New Right to Rent guidance for landlords published

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New guidance has been published by the Home Office on carrying out right to rent checks on nationals of Australia, Canada, Japan, New Zealand, Singapore, South Korea and the USA who have entered the UK through eGates as visitors. The factsheet, which can be read online here, says that nationals from the countries above may […]

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Final reminder on Section 21 Consultation

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Have
Your Say:

This
is a final reminder to landlords and agents to have your say about
the abolition of Section 21 in the private rented sector (PRS). This
consultation seeks views on implementing the government’s decision
to remove Section 21 of the Housing Act 1988 and improving section 8
eviction grounds.

The consultation closes at 11:45pm tomorrow, Saturday the 12th October 2019

It’s
important that as many landlords and agents as possible makes their
views known before the consultation exercise closes, because most
people in the industry acknowledge that abolishing Section 21 without
putting credible alternatives in place first would be highly damaging
to the PRS.

The
National Landlords Association (NLA) ran a panel discussion at the
Conservative Party Conference earlier this month, titled: 21st
Century housing options: Landlords, the state or the streets?

The
panellists were Greg Beales, Director of Policy at Shelter; Cllr John
Fuller OBE, leader of South Norfolk Council; Dawn Foster, journalist
and commentator for The Guardian; and Chris Norris, Director of
Policy and Practice at the NLA.

Steve
Bloomfield, Deputy Editor of Prospect Magazine, chaired a lively
discussion in front of a packed room. While the model of regulation
for landlords was heavily debated, there was agreement that improving
the court process would be vital if the Government wants to avoid a
dramatic reduction in supply within the sector.

Highlights of the discussion are available on YouTube here: https://www.youtube.com/watch?v=vJQJskmrW4s

Chris
Norris of the NLA said:

“The
biggest challenge we face as an organisation is the bad reputation of
landlords. Central government has driven that acrimony, which has
been less than helpful.”

On the same day as the panel, the NLA launched its report based on research commissioned from Capital Economics on the impact of the Government’s proposal, A new deal for renting? The unintended consequences of abolishing Section 21

The
report, based on a survey of NLA members, found that if the
Government’s proposals go ahead, there could be a 20 percent
reduction in the number of dwellings available in the private rented
sector. Furthermore, the number of dwellings available to tenants in
receipt of benefits could fall by 59 percent.

See the Consultation link

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Final reminder on Section 21 Consultation | LandlordZONE.

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Home alone…

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DIY landlords are being burdened with ever-changing regulations and legislation. Is it time to consider full management?

Whether you are new to the industry or a successful landlord with a
growing property portfolio, the services of a reputable letting agent can be an
important source of help and support. With profit margins tight, many landlords
try to manage their own properties, but is it worth risking falling foul of the
law in order to save a few pounds? There may be many benefits to using a
letting agent that you have not yet considered…

Firstly, a reputable letting agent will have a comprehensive
overview of everything that is going on within your geographic area, and this
can be invaluable. The agent can also offer guidance to issues such as legal
compliance, setting up the tenancy and running all aspects of the tenancy for
you. A good agent really can save a landlord significant amounts of time, money
and stress!

Interestingly, it’s not just the landlord who can benefit from a good
letting agent. Tenants who secure a property via an agent will also benefit
from many levels of protection and support, knowing they are living in a
property that is safe and legally compliant. Letting agents should have access
to regular training in all areas of the business and are kept up to date with
legislation as soon as it is announced. Tenants can be reassured that any
action a landlord wanted to take would be moderated by the agent to ensure it
was fair and legal. In addition, if a tenant was in a predicament of any kind,
or a property required emergency maintenance, the agent should be able to help
to sort out the problems quickly and efficiently – sometimes without troubling
the landlord at all.

Under
management

Levels of service and management will differ from agent to agent, so
what specific day-to-day services can a landlord generally expect?

A letting agent’s work starts long before a tenancy even begins. A
good agent, can market the property to the widest possible audience, offer
advice on how to best to prepare that property for market, organise and execute
the viewings, source contractors to make sure the property has the correct
certification, carry out credit checks and references to mitigate any risk to
the landlord, draw up the Tenancy Agreement, take a thorough inventory of the
condition of the property, plus register the deposit lawfully on behalf of the
landlord.

The agent’s work will continue throughout the tenancy. The agent
will visit the property regularly to ensure that the tenant is living within
the terms of their Tenancy Agreement and no maintenance issues have arisen. When
the time comes for the tenant to vacate the property, checks will be made comparing
the condition of the property to the inventory that was carried out at the
beginning of the tenancy.

Troubleshooting

One much-underestimated benefit is that an agent can become a
communication firewall between the landlord and tenant should something go
wrong during the tenancy. Some landlords find difficult conversations
particularly uncomfortable and it can sometimes prove easier for an objective
third-party to take over. The agent can also advise landlords on their legal
rights and make sure any issues are dealt with fairly, swiftly and within the
law.

Importantly, if an agent is involved early enough, they can help to
ensure potential problems are avoided in the first place, which is always the
best solution to problem-management.

Portfolio
potential

If you’re looking to grow your property portfolio an agent can help
here too. Whether a landlord is looking for incremental growth or yield from a
property, an agent will be able to help them find their next investment.

Professional letting agents will know what is available on the market,
and many also offer a sales service, they will be aware of any good properties that
are due to be offered shortly. Importantly, the agent will have wide and
up-to-date knowledge of those local areas that are good for investment and represent
good value.

Prior to purchase an agent can give an indication of potential
rental income and possible outgoings so that landlords can create an accurate calculation
of profit and costs.

Arranging an annual or bi-annual meeting with your agent is a good
idea to ensure you are not missing out on any potential opportunities to grow
your portfolio and maximise your overall investment. You may also be offered
access to wealth management and tax advice, which is more important than ever
today.

Choosing an
agent

Every letting agent will offer their own specific set of services
and level of support, so make sure you do your research before committing. Working
with the right agent is vital. Never choose an agent purely on their fees. Find
out exactly what level of service you can expect for the fees asked, how your
money will be protected, and ensure all your needs will be covered.

A quick check of the agent’s online reviews plus research into any industry awards they may have won will give you a good overview of the services they offer. Finally, do make sure you arrange to meet your short-listed agents in person. The agent you choose will be entrusted with the keys to one of your biggest assets, so there needs to be personal rapport, trust and confidence between the two parties.

To find a Belvoir agent in your local area visit: www.belvoir.co.uk

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Home alone… | LandlordZONE.

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Is your property a ticking tax time bomb?

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If you earn income from residential properties, in the UK or abroad, you need to declare this income on your tax return. Not doing so can result in major penalties or fines. However, there is a way out: HMRC has started its Let Property Campaign again for the 7th year, since beginning in 2013. This allows UK landlords to come forward and voluntarily disclose unpaid tax on rental income that they have not paid. This disclosure should always be assisted by a qualified tax professional, as with this voluntary disclosure comes lenience when it comes to fines and penalties. Given that it’s possible to make significant savings on these penalties, it’s important to get your declaration right the first time around!
In the last year alone, nearly 400 overseas-based landlords confirmed to HMRC that the tax owed on their rental income was not declared or paid. This is a 61% increase on the approximately 250 declarations that came forward in the previous year. This is an indicator that the campaign is working, and that landlords who have currently not declared rental income should consider doing so.
HMRC have recently sent a number of letters to landlords whom they have information on but have not disclosed any information. These landlords are discovered by HMRC using a large database, combined with an artificial intelligence program called “Connect”. Activity can be cross-referenced from multiple sources including tax returns that have disclosed the ownership of property, the client lists of estate agents, and land registry and ownership data. Connect can also use information from social media profiles as well as spending patterns that indicate tax evasion. If the landlord does not respond within 30 days of receiving the letter from HMRC, they may be liable to face penalties based on what they owe. In addition, they could be subject to criminal investigation for non-compliance with tax declaration laws.
The let property campaign applies to landlords who have residential properties either in the UK or abroad. This includes landlords who have multiple properties, single rentals, holiday lettings, student accommodation, or rent out a room in their own home for more than the Rent a Room Scheme threshold. It does not apply to landlords who are letting out non-residential properties such as shops, garages, and lock ups. It does also not apply if you are renting out property on behalf of a company or a trust.
The process of declaring rental property income under the Let Property Campaign has several steps. Firstly, you need to appoint a tax advisor to notify HMRC know that you want to participate in the Let Property Campaign. Then disclose any income, gains, tax, or duties that you owe that you have not previously disclosed. Make sure that you engage a tax professional to calculate how much you owe, as well as determining how big your offer of fines and penalties should be. Ensuring that you get this process right will save you a lot of effort (and potentially money) further down the track. Once you have worked through your disclosure and offer with a tax professional, formally offer the disclosure and payment to HMRC, then pay what you owe. You can also voluntarily declare at any time outside of the Let Property Campaign, but you may
be hit with heavy sanctions if HMRC has contacted you as part of the campaign and you do not respond.
When you make your disclosure, you and your tax advisor can work out how much you should offer with regard to penalties you think you should pay. To determine exactly how much you will owe, HMRC will take into account the level to which you have helped them, and how significant your previous evasion has been, as well as the reasons behind why you did not declare income before. For example, a simple oversight or mistake will be treated much more favourably than purposeful lack of declaration. In some cases you may not have to pay any penalty at all. If you do have to pay penalties it will almost certainly be less than what you would have to pay if HMRC finds out that you are avoiding tax: under the Let Property Campaign the rates are rates are 0%, 10%, 20% depending on the circumstances, while without disclosure under the campaign the penalties can be up to 100% of your total tax liability. If you made a careless mistake, HMRC will look back up to a period of 6 years in determining what you owe. If you do not come forward and HMRC finds out you did not pay enough tax, they can look back up to 20 years.
Once you determine what you owe, you should pay within 90 days of declaring and offering your payment. If you cannot pay the full amount, let HMRC know as soon as possible, and do not make any payments until you have discussed your financial position with HMRC. They will take into account how and when you intend to pay, what your current income is, assets you have, and any debts that you have. They can then come to an agreement with you for, for instance, a payment plan.
The great news is that for certain individuals whom rental profits fall below or within their UK personal allowance entitlement, then you can register for the campaign complete all the work and get no penalties and no tax to pay. It is a way of completely bringing your tax affairs up to date in one exercise.
Taking advantage of the Let Property Campaign is a good way to get in line with your tax liabilities, while removing the full hit of potential penalties and fines. If you have undisclosed rental income, or have received a letter from HMRC, be sure to get your affairs in order as soon as possible, or risk facing even higher fines.
Finally I have recently seen letters from HMRC addressed to tenants of certain rental properties asking them to hold back rent due to the landlord as they have failed to get in touch with HMRC regarding their tax affairs because they are overseas. This is very serious and is a sign of HMRC and UK’s intent to claw back unpaid taxes. Taking from the Telegraph an HMRC spokesmen said: An HMRC spokesman said: “These letters form part of targeted compliance activity to ensure that offshore owners of UK property are aware of and comply with their UK tax obligations.
“HMRC is contacting both the overseas owner and any occupant of the property to provide information and help put right any innocent errors made. We understand that some areas of tax
can be complex and we want to help customers pay the right tax at the right time, ensuring the continued funding of vital public services in the UK.
It is vital all landlords comply as it is only a matter of time before HMRC get in touch for failure to comply
At Fusion Consulting we have successfully helped over 500 individuals complete the let property campaign and bring their tax affairs up to date. If you would like a free consultation please register by clicking the following link – https://lz.eshots.online/

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Is your property a ticking tax time bomb? | LandlordZONE.

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Will buy-to-let troubles presage a phoenix like rise again?

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Buy-to-Let:

Are landlords’ woes just a blip and will buy-to-let rise again asks Phil Rickards, head of BM Solutions, the buy-to-let arm of Lloyds Banking Group.

Writing for the
Daily Telegraph Mr Rickards argues that the property market is
just a “cycle of downturns and booms, interspersed with government
interventions.”

Reflecting on the
challenge that landlords have faced over the last decade and beyond,
first a credit crunch, and then a government crackdown, with what
seems like manic private rented sector (PRS) regulation, Rickards
takes a long-term view.

New Laws:

There are an
estimated 2.5 million plus landlords in the UK’s private rented
sector. Many of them entered what is still a cottage industry,
investing their hard earned cash, often supplemented with a
buy-to-let mortgage, in what they saw as a safe and secure investment
– property, bricks and mortar, you can’t go wrong as the old
saying goes.

But these people are
now finding that the changes introduced over the last few years have
shifted the ground under their feet, if not literally then certainly
metaphorically: one new law or regulation after another has turned
what was an easily managed and quite lucrative sideline for many
landlords, one that the prudent investor saw as an alternative
pension, into something of a bureaucratic nightmare. And all this
under a Conservative government, traditionally the landlord’s
friend.

No easy solution

There’s no getting
away from the fact that buy-to-let took on bubble proportions: the
shorthold tenancy introduced in 1988, followed by the buy-to-let
mortgage soon after, meant that everyone and his dog had a
buy-to-let, or was thinking getting one. The age of the middle class
landlord had arrived, and it made sense – not only were the
investment returns (income yields) far in excess of any interest
available in banks and building societies, capital growth was
phenomenal.

But then the
inevitable backlash came: the get rich quick schemes, the property
millionaires, the rogue landlords, the media stories proliferated
until the already poor public perception of a typical landlord became
almost toxic. And with 20% of households being tenanted, it became a
real political issue – a substantial block of voters no government
could ignore.

The Tories
themselves were conflicted. The party of home ownership, in the end,
decided that to dampen the demand for buy-to-let mortgages was the
only answer, not least because the amount of borrowed money in the
system risked destabilising the whole economy, should there be
another downturn. Also because there was a perception that first time
buyers were being priced out of the housing market.

What followed was a
plethora of new regulations designed to crack down on rogue
landlords. At the same time this was switching the emphasis away from
the amateur landlord, with their precarious grasp on what is legal,
to what was seen as the professional portfolio landlord. This was
backed up with a government policy of encouraging large-scale
institutional build-to-rent developers and professional block
management with tax incentives and partial funding.

The net result is that some small-scale landlords are leaving the sector or selling down the size of their portfolios. The measures have put a stop to expansion, house prices are stalling and all the bureaucracy and red tape just keeps squeezing landlords’ profits.

A Tough Market, but room for optimism

Things have got a
lot tougher for landlords; it now takes a lot more effort to squeeze
profit from buy-to-let, and it all makes investing in property less
attractive. But, argues Mr Richards, “are we really seeing the slow
demise of buy-to-let?”

The boom times that
brought the expansion of buy-to-let might be over, but taken over a
long period of time, this pattern tends to repeat itself over and
over again. A view taken over 100 years shows that there have been
booms interspersed with government interventions leading to
downturns, then booms again, all along.

The cycle of supply
and demand is somewhat inevitable and eventually defies all
government intervention, not least threats like rent controls and
rent stabilisation – in fact these measures can actually accelerate
the return to status quo, as as eventually supply can’t fulfil
demand and the PRS is on the rise again.

Richards sees this
cycle in what’s going on now:

“At the start of
the 20th century, the Private Rental Sector was flourishing. Most
Brits rented property and the majority of lets were private.

“The following
century saw repeated highs and lows for landlords, with two world
wars contributing to a lack of supply in properties generally
(housebuilding was halted during The Great War and homes demolished
by bombs in the Second World War).

“This, in turn,
meant letting property privately became more profitable and the
Private Rental Sector grew, which was followed by government measures
to give tenants greater rights, which curtailed that profitability.”

The Rent and
Mortgage Interest Restriction Act of 1915; The various socially
inspired Rent Acts; The Protection from Eviction Act in 1977; the
post war social house-building programmes; the Right to Buy council
houses, the introduction of Shorthold Tenancies in the Eighties; the
introduction of low interest buy-to-let mortgage in the Nineties; and
economic booms and busts, all contributed to this roller coaster of
ups and down in the PRS.

Chancellor George Osborne’s post financial crisis measures were just the latest in a long line of these ups and downs in the fortunes of the PRS, but the fundamentals have not changed: rapid population growth, a severe lack of social housing and a need for employment flexibility in a modern economy meant that renting was more critical than ever. These are forces that no government can easily harness and control, to the benefit of either landlords or tenants.

Rickards cites UK
population growth currently estimated 66 million, according to the
Office for National Statistics (ONS), reaching nearly 73 million by
2041. And despite the best efforts of all post-war governments,
new-build rates remain stubbornly below targets.

So despite and perhaps because of all this, demand for renting remains high, rents, as Rickards says, are even higher, while at the same time buy-to-let mortgage rates are lower than ever. And now, with a new flavour of cabinet in Downing Street government housing policy could well shift yet again?

There will always be
challenges for landlords, and the vicissitudes of the market and
government interventions will exacerbate the cycle, but history shows
that renting and the PRS will always bounce back.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Will buy-to-let troubles presage a phoenix like rise again? | LandlordZONE.

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