can be claimed but will be paid as a loan. Those currently claiming SMI should have received a letter from the DWP, but there will be no automatic conversion – all SMI will stop being paid on 5 April. Claimants need to complete a loan agreement if they wish to continue receiving SMI.
Individuals will have to pay the loan, with interest, on the sale of the property, transfer of ownership or death. SMI may therefore need to be considered as part of the advice process, particularly for older customers.
Last year we saw the start of the phasing out of higher rate tax relief for landlords’ property finance costs, which is to be fully restricted to basic rate tax relief from 2020. The next tranche of this phasing starts next month when a maximum of 50% of the finance costs can be deducted from rental income when calculating taxable property profits.
With these various changes coming, arming advisers with this information should mean more informed conversations with customers. The new reporting requirements may result in more pressure being applied on businesses from their own employees and competitors using this to their advantage. We have already started to see scrutiny in the media. If firms can embrace these requirements and see the opportunities, they will not only make for positive and sustainable workplaces but ultimately contribute to their success.
Senior Policy Adviser