Landlord Action response to Budget Universal Credit changes

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The Government appears to have bowed to the volume of criticism leveled at its flagship Universal Credit scheme and a realisation there is a range of fundamental issues which need to be urgently addressed. Mounting evidence pointed to the fact significant hardship was being experienced by claimants due to

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Consultation on longer tenancies, Budget reaction

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Longer-term Tenancies:

James Davis of Upad comments on the Chancellor’s Budget speech in which he announced that a consultation would be launched to look at barriers to longer tenancies in the private rented sector. James Davis is founder of online letting agent Upad.co.uk and is himself a portfolio landlord. Mr Davis says:

“Whilst longer tenancies aren’t exactly new, the fact that a consultation will now take place should be welcomed.

“From the landlord’s perspective, it’s better to have the security of knowing your property is let, albeit without a regular % increase in the rent, than it is to enjoy 5% income rises but with the risk of costly void periods. It’s all about looking at the bigger picture and in this instance, that’s your profit and loss account.

“I’ve personally agreed many three or even five-year tenancies and have found that they offer me far greater security and peace of mind, compared to regular six monthly turnovers of tenants.

“Then, of course, there’s the simple ‘hassle factor’ of regular changes in occupants: cleaning, repairs, making time for viewings and the administration that goes with all of that. Personally, I’d rather get on with living life!

“That said, a certain level of flexibility will need to be employed so that any investor with a loan or loans against his portfolio isn’t penalised by tenancy agreements of longer than three years as this could limit his financing options.

“From the tenant’s perspective, longer agreements can also signal greater security knowing that there’s a roof over their head for a certain amount of time.

“Again though, there is a need for flexibility as many tenants that we engage with, enjoy the flexibility that six month agreements afford them.

“I shall eagerly await the findings of this consultation and would be happy to contribute to it.”

www.Upad.co.uk

Upad began in 2007 and has grown into the UK’s largest online lettings agency by offering a simpler, more cost-effective way to find tenants and let a property. This has proved equally popular among landlords who previously used a high street letting agent to find tenants as well as those who used classified channels says James Davis. Last year, Upad helped rent over 10,000 properties.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Consultation on longer tenancies, Budget reaction | LandlordZONE.

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Inheritance tax relief maximisation?

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My wife and I own several properties which are rented to tenants. Some of the properties were bought over a number years by increasing the mortgage on our principal residence, each advance being identifiable as an advance with which to purchase a buy to let property

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Tenant from Hell leaves property in sickening state

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Nightmare Tenants:

Yet another tenant from hell story demonstrates that landlording is far from the instant millionaire scenario that the popular myth perpetuates, a media peddled myth that would have all hard working landlords exploiting their innocent unsuspecting tenants.

In fact, a small proportion of tenants cause landlords no end of problems, failing to clean when they leave, failing to look after the garden and internal basic maintenance work, but far worse, sometimes trashing the property and leaving owing rent.

Experienced landlords know how to deal with these issues, but it’s no means easy, and every now and then even the best landlords get lumbered with a nightmare tenants.

Landlord, David Girtchen from Hull is a case in point. He was horrified and sickened, literally, when he saw the state of his property after his tenants had lived there – he found graffiti all over the walls and excrement (poo) smeared all over the floor.

The bathroom tiles had been torn off the walls and piles of children’s toys were strewn across a child’s room. The garage roof had holes in it, there were mountains of junk inside, as well as a stained mattresses from the house.

Mr Girtchen said his tenants had left owing him £5,000 in rent, and disappeared without trace weeks ago, but they had left their dog locked inside the house. He said they had been with him for 5 years without trouble for most of that time: “For the first few years they were fine – they paid their rent on time and nothing was a problem.

The tenants, who had three children, started to miss rent payments: “…about two or three years ago they missed a payment at Christmas and from then it has been £100 here and £200 there.”

They had not paid any rent since July and Mr Girtchen, who managed to trace them, is taking them to court over the state they left the property in. The laminate flooring needs replacing due to stains from dog faeces, which looks as though it was plastered on the floor, he said.

Having only paid a small amount of rent since last Christmas the court hearing will investigate the rent owed to the landlord as well as the state of the property and cost of repairs. Also, the RSPCA, is investigating, after taking the family’s dog into their care.

Mr Girtchen said: “I can’t understand what they thought they were doing. They have three kids in there.” I will be pursuing them for all the losses.

However, landlords need to be aware that taking tenants with no assets to court can be a waste of time and money – throwing good money after bad is a mugs game and sometimes landlords have to write off losses and move on.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Tenant from Hell leaves property in sickening state | LandlordZONE.

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No Major Surprises for Landlords

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Breaking News – Budget Review for Landlords:

Aww bless. Hammy Hammond hopes to stop Uncle Joe Corbyn’s socialist revolution by giving out railcards to Millennials.

After all the scare mongering in the press in recent weeks, I had a really bad feeling about this Budget. But in the end there were very few nasty tax surprises.

Contrary to what the newspapers predicted there was:

• No increase in the additional 3% stamp duty paid by landlords
• No big cut in the VAT registration threshold
• No scrapping of higher-rate tax relief on pension contributions
• No freezing of the corporation tax rate – it will still fall to 17% in 2020
• No increase in dividend tax rates
• No freezing of the personal allowance or higher-rate threshold
• No further attack on the self employed

The main tax changes include:

Stamp Duty Land Tax

From today first time buyers paying £300,000 or less for a residential property will pay no SDLT.

Those paying between £300,000 and £500,000 will pay no SDLT on the first £300,000 and 5% between £300,000 and £500,000.

A first time buyer is defined as someone who never owned an interest in a residential property in the United Kingdom or anywhere else in the world and who intends to occupy the property as their main residence.

First time buyers purchasing property for more than £500,000 will not enjoy any relief.

Some changes have also been made to the extra 3% charge on additional properties. For example, the higher rates for additional dwellings will no longer apply where an individual buys a property from their spouse or civil partner.

Income Tax

From April 2018 the income tax personal allowance will go up from £11,500 to £11,850 and the higher-rate threshold will go up from £45,000 to £46,350.

The Government has reaffirmed that it is committed to raising the personal allowance to £12,500 and the higher-rate threshold to £50,000 by 2020.

Unfortunately these changes will not apply in Scotland (with the exception of the personal allowance). Scots will have to wait until 14 December to see what nasties the Scottish Government has in store for them next year.

National Insurance

The Government is delaying various national insurance changes by one year (until April 2019), including the abolition of Class 2 national insurance (paid by the self employed) and reforms to the treatment of termination payments.

The Government has confirmed again that it will no longer proceed with the aborted increase in Class 4 national insurance paid by the self employed from 9% to 11%.

Companies Indexation Relief

This change will affect property investors who use companies. At present they can claim indexation relief when they sell property. This essentially means they only pay tax if their properties rise in value faster than inflation. No relief will be available for inflation from 1 January 2018.

VAT

The VAT registration threshold will not be cut significantly which will be a big relief to small business owners. It will, however, be frozen at £85,000 for two years from April 2018.

Personal Service Companies

The Government has already changed the rules for those who work in the public sector through their own companies (essentially forcing them to pay income tax and national insurance like regular employees).

The Government has indicated that a “possible next step” would be to extend the reforms to the private sector and will “carefully consult on how to tackle non-compliance in the private sector”.

Trusts

In 2018 the Government will consult on how to make trust taxation “simpler, fairer and more transparent”.

Rent a Room Relief

The Government is investigating how rent a room relief is used and wants to target it at longer-term lettings,

Mileage Rates for Landlords

Landlords who use their cars in their business will be given the option to claim tax relief for their travel by using the mileage rates (45p per mile for the first 10,000 miles, 25p thereafter).

Council Tax – Empty Homes

Local authorities will be able to increase the council tax premium from 50% to 100%.

Electric Vehicles

From April 2018 there will be no benefit in kind charge if employees use their employer’s electricity to charge their electric vehicles.

Capital Gains Tax

Capital gains tax due on disposals of residential property will have to be paid within 30 days. This change was due to take place in April 2019. It has now been deferred until April 2020.

ISAs

The subscription limit for 2018/19 remains unchanged at £20,000. The limit for Junior ISAs will go up to £4,260.

Pensions Lifetime Allowance

This is the maximum you can invest in pensions without adverse tax consequences. It will increase in line with inflation from £1 million to £1,030,000 for 2018/19.

Business Rates

In England the planned switch in indexation from RPI to CPI will be brought forward to 1 April 2018. RPI almost always gives a higher figure for inflation than CPI so this will provide some relief to businesses.

Non-Resident Capital Gains

At present non-residents have to pay capital gains tax on residential properties but not commercial properties. Gains that accrue after April 2019 will now be taxed.

Non-Resident Companies – UK Property Income & Gains

From April 2020, rental income received by non-resident companies will be subject to corporation tax, not income tax. Gains from selling UK property will be subject to corporation tax, not capital gains tax.

Fuel Duty and Cars

Fuel duty will be frozen once again in 2018/19.

A vehicle excise duty supplement will apply to new diesel cars registered from April 2018.

The company car tax diesel supplement will increase from 3% to 4% from 6 April 2018.

By Nick Braun

Nick Braun is the founder of Tax Cafe which publishes tax guides for landlords including How to Save Property Tax and Using a Property Company to Save Tax

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – No Major Surprises for Landlords | LandlordZONE.

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Landlord Reactions To The 2017 Autumn Budget

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The key headlines affecting UK landlords are:-

RESTRICTIONS ON FINANCE COST RELIEF

Disappointingly, there where no amendments suggested to the legislation which restricts finance cost relief for private landlords under Section 24 of the Finance (No.2) Act 2015

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Over 300 Councillors in 40 boroughs are Landlords!

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More than 1 in 7 Councillors in the boroughs with the highest levels of privately rented homes are landlords themselves.

This is more than ironic considering the attitude local authorities have to the PRS and landlords with many stories of councils telling tenants not to move out until they are physically evicted regardless of the costs and stress caused.

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Commercial property webinar Q&A Part 2

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On 19th October we hosted a webinar on commercial property, we had over 170 people attend. We’ve compiled the second part of the Q&A for you here.

If CRAR has taken place with control of goods on premises and rent still not paid and goods worth less then what do you do? 

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Need to evict? Check these off first

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S21 Tenant Evictions:

The decision to evict a tenant is not an easy one – even for seemingly clear cut cases such as non-payment of rent or severe damage to a property will see you facing a lengthy court process. Plus, you’re going to face scrutiny yourself to ensure you’ve complied with your legal responsibilities. If you’re considering evicting your tenant and the tenancy began or was renewed after October 2015, make sure you’ve done the following before issuing proceedings.

Here, www.Upad.co.uk provide a checklist for landlords to make sure that their eviction process is successful given the new rules introduced from 1^st October 2015.

Protected the deposit?

If you take a deposit, by law you must protect it with one of three approved government schemes. But that’s not all; once it’s protected you need to ensure you’ve sent your tenant, plus any third party (such as a family member) who has contributed to the deposit, the Deposit Certificate and the Prescribed Information. Failure to do so is a breach of the regulations and you could find yourself not only paying the full deposit back to the tenant but potentially an additional 1-3 times the deposit amount. You won’t be able to serve an eviction notice until you’ve protected a deposit and if you protect it late, you’re still liable to pay out.

Provided an EPC (Energy Performance Certificate)?

This is one bureaucratic rule you’ll wish you followed if you want to gain possession of your property back. An EPC gives an indication of the energy efficiency of a property and estimated fuel costs for the year. This needs to be given to tenants before they move in, and available should they request it earlier, in order for them to make an informed decision about whether to rent the property. If you don’t provide an EPC to the tenant, you won’t be able to serve notice until you do.

Provided the ‘How to Rent’ guide?

This guide outlines what documents should be provided, what the landlord is responsible for and guidance on behaving in accordance with the tenancy agreement among other things. It’s not enough just to send the tenant a link to the gov.uk site though, you need to either print a copy or email an attachment (best to get a read receipt or reply from the tenant to confirm they’ve received it though). Also, be wary that this guide has already been updated twice, so give the most up-to-date version to your tenants to be on the safe side.

Provided a Gas Safety Certificate?

By law, you must give tenants a hard copy of the Gas Safety Certificate before they move in. A gas safety check is required every year by a Gas Safe registered engineer and the certificate needs to be given to the tenant within 28 days if they’re staying on. Otherwise, you’ll give a copy of the new certificate to your new tenants before they move in. You’ll need to keep records for 2 years. If you don’t carry out a check or fail to provide the certificate, you won’t be able to serve notice.

Taken action on a reported repair?

New rules on handling repairs were brought in to tackle retaliatory evictions: a situation where rather than dealing with a complaint about the condition of a property, the tenant is served a Section 21 notice by the landlord. Under the new rules, you must provide an ‘adequate response’ within 14 days of a tenant making a complaint otherwise the tenant can go to their local authority who in turn, can serve a formal notice under the HHSRS which will limit you serving a notice.

Not served the notice during the first 4 months of the tenancy?

Before October 2015, you could technically serve a Section 21 notice on a tenant along with the tenancy agreement, which would mean the tenancy is only for the initial fixed term and then you will get possession of your property back.

Now, you cannot serve the notice during the first 4 months of the tenancy. So if you want to end a 12 month tenancy, you must give at least 2 month’s notice starting from the 4^thmonth of the tenancy. Plus, a Section 21 notice is now only valid for 6 months from the date of service and you’ll need to start court proceedings within that time.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Need to evict? Check these off first | LandlordZONE.

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Undervalue sale of property repossession

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I had a property sold by my lender for what I believe was undervalued.

It comprised of a house converted with consent into 4 x 2 bed flats producing £5200 per month on ASTs.

The lender kept the property for 1.5 yrs systematically vacating each flat thus reducing income.

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