Buy to Let Rules: What Taxes and Regulations Should You Know About in 2021?

Amy Jackson
Amy Jackson
Property Editor
Updated 29 September, 2021
4 Min Read

Buy to Let Rules Buy to Let Rules

Whether you’re a new buy to let investor or an experienced property investor, keeping up to date with the latest buy to let rules is essential. 

Things are constantly changing in the property world, and that includes tax rules on buy to let properties. 

If you’re looking for the latest updates and information on buy to let rules in the UK, look no further.  

Our buy to let rules guide contains all the information you need to know as a property investor.  

We’ll offer insight into what you’re expected to pay in tax on buy to let purchases, inform you on the most current buy to let rules that investors and landlords need to follow, and help you stay in the know. 

Keep reading for more details.  

Download Your 2021 Buy to Let Property Guide - Completely for FREE

Buy to Let Ultimate Guide

Enter Details to Download Now

What Are the Latest Buy to Let Rules Investors Should Know About?

Many aspects have changed in the past year, and there are new rules for buy to let investors to be aware of. 

Here are some of the most recent buy to let rules that all investors should know if they want to comply with the latest regulations.  

The right to rent rule is in place to confirm that all adult occupants seeking a rental property in the UK have the legal right to do so. 

The right to rent is a buy to let rule that’s been around for many years but has recently been updated. 

From the 1st of July 2021, buy to let rules were changed to ensure that all right to rent checks are now based on immigration status instead of national identification. 

This means that anyone who has applied for a UK visa or EU Settlement Scheme and is looking to rent a UK property must provide evidence of their immigration status. 

This is something that UK landlords and buy to let investors should be aware of moving forward. 

One of the most significant changes in buy to let rules for 2021 is the introduction of new electrical safety standards 

The new electrical safety regulations have been put in place to ensure that a qualified electrician checks that all electrical elements of a property are safe.  

This includes all electrical installations and wiring. The new buy to let rule started in April 2021 and was introduced as part of the UK government’s plans to improve living standards throughout the private rented sector.  

If you own a buy to let property, be sure to comply with this crucial new buy to let rule.  

Since the Covid-19 pandemic, some changes have been made on the buy to let rules for evicting tenants from a rental property. 

Since the 1st of June 2021, new rules on buy to let eviction notices require landlords to give tenants at least four months’ notice if they wish to evict them from their investment property. 

However, there is speculation that this rule is set to end in October 2021, so these eviction notice changes may not be permanent.  

From February 2021, it became compulsory for all homes to have a smoke alarm in living rooms, hallways, and landings. 

Properties should also have a heat alarm in kitchens and a carbon monoxide alarm in areas close to boilers or wood burners to ensure the tenant’s safety. 

Another new buy to let rule brought out in 2021 means that landlords are no longer allowed to issue a blanket ban on pets within their property. 

This new standard tenancy agreement makes it easier than in the past for tenants with ‘well-behaved’ pets to secure a lease within rental properties 

In a statement on this new rule, Housing Minister Rt Hon Christopher Pincher MP said: 

“We are a nation of animal lovers, and over the last year, more people than ever before have welcome pets into their lives and homes. 

“But it can’t be right that only a tiny fraction of landlords advertise pet-friendly properties, and in some cases, people have had to give up their beloved pets in order to find somewhere to live.” 

Just 7% of property investors and landlords allow pets within their property. Hopefully, with these new rules in place, demand for rental properties will rise even further in the UK.  

This is always good news for investors who want to reduce potential void periods and keep up a steady stream of tenant interest.  

Right to Rent

The right to rent rule is in place to confirm that all adult occupants seeking a rental property in the UK have the legal right to do so. 

The right to rent is a buy to let rule that’s been around for many years but has recently been updated. 

From the 1st of July 2021, buy to let rules were changed to ensure that all right to rent checks are now based on immigration status instead of national identification. 

This means that anyone who has applied for a UK visa or EU Settlement Scheme and is looking to rent a UK property must provide evidence of their immigration status. 

This is something that UK landlords and buy to let investors should be aware of moving forward. 

Electrical Safety Standards

One of the most significant changes in buy to let rules for 2021 is the introduction of new electrical safety standards 

The new electrical safety regulations have been put in place to ensure that a qualified electrician checks that all electrical elements of a property are safe.  

This includes all electrical installations and wiring. The new buy to let rule started in April 2021 and was introduced as part of the UK government’s plans to improve living standards throughout the private rented sector.  

If you own a buy to let property, be sure to comply with this crucial new buy to let rule.  

Eviction Notices

Since the Covid-19 pandemic, some changes have been made on the buy to let rules for evicting tenants from a rental property. 

Since the 1st of June 2021, new rules on buy to let eviction notices require landlords to give tenants at least four months’ notice if they wish to evict them from their investment property. 

However, there is speculation that this rule is set to end in October 2021, so these eviction notice changes may not be permanent.  

Smoke Alarm Rules in Scotland

From February 2021, it became compulsory for all homes to have a smoke alarm in living rooms, hallways, and landings. 

Properties should also have a heat alarm in kitchens and a carbon monoxide alarm in areas close to boilers or wood burners to ensure the tenant’s safety. 

Pets

Another new buy to let rule brought out in 2021 means that landlords are no longer allowed to issue a blanket ban on pets within their property. 

This new standard tenancy agreement makes it easier than in the past for tenants with ‘well-behaved’ pets to secure a lease within rental properties 

In a statement on this new rule, Housing Minister Rt Hon Christopher Pincher MP said: 

“We are a nation of animal lovers, and over the last year, more people than ever before have welcome pets into their lives and homes. 

“But it can’t be right that only a tiny fraction of landlords advertise pet-friendly properties, and in some cases, people have had to give up their beloved pets in order to find somewhere to live.” 

Just 7% of property investors and landlords allow pets within their property. Hopefully, with these new rules in place, demand for rental properties will rise even further in the UK.  

This is always good news for investors who want to reduce potential void periods and keep up a steady stream of tenant interest.  

Find Information On Everything You Should Know About Buy to Let With Our Ultimate Buy to Let Guide

Learn More
New Buy to Let Tax Changes Explained New Buy to Let Tax Changes Explained

New Buy to Let Tax Changes Explained 

Alongside the above changes to buy to let rules, some additional new tax laws on buy to let property investments were introduced in 2021. 

Here’s some information on buy to let tax changes and new tax laws on buy to let that everyone buying an investment property should know about. 

Stamp Duty Tax Reverts Back to Pre-Covid Rates 

Stamp duty is one of the most significant types of tax on buy to let purchases, with varying rates paid depending on property value and whether you’re a buy to let buyer, first-time buyer, or buying a second home 

Since reducing tax is always a good thing, many investors jumped at the chance to minimise their stamp duty land tax during the stamp duty holiday.  

Announced in July 2020, the stamp duty tax holiday allowed buy to let investors and homebuyers to avoid stamp duty tax or pay a lower rate of tax than usual.  

This tax break contributed to the massive rise in house prices across the UK in 2020 and 2021. 

As of October, however, the stamp duty holiday has officially ended in England and Northern Ireland, and buyers are required to pay the typical rates on property purchases. 

In April 2021, a stamp duty surcharge was also introduced for overseas buyers. This surcharge requires overseas buyers to pay an extra 2% in stamp duty taxes. 

Read our guide to stamp duty tax on buy to let property to understand how much you’re likely to pay. 

Tax Relief on Buy to Let Mortgages Tax Relief on Buy to Let Mortgages

Tax Relief Rules on Buy to Let Mortgages

2021 is the first full year where those with a buy to let mortgage cannot deduct their mortgage expenses from their rental income 

This rule has been gradually enforced over recent years, with landlords able to offset mortgage interest payments against rental income by claiming 75% in 2017/18, 25% in 2019/20, and now 0% as of 2021. 

Instead, buy to let investors and landlords are given a 20% tax credit on interest payments 

You can find out more about buy to let mortgages, typical mortgage rates, and more with our buy to let mortgage guide 

Buy to Let Income Tax Rates 2021 

Buyers of investment properties need to pay income tax on the money they earn through rent. The only downside to high rental yields on an investment property is that a higher income tax may be payable.  

The individual income tax rates tend to change, but for 2021, the personal allowance (the amount you can earn before paying tax) is £12,500 – the same as the last tax year. 

However, the higher rate threshold, which is the point at which you start paying a higher tax rate of 40%, increased in 2020 to £50,000.  

So, this is something for buy to let investors to keep in mind for 2021. 

Find Your Perfect Buy to Let Investment in the UK With RWinvest

Browse Our Latest Properties For Sale

View Properties
Which Buy to Let Rules and Buy to Let Taxes Are Staying The Same Which Buy to Let Rules and Buy to Let Taxes Are Staying The Same

What Buy to Let Rules and Buy to Let Taxes Are Staying the Same? 

While some aspects of buy to let have changed for 2021, many tax rules on buy to let and buy to let responsibilities remain the same as those in 2020. 

Here is a brief summary of the buy to let rules, taxes, and regulations that haven’t changed for 2021 but still apply to all buy to let investments. 

  • Capital gains tax – CGT rates are the same for 2021/22 as they were for 2020/21. The general capital gains tax allowance (the amount you can earn before tax is payable) is £12,300 for 2021. 
  • Energy Efficiency rating – All rental properties in the UK must hit an energy efficiency score (EPC rating) of at least E.   
  • Fire safety standards – Like electrical safety standards, fire safety standards remain for 2021 as a key buy to let rule, just without any new changes.  
  • Landlord insurance – Those who own rental property are still encouraged to take out landlord insurance to protect themselves and their investment.  

Find out more about the buy to let rules and tax rules on buy to let that all investors should know about within our guide on how to become a landlord in the UK 

RWinvest Award Winning Property Investment Company RWinvest Award Winning Property Investment Company

Ready to Invest in Buy to Let

​Whether you’re new to buy to let or you’re looking to add to your property portfolio, don’t miss our range of lucrative investment opportunities.

We have properties in the best locations for buy to let investment in the UK, and our experienced team of property professionals is equipped to help you find your ideal opportunity.

Contact us today or chat to an agent to learn more about our current buy to let properties. 

Amy Jackson
Amy Jackson
Property Editor

Amy Jackson is the property editor at RWinvest. Amy has over three years of experience working in the property content sector and has a keen eye for finding the latest news, statistics, and must-have property investment information.

Liverpool L1 City Centre Postcode

The Mill

Invest From £39,950

Liverpool Prices from £139,950

Assured 6% NET Rental Return

Grade 2 Listed Building

Exclusive Payment Structure

One Park Lane

Exclusive Liverpool Investment

Liverpool Prices from £129,950

6% Assured Net Rental Return

16 Storey Skyscraper

Invest With £29,990

Heaps Mill

Exclusive RWinvest Opportunity

Liverpool Prices from £124,950

7% Assured Net Rental Return

Deposits From as Little as 15%