Landlord Investment Show – ‘Living by numbers’ panel debate: the key takeaways

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At the recent Landlord Investment Show in London, Paul
Shamplina, Founder of Landlord Action and Brand
Ambassador at Hamilton
Fraser, chaired a panel debate on the topics of tax,
finance and legal
advice for buy-to-let landlords. The panel took part in a Q&A
and shared their tips on the latest tax, legislative and financial challenges
that buy-to-let landlords face today.

The panellists included: Sean Hughes, Chartered Tax Advisor
from Comprehensive
Tax Planning; Jenny Brown, Sales Director from Mortgages
for Business; Vincent Burch, from Vincent Burch Ltd (an
independent mortgage broker); and David Hanna, specialist Tax Adviser at Cornerstone Tax.

Here, we share some of the key takeaways and provide top
tips from Paul Shamplina and the expert panellists.

Advice for new buy-to-let investors

The panel had plenty of useful advice for those who have recently
become, or are interested in becoming, buy-to-let investors.

Paul suggested that the first thing anyone who is planning
to become a landlord should consider is what type of landlord they want to be.
There are several different approaches to managing properties, and it is
important to understand what will work best for you. For example, you may
choose to be a passive landlord with little involvement with or responsibility for
your tenants, an HMO owner with multiple tenants, or a portfolio landlord with
several properties and a much larger remit of responsibility.

Vincent Burch advised that it is important to research the
property market thoroughly; this will help you to decide what type of property
you want to invest in and what sort of return on investment (ROI) you can
realistically expect to make. Similarly, Jenny Brown emphasised the importance
of research and also suggested speaking to a mortgage broker to gather information
about the mortgage market.

Tax, finance & legal advice

A member of the audience raised a question about the
potential tax benefits of moving to a limited liability company (LLC) or a
special purpose vehicle (SPV) (a company set up for the sole purpose of renting
out properties). Vincent Burch advised landlords to consider how much it will
cost them to move to a limited company, pointing out that although mortgages
are more expensive when applying as a limited company, they offer better tax
relief.

Sean Hughes suggested that the choice to move to a LLP or
SPV depends entirely on personal circumstances and that landlords should be
mindful of the tax processes and implications when transferring property to a
limited company. He advised that if a property has increased in value between
the time of purchase and the present time, the landlord will have to pay Capital Gains
Tax (CGT) on the property if they decide to move to a limited
company. However, if you own five or more properties, and spend at least 10
hours on average per week fulfilling landlord duties, you may qualify for ‘Incorporation
Relief’ which means that you won’t have to pay CGT that has accumulated
on the property if you want to transfer to a limited company.

Business planning for landlords

The panel provided some tips to help landlords with
effective business planning. Jenny Brown suggested that landlords should add a
20 per cent contingency on top of every potential cost, because landlords’
costs are often higher than anticipated.

The panel also advised landlords to take into account refurbishment
and maintenance fees, along with planning for the unexpected, for example the possibility
of a property becoming vacant, resulting in an unplanned void period. Landlord
insurance isn’t compulsory, but a comprehensive policy like Hamilton
Fraser Total Landlord Insurance’s premier policy will provide full
cover between tenancies, as well as for loss of rent or alternative
accommodation and malicious damage by tenants or guests. As a landlord, you
can’t possibly plan for every eventuality, but you can take steps to reduce
your risks.

With the growth in build-to-rent, Paul pointed out that a growing number of tenants are choosing to rent from corporate landlords. This shift amongst many tenants towards a preference for dealing with professional landlords presents serious competition for landlords. Paul emphasised that it is important for landlords to seriously consider how they manage their properties and tenants to ensure that they appear professional and reliable and to factor this into their business planning.

Section 21

The panel discussed the backlash and potential
implications of the abolition of Section 21. The 2019 general election
manifestos confirmed a cross-party consensus that Section 21 will be scrapped.
Paul highlighted that over 20,000 landlords challenged the consultation to ban
Section 21, and that the ban could cause large amounts of landlords to leave
the property market. The panel agreed that scrapping Section 21 would have to
be supported with considerable investment and reforming of the Section 8 rule
in order to maintain the balance between tenant and landlord rights.

As Paul says in his previous 2019 wrap up article for
LandlordZONE, A
‘look back’ and ‘look on’ at landlord liabilities , “Despite strong opposition from landlords and
the industry, including myself, it would seem that whichever political party
wins the election, Section 21 will be scrapped.  For me, this could have
the greatest impact on the PRS we have ever seen, especially without
substantial funding for our court system.”

Paul regularly chairs discussions and speaks at the Landlord
Investment Show and other industry events, winning the award for ‘Best
seminar speaker’ at this year’s Landlord Investment Show Awards.

The Landlord Investment Show
is attended by thousands of industry players, including landlords, investors,
letting and estate agents, property developers, and other specialists within
the private rented sector. The event is a leading landlord & property
investment exhibition, showcasing panels of industry professionals and key
speakers who discuss a wide range of topics regarding the buy-to-let sector.

The next Landlord Investment Show will take
place on 19 March 2020, at Olympia London in Kensington. If you would like to
learn more about the show and how you can attend, visit the event’s
official website.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlord Investment Show – ‘Living by numbers’ panel debate: the key takeaways | LandlordZONE.

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Queen’s speech set to introduce legislation to axe Section 21

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The state opening of Parliament will take place on Thursday, and so will the Queen’s speech, which will set out the government’s agenda for the coming session, outlining proposed policies and legislation. Ahead of the speech the press has been briefed that it will include the legislation to end Section 21 repossessions. This is in […]

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Nottingham homeless in The Post again!

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Nottingham homeless in the post again. Nottingham has the highest by A LONG WAY homeless in the region. Us Landlords all know this is because of the Labour Council Selective Licensing who blame it on Tory Govt Benefit Cuts Universal Credit UC.

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Call of the Week: Keeping properties secure over Christmas break

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This week our advice team took a call from a student landlord who wanted some advice on keeping their property secure while there tenants are away over Christmas. As universities across the country finish term soon, many students will be planning to spend a few weeks at home-leaving their rental property empty for several weeks. […]

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Number of rent increases slowed in November

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ARLA Propertymark has released its November Private Rented Sector (PRS) Report.1

 Rent prices

– The number of tenants experiencing rent rises fell by 18 percentage points in November with 32% of lettings agents witnessing landlords increasing them compared to 50% in October.

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Whirlpool recall: landlords urged to check white goods

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More than half a million washing machines have been recalled by Whirlpool, with landlords urged to check whether white goods in their rentals are affected. Many landlords provide white goods as standard – even in unfurnished properties. And with 36% of accidental house fires caused by appliances, electrical safety is something that needs to be […]

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GDPR: ICO registration and limited companies

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This month, the Information Commissioners Office (ICO) has launched a new campaign to contact all registered companies in the UK reminding them of their legal responsibility to pay a data protection fee. The move marks the start of an ‘extensive programme’ to make sure the Data Protection Fee is paid by all those who need […]

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Will Nottingham fine landlords for increasing rents to cover licencing?

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I read an article about the council checking that the renting cost/ prices are kept down. Nottingham City Council will apparently fine any landlord that increases the rent cost because of licencing. The reason for this pressure on landlords from the Council is that the licencing is covering a 5 years period.

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What can landlords expect from the government after the election?

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Rental Property:

Housing was a major
election issue this time, given the general acceptance that housing
is facing something of a crisis in the UK. Both of the main parties
had proposals for the private rented sector (PRS) in their election
manifestos, particularly Labour with its proposals to radically shake
up the sector; rent controls, forced sales, capital gains hikes and
ending the shorthold tenancy being the main fears…

Labour had planned
new policies which would have seen a huge expansion of tenants’
rights, including government funded renters’ unions, open-ended
tenancies, removing immigration status checks, and removal of a
landlord’s rights to exclude tenants on housing benefits.

Rent rises would
have been capped in line with inflation, while some cities would have
been given the right to impose further restrictions, as well as
introducing an annual MOT check on all rental properties, coupled
with a national landlord licensing scheme.

Capital Gains Tax
was to be brought in-line with income tax, in most cases from ten per
cent up to 20, 40, 45 and 50%, depending on individual circumstances,
while removing the current £12,000 tax-free allowance. However, a
concession was to be applied for those with long-term lettings.

Landlords therefore
will have breathed a collective sigh of relief last Friday morning
when it became clear that a huge threat had been lifted, though the
Tories still intend to carry out their plans already in train to make
renting more tenant friendly. Indeed, the plan to remove Section 21
is slated to be in the Queens speech this Thursday.

That the
Conservatives plan to scrap no fault evictions is no longer news, but
perhaps less welcome than the suggestion that lifetime deposits
become mandatory.

The Conservative
manifesto confirmed that existing plans to abolish ‘no fault’ Section
21 evictions would be scrapped in England and Wales, bringing the
system in this respect in-line with Scotland, though the introduction
of a Housing Court or Tribunal in operation in Scotland is still in
question, and probably unlikely.

It is more likely
that a beefed-up Section 8 procedure will be introduced with extended
grounds for possession and a “stream-lined” court process, the
details of which are yet to be revealed. Unlike a no fault notice,
Section 8 notices will only operate in circumstances where a breach
of the tenancy rules has occurred, thereby giving landlords the
opportunity to take a tenant to court and argue their case.

The lifetime deposit
system would replace the current system in which tenants are having
to raise a deposit twice when moving: leaving their old deposit under
the landlord’s/agent’s control, while raising another one for the
new tenancy. The whole process involves a substantial amount of
money, especially where rents are high in the capital for example.

The lifetime deposit
suggestion would mean that deposits can be transferred from tenancy
to tenancy, a seemingly ideal solution, but the devil will be in the
detail here; what happens if there’s a deposit dispute – all yet
to be revealed.

In addition to these
two key changes, there was a whole raft of other reforms in train and
due to be implemented next year, most of which it can safely be
assumed, will now go ahead.

• Next April sees the final phase of George Osborne’s 2015 tax changes. Landlords will no longer be able to claim any tax relief on mortgage interest payments, apart from a Tax Credit of 20%.
• Energy efficiency rules that came in last year will be extended to all existing tenancies from April next year. Properties with an EPC rating of F or G will not be able to be rented out from that date onwards.
• Currently homeowners who have previously lived in a property but have since rented it out can claim capital gains tax relief on the sale of the property for up to 18 months after they moved out. From next April this period will be reduced to nine months under changes to the Private Residence Relief. This could have significant implications for many ‘casual’ or ‘accidental’ landlords and is expected to raise an additional £470million for the Treasury over five years. Anyone in this position and wanting to sell must do so before April 2020 to avoid any additional Capital Gains Tax.

David Smith from the
Residential Landlords Association said:

“On the pledge by
the Conservatives to end so called ‘no fault’ repossessions, we
agree that the system needs to be reformed, but this needs to be done
properly.

“Whilst any new
system should protect tenants from the minority of landlords who
abuse the current rights, it is important that good landlords can be
confident that in circumstances such as tenant rent arrears or
anti-social behaviour they can swiftly and easily regain possession
of their property.

“We want to see
comprehensive reform that works for both landlords and tenants.

“This should
include setting up a dedicated housing court offering easy and
inexpensive access to justice for both tenants and landlords.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – What can landlords expect from the government after the election? | LandlordZONE.

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