HMRC confusion – Is BTL a commercial mortgage?

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I have just been on the HMRC webinar for Income from property and they have said that commercial mortgages will be exempt from interest relief changes that are getting phased in from 2017-2018 tax year.

Is a BTL mortgage classed as a commercial mortgage?

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HMRC – Tackling the Hidden Economy

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Tax Compliance

Under an initiative by HMRC to use new technology and artificial intelligence (AI) techniques to “Tackle the Hidden Economy” a recent consultation has identified several areas where there is a need to have an operating licence – HMOs and selective licensing in the private rental sector being one of these – as an option for HMRC to develop tax-registration checks.

It follows a recent revelation that in one London borough alone, up to 50% of landlords operating with a landlord licence had not registered for a self-assessment tax return. The HMRC consultation aims to tackle different areas of the hidden (non-tax paying) economy by making the need to access all licences conditional on tax compliance, known in the HMRC jargon as ‘conditionality’.

Mandatory licensing for HMOs and the selective licensing schemes are obvious areas of a landlord’s operations where the government thinks they would be suitable for conditionality.

The Housing Act 2004 introduced mandatory licensing for private HMO rented properties, enforced by local authorities in England and Wales. In 2015, the Department for Communities and Local Government (DCLG) introduced further grounds for implementing selective licensing schemes for poor property conditions, high levels of migration, high levels of deprivation and high crime, and it is now likely that following an upcoming legal review, mandatory licencing will be introduced for 2-storey HMOs as well.

There are approximately 510,000 HMOs in England and approximately 64,000 of these are currently required to be licensed, with a further 160,000 HMOs with the introduction of 2-storey mandatory licensing.

The government says it “values the private rented sector and wants to see a strong, healthy and vibrant market, which meets housing needs in a professional way”, and this includes ensuring that landlords are reporting and paying the tax they owe.

HMRC is therefore increasing its targeted compliance activity across the private rented sector through taskforce activity. HMRC says it is also encouraging those who have been non-compliant to come forward through activities such as the Let Property Campaign

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – HMRC – Tackling the Hidden Economy | LandlordZONE.

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Calling all legal minds for help please – Bullied by Council and Water Co.

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I have been embroiled in a 3 year campaign waged against me by the local authority being Enfield Council, along with Thames Water. This is a classic case of large institutions, abusing their position and adopting bullying tactics – To date it has cost me £8000 plus an award  by the court of a further £7000 for Enfield Council costs this element yet to be settled.

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Social Landlord not prosecuted despite mass gas safety breaches!

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Terry Lovett, of Lovett Sales and Lettings in St Neots told the Property Industry Eye that he is “incensed” Social landlord Luminus Homes has escaped prosecution by the Health and Safety Executive (HSE) after gas safety breaches and no certificates were found in over a thousand of its homes.

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Selective Licensing fails with Newham homeless crisis!

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Readers of Property 118 will be familiar with my opposition to Selective licensing. A revenue raising exercise for Bankrupt Councils.

The onslaught on the PRS is now bearing fruit.

The Sky News report in to the homeless crisis in the UK has today released a startling statistic.

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Labour would roll-back tenancy laws

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Section 21

In a Christmas interview Jeremy Corbyn has repeated his pledge that labour would increase tenants’ security by rolling back the English tenancy laws as part of a mission to replace Britain’s “failed model of capitalism”, with rent controls and an end to the non-fault, no blame (Section 21) eviction process.

Introduced by the Thatcher government in 1988 the then Housing Act brought the assured shorthold tenancy, which, over the last 30 years or so, has had the effect of revolutionising the UK letting market.

In the 70s and 80s there were few houses and flats available to rent as most landlords had left the market due to the overbearing letting laws – security of tenure for life and a situation where it was almost impossible to remove a tenant.

Today, landlords have a system where (after the fixed term has ended) they can give 2 months’ notice and if necessary peruse an eviction through the courts. Mr Corby argues that landlords are evicting their tenants on a whim and “at the drop of a hat”, even though on average it can take 6 months to do that. But at least under the present system landlords know they can get their property back if they need to, or if they have a bad tenant.

Statistics show that most landlords encourage good tenants to stay as long as possible, because it costs them money when they have a vacant unit, and the extra costs and time involved in re-letting. Government statistics show that the section 21 process is used in a small minority of lettings, and in those cases the overwhelming majority are for non-payment of rent.

Speaking to The Independent newspaper Mr Corbyn said that the “so-called no-fault evictions”, where he says, allow landlords or their agents to evict renters on a whim and without reason, are contributing to homelessness.

Arguing that families are being disrupted by evictions because children have to move schools, and that the current laws make insecurity rife amongst individual renters, Mr Corbyn says communities are broken up when tenants have to move away from an area.

Mr Corby told The Independent newspaper:

“I am very committed to housing and dealing with homelessness. I think it’s a moral litmus test for the country: do we just put up with so many rough sleepers or do we do something about it. What we would do is bring in a more regulated private rented system with particular emphasis on longer tenancies.”

“It’s a power relationship that is not remotely fair. Every other country in Europe has some degree of private sector regulation – most cities in the United States do with the odd one out and this was abolished, basically, by the Thatcher government.

”As you know I’ve spent a lot of my life very concerned about housing and remain so. At the moment we have a largely deregulated private rented sector in Britain and people can be evicted or have their tenancy terminated at the end of six months for no reason whatsoever.

“The stress levels on people concerned is incredible. I get it all the time from constituents because a third of my constituents are private renters. I am very determined to bring some order and stability to their lives by longer tenancies and eviction that can only be there for good reason rather than just what can be retaliatory eviction.”

The Labour leader said that removing the Section 21 ‘no fault’ eviction notices will be a key housing pledge in the next Labour election manifesto.

However, the Residential Landlords Association (RLA) strongly dispute Mr Corbyn’s claims, stating that there are over 400 regulations and 100 laws that Landlords have to contend with, that Ministry of Justice figures show social landlords (councils and housing associations) made 294% more claims for possession than private landlords in Q3 2017, even though they now represent a smaller section of the letting market, and that landlord repossession claims actually decreased in Q3 2017, continuing a downward trend since Q2 2014.

These figures are also showing that private tenants are staying in their homes for longer (an average of 4 years), says the RLA.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Labour would roll-back tenancy laws | LandlordZONE.

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Funding for Lending scheme ends for Banks and Building Societies

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The Funding for Lending Scheme (FLS) was made available by the Bank of England to encourage banks and building societies to lend more to households and businesses. It did this by providing funding to these firms for an extended period

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Santander to allow three-year ASTs

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Longer Term Tenancies:

Ahead of the government’s stated intention to introduce voluntary longer short-term tenancies, Santander has extended its assured shorthold tenancy (AST) lending policy from 12 months to 36 months.

This means that landlords with a mortgage from Santander will be in a position to offer longer assured shorthold tenancy agreements with their tenants if they want to do so.

Surveys have shown that the majority of AST tenants don’t want longer term tenancies, as they prefer flexibility in case they need to move with employment etc. However, with an increase in the number of families renting, they prefer stability, particularly if they have children in schools locally.

It is likely that with the introduction of a longer term tenancy (which will be voluntary between the parties) there will be a restriction on rent increases, perhaps annually, or the full term, but they will be off-set by increased certainty that the tenant will stay for longer, reducing void periods.

Miguel Sard (pictured), director of mortgages at Santander, told Mortgage Introducer:

“In areas such as London and the South East, property prices continue to rise and outpace wage growth significantly.

“Many renters aspire to take a step on the property ladder, but are resigned to ploughing their money in to rent, unable to save for a deposit.

“We hope these changes in [lending] policy will go some way to helping people budget and potentially save towards a deposit for their own property, supporting the first time buyer market and enabling social mobility, while also helping to prevent the risk of homelessness.

“Meanwhile, it also ensures landlords have a guaranteed rental income and don’t have to worry about loss of income with an empty property.”

This could be the start of a trend with BTL mortgage lenders offering longer term tenancy loans.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Santander to allow three-year ASTs | LandlordZONE.

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Action to make the process fairer on debt rulings – What about Landlords?

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Plans to protect consumers from unresolved debts which can damage people’s credit ratings without them knowing have been unveiled.

The government has launched a consultation on how county court judgments (CCJs) are issued, after concerns were raised that some rogue companies were deliberately sending claims to consumers using incorrect addresses.

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Joint tenants breaking up – New AST?

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I have a couple on an AST. They have split up. One wants to remain in the property and move a friend in to take her place.

I am assuming that I will have to conclude one tenancy and start a new one.

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