Overseas landlords need to make sure their tax affairs are in order

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UK expats often rent out their primary residence when they relocate overseas. It is also the case that some individuals relocate for the primary purpose of limiting their UK tax bill. HMRC is undertaking a sustained campaign to ensure that overseas landlords are paying the tax they owe in full.

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BREAKING: UK’s two landlord associations make their first political joint statement

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Due to merge in January but awaiting legal due process, the RLA and NLA have jointly called for the new Chancellor to change the government’s course on the private rented sector.

The UK’s two leading landlord associations have
issued their first joint political statement ahead of their upcoming merger –
although they still haven’t set the date.

Despite announcing the merger last August, legal
due diligence issues are holding up the process, which was due to take place
early in the new year.

In their submission for the Budget, the Residential
Landlords Association (RLA) and the National Landlords Association (NLA) have
urged the Chancellor to use his first Budget to reverse a decline in the supply
of rented housing.

The statement points to extremely low confidence among
landlords, who are selling more properties than they are buying, with others
switching to short-term holiday lets for tax reasons.

Change course

David Smith, policy director for the Residential Landlords
Association (RLA), says: “Ministers need to use the Budget to urgently change
course to ensure that their tax policies are positively aligned with their
wider housing objectives to encourage good landlords to provide long-term
affordable housing.”

Chris Norris, director of policy and practice at the NLA,
adds: “The tax system with which landlords must contend is no-longer fit for
purpose. HM Treasury has constructed a series of barriers to investment, which
make running an efficient and successful lettings business borderline
impossible.”

The merger will combine their membership and
activities into the National Residential Landlords Association or NRLA, giving
it a total membership of more than 80,000.

This, it is claimed, will mean it represents
the owners of some 500,000 private rented properties or approximately 10% of
the stock in the PRS.

The NLA was founded in 1988 and the RLA in
1973, but in recent years have been pursuing almost identical roles including
training and advice for landlords, and both lobbying and campaigning
activities.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: UK’s two landlord associations make their first political joint statement | LandlordZONE.

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Possession Claims Online

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Section 21:

Not every landlord
or agent would consider handling a possession claim themselves, but
the good news is, it can be done – the system is designed for LIGs
– litigant’s in person.

Everyone has the
right to speak for themselves in court without the aid of a solicitor
or other legal professional, and landlords will often prefer to do
this because they can deal with the paperwork themselves, they can if
necessary speak directly to the judge, if a hearing becomes
necessary, and it saves on legal fees..

It may all change if
section 21 is abolished and some form of Housing Tribunal is
introduced, but as it stands right now it is possible to bring a
possession claim using section 21 without the need for a hearing –
its all done using the documentation you present.

If you handle it
yourself you will be known as a ‘litigant in person’ and you
will also be known as the ‘applicant’ in the county court. The
usual reason for a possession claim online is the tenant is owning
rent and the landlord wants the property back. The PCOL service
currently costs £325.

HM Courts &
Tribunals Service operates a Possession Claim Online service (PCOL)
which allows you to start off the process conveniently online – PCOL
is a simple, convenient and secure way of making or responding to
certain types of possession claim on the Internet.

Civil Procedure Rule Practice Direction 55A governs the type of claims that can be issued using the PCOL service and landlords wishing to use it should familiarise themselves with this and the online User Guide before commencing the process. The is also support on procedures, not legal advice, by a Customer Help Desk.

The latest available
figures show possession claims have been falling, and the quarter
from January to March 2019 is representative with the majority (63%)
(19,192) of all landlord possession claims being from social landlord
claims, 16% (4,893) were accelerated possession (section 21) claims
and 21% (6,266) were private landlord claims.

The 24 hour PCOL
service allows small and infrequent users, such as private landlords,
to fill out their claim online, while frequent users, such as local
authorities or mortgage lenders, can link their data system directly
into the Possession Claim Online interface to automatically start new
claims.

When the service was
launched for England and Wales, HMCS Chief Executive Sir Ron De Witt
said:

“A Possession
Claim Online is putting the needs of courts users first – it’s
about accessing justice in a more efficient and convenient manner.
The service is more convenient for users as it means that they can
make their claim online and it is issued immediately, with a court
date automatically scheduled. Those using PCOL no longer have to fill
out a lengthy paper claim. And they can keep track of their claim at
all stages, instead of having to contact the court.”

When applying for
possession using section 21, landlords will need to follow closely
the rules which govern the process which can be summarised as
follows:

As well as the
existing preconditions of complying with the deposit rules and
having, where required, a selective, additional or HMO licence, when
it applies, landlords must have, at the start of the tenancy, served:

• A current gas
  safety inspection certificate
• A current
  Energy Performance Certificate
• A current copy
  of the government’s “How to Rent” booklet

It is likely that
before long landlords in England will also be required to prove an
electrical safety certificate.

Failure to supply any of the above in the form of accurate documentary evidence means that your claim will be rejected.

The section 21
notice cannot be served during the original first 4 months of the
tenancy and it will expire (in most cases) after six months. You
cannot start the Section 21 claims process until the contractual
tenancy terms has ended, though a Section 8 claim for breach of
contract is different.

Trips and Traps
for Landlords:

When problems arise
within a tenancy it is often the case that communications breakdown
between landlord and tenant. Tenants in arrears with the rent may
refuse to cooperate with the landlord and refuse to allow access to
the property to carry on an ECP assessment when it becomes due (every
10 years) or an annual gas safety inspection.

As these documents
must be current at the time of serving a Section 21 notice the lack
of them would stymie any Section 21 claim, so the landlord would in
this case need to fall back on a section 8 claim.

Landlords who failed
to serve a gas safety certificate at the start of the tenancy may be
unable to use either process.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Possession Claims Online | LandlordZONE.

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EXCLUSIVE interview: Make sub-letting a criminal offence, says leading rentals firm

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Draker Lettings says persistent sub-letters are a huge problem because those doing it know there are few or no legal or financial consequences for them if caught.

A
property firm in London has called on the law to be changed so that illegal
sub-letting becomes a criminal rather than a civil offence as a significant
epidemic continues to sweep across the capital and beyond.

It
is a criminal offence to sub-let some forms of rented social housing but not
private rented accommodation.

Tenants
in the private rented sector who sublet part or all of their home without their
landlord’s permission are usually breaking the terms of their Assured Shorthold
Tenancy contract and this can be grounds to begin eviction proceedings.

But
Draker Lettings, which has two branches in central London and handles
approximately 700 tenancies a year, says it should be a criminal matter.

“These
are people who from the outset pretend to be who they are not, produce fake
references and lie about why they are taking a property and then, often, behave
appallingly when we and our landlord clients find out what they are up to,”
says its Managing Director Tim Hassell,

“We
have had to invest a lot in time, training and technology to try and get rid of
illegal sub-letters and we run a mile if we see them. 

“Also,
we’ve partnered with a company called Smartsearch to change our referencing
procedures so it’s much harder for people to sneak anything past us.”

Many
of these illegal sub-letters, particularly in areas of London and other cities with
easy access to popular tourist attractions, use Airbnb and other short-lets
platforms to create revenues often far in excess of the monthly rent being paid,
or fail to pay the rent at all.

“Airbnb is problem for us and it’s a problem for everyone and it needs
regulation,” says Hassel.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE interview: Make sub-letting a criminal offence, says leading rentals firm | LandlordZONE.

View Full Article: EXCLUSIVE interview: Make sub-letting a criminal offence, says leading rentals firm

Exclusive: Huge frustrations with Universal Credit rent payment system revealed

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HMO operator Nick Sturgeon says providing accommodation to UC claimants is becoming too risky and expensive to consider.

A landlord based in South Yorkshire
has contacted LandlordZONE to share his growing exasperation with the Universal
Credit (UC) rent payments system and how it continues to cause mounting problems
for his business, and many other landlords like him.

Nick Sturgeon, a professional
HMO landlord, rents out properties to tenants in receipt of Universal Credit
and recently put his concerns to the Department of Work and Pensions (DWP).

These include how, because
the DWP insists on paying claimants direct initially, it can take him up to 11
weeks to receive his first rent payments when a tenant gets into arrears.

In other words, when these
tenants use the money to fund their living expenses rather than pay the rent, payments
are subsequently then switched to the landlord, but often too late.

“Support is not given to the
private landlord under the Universal Credit system because of the way the
legislation is structured,” says Sturgeon.

“This is causing a massive
reduction in the number of landlords willing to take tenants in receipt of UC,
pushing up homeless numbers and raising poverty because people on benefits are
finding it increasingly difficult to be safely housed. 

“For example, I have reduced
down from operating 11 properties to just two because of the way UC payments
are administered.”

Other key failings of the
system put to DWP by Sturgeon include:

• How the system does
  not factor in the mental and physical state of a UC tenant. To avoid the almost
  inevitable arrears they get into, vulnerable tenants should have their rent paid
  directly to their landlord from the start of a tenancy, says Sturgeon.
• DWP Case Managers and
  Account Managers rarely respond when sent paperwork by landlords chasing
  payment or requesting that rent be paid to them direct after the tenant has
  agreed that it should take place.
• When a tenant in
  receipt of UC gets into arrears, it can take months and even years for the
  money to be recouped by the landlord via the Third Party Deductions system.
• If a tenant is in
  arrears and then moves out, it is very difficult for landlords to get the money
  owed deducted from the person’s benefits payments.
• Private landlords are
  treated more harshly than social landlords or charities providing
  accommodation, who are more easily able to be reimbursed for arrears through
  the Alternative Payments System.

“Why are such normal and previously standard arrangements
not allowed or extended to the private landlord under Universal Credit when
this was a lynchpin of the Housing Benefit system?” asks Sturgeon.

“It ensured that a tenant could request accommodation from
a landlord who knew they would be paid retrospectively for providing the
accommodation.”

If you are a landlord suffering similar problems with the
UC payments system as Nick, get in touch via editor@landlordzone.co.uk.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Exclusive: Huge frustrations with Universal Credit rent payment system revealed | LandlordZONE.

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Developers scramble to offload discounted property to landlords

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Newbuild specialist agency James Pendleton says builders are struggling to sell properties not included within the government’s Help to Buy scheme, and are cutting prices heavily to shift stock.

Landlords are being offered property bargains in the
capital as developers try to sell-off new-build stock that doesn’t attract Help
to Buy financing.

Some developers are offering discounts of up to 20% and
for example landlords have been getting a 14.1% reduction over the past three months on average when buying
new builds in London through estate agent James Pendleton — down £141 per sq ft to £864 per sq ft.

This compares with an average discount of just 2.6% for re-sold property –
private vendors are much less able or keen to cut their asking prices.

Lee Pendleton, founder of James
Pendleton, says there has been a gradual build-up of new build stock in
many areas that hasn’t shifted as quickly as developers would like.

He points to Brexit and a political impasse in
Westminster during the last year as the cause. Says Pendleton: “Once developers find the right buyer,
they are very prepared to reduce the price beyond anything you would think
possible.”

David
Galman, sales director at Galliard Homes, adds: “Finished stock, if priced sensibly,
will sell, certainly with the added bonus of the Help to Buy option. 

“At developer’s year-end, buyers are
often able to cash in on a developer’s requirements to their respective boards
and get a broader discount.”

He adds that multiple sales can often gain an even better deal. “What
vendors, developers and landlords need to look out for is the bulk buyer who
really isn’t a bulk buyer, someone who tries to get a vast discount by claiming
he is a cash bulk buyer, but is really trying to broker individual sales,” says
Galman.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Developers scramble to offload discounted property to landlords | LandlordZONE.

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Tenant claiming £10k damages?

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Hi everyone, I’d appreciate any input that the members might have with my predicament. I am currently the defendant in a case that one of my tenants has brought through the small claims court. The tenant is claiming in excess of 10k against me and has listed the following reasons.

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Call for new Chancellor to reverse decline in PRS

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The Chancellor must use his first Budget to take immediate action to reverse the decline in the supply of rented housing, say landlords.

With landlords selling more properties than they are buying and others switching to short-term holiday lets for tax reasons

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Budget 2020: Action needed to halt fall in supply of homes

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The Chancellor must take action in the Budget to reverse the fall off in the supply of rented housing say landlords. With landlords selling more properties than they are buying and others switching to short-term holiday lets for tax reasons, unless action is taken tenants are going to find it increasingly hard to find the […]

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Universal Credit: update for landlords

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The Department for Work and Pensions has published a newsletter for landlords who have tenants in receipt of Universal Credit. The newsletter includes the latest information on the managed migration pilot scheme in Harrogate as well as the latest statistics on Local Housing Allowance and Universal Credit. It also includes a new video for private […]

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