EXCLUSIVE: Financial impact of Covid on landlords revealed for first time

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Nearly 20% of Welsh landlords have struggled to pay their outgoings when tenants have failed to pay their rent during lockdown, it has been revealed.

A Rent Smart Wales survey of 1,343 landlords found 38% had tenants who had been unable to pay full rent since 23rd March, with 28% of those now more than two months in arrears.

The study, looking into how tenants and landlords have been impacted by the pandemic, found that of landlords who had struggled, 11% had tried and failed to get financial help, 30% had used their savings, 7% had requested a mortgage holiday, 3% had accessed Government support and 3% had got a loan to keep afloat.

Rent Smart Wales says of the 33% of landlords who reported that their tenants had asked for a rent reduction since lockdown, 13% have provided one, while 5% couldn’t.

Meanwhile, of the 26% who had been asked to provide a rent holiday, 8% of landlords have been able to oblige, but 4% were unable to help.

A Rent Smart Wales spokeswoman tells LandlordZONE that these interim results give a valuable initial insight into the effect on rent payments and how landlords have responded.

But she adds: “The survey response reflects only a small sample of registered landlords who have opted to receive communications from Rent Smart Wales.

“The survey was voluntary and, assuming that those who took the time to complete it may be those who were directly impacted, the results should be approached with a degree of caution.”

Citizens Advice Cymru is warning of a “wave of evictions” from 23rd August, when the ban on evictions ends. It says calls for help with rent have doubled during lockdown, with 1,037 between 24th March and 23rd June this year, compared to 497 during the same period last year.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: Financial impact of Covid on landlords revealed for first time | LandlordZONE.

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Airbnb walks into social media storm after allowing guests to give landlords ‘thank you’ payments

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Airbnb has defended its bid to top up its host and landlords’ finances with personalised kindness cards and a cash bonus so guests can say thank you.

The lettings platform has been widely attacked for asking customers if they would like to donate money to landlords and hosts who have lost income due to coronavirus.

Visitors now receive an email which explains how to reward those who have provided excellent service, stating: “To show appreciation or encouragement, eligible guests can send personalized kindness cards to hosts they’ve given four or five-star ratings, with the option to add a financial contribution.

“Airbnb will charge no fee, and 100% of your contribution goes directly to the host.”

However, on its community page, it adds that after feedback from some hosts who were concerned about the financial contribution element, it has updated the programme so they can opt-out of future contributions or donate unwanted cash gifts to charity. 

Twitter users have asked why they should contribute towards someone’s second mortgage, with one accusing Airbnb landlords of “jacking up prices for the already struggling locals looking for housing options”.

An Airbnb spokesman says: “We’ve heard from many guests that want to support hosts during this difficult time.

“There is also the option for a voluntary financial contribution, with no charges from Airbnb, that goes directly to the hosts, more than half of whom say they rely on the additional income from hosting to afford their home.”

In March the company announced a $17 million ‘superhost’ relief fund to provide grants to those facing financial challenges because of travel disruption along with a £250m fund to support all hosts with the cost of cancellations.

Read more about Airbnb.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Airbnb walks into social media storm after allowing guests to give landlords ‘thank you’ payments | LandlordZONE.

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Temporary Welsh increase to nil rate band of LTT for main residences only

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The Welsh Government has announced a temporary increase to the nil rate band of Land Transaction Tax (LTT) to £250,00 for main residence property transactions from 27th July 2020 until 31st March 2021.

The tax paid for higher rate residential or non-residential transactions are unchanged.

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International Student payment before arrival?

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We are considering an International Student who has viewed the room to rent via Whatsapp and has chatted to me about the rental. She would like to take the room, but will not be in the UK until mid-September.

We have agreed to commence a 12-month tenancy from 1 September and will email the contract to her

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Church of England Diocese tenant eviction?

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We have a property rented to the Local Diocese of Church of England on a Company Letting Agreement for 2 years. The agreement has ended, but the permitted Occupiers refused to leave the property on the basis of the current coronavirus outbreak.

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INVESTIGATION: the ‘property gurus’ pushing Bounce Back loans as ‘free money’

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YouTube is littered with videos by property gurus discussing with varying levels of expertise and probity how to apply for business Bounce Back loans and – in some but not all cases – implying indirectly that that they are a cheap way to raise finance to buy property.

Some are from controversial characters such as Paul Smith and Samuel Leeds, but also a plethora of other ‘millionaire property gurus’ such as Glen Armstrong and Ranjan Bhattacharya.

And as we reported recently, one of them – Paul Smith – was investigated by a national newspaper over his suggestion that investors should use Bounce Back (BB) loans to buy property.

This kind of advice can be given by gurus freely and legitimately because HM Treasury’s guidance is extremely vague about what these loans can be used for, saying only that they are to help businesses ‘keep operating’ or ‘stay afloat’ during the crisis.

But would this include using a BB loan to put down a deposit on a mortgage property?

Glenn Armstrong of Property Millionaire Academy, who has posted several videos discussing the loans with property sourcing guru Christoz Wild, is one of the more cautious advice givers, but nevertheless suggests the loans can be used in some circumstances to buy property.

He tells LandlordZONE that the loans “can be used for development projects if you lend it to another company, but not as a deposit for buying investment properties.

“And most investment properties would not be profitable if you had to pay [the Bounce Bank loan] interest from rent income. Most lenders will not lend if they know deposit is from a BB loan.”

Wild says government guidelines state that BB loans must be used ‘for the economic benefit of the business’ so an example given is that the company receiving the loan could lend it to another company for a higher rate of interest.

“The new company would then be able to use the funds as it wishes within the property sector, subject to any restrictions that the original company gives in the loan agreement,” he says.

Cyril Thomas, who heads up the Property Investors Bureau, has told LandlordZONE that: “We would not encourage investors or individuals to do anything in breach of the terms of their loan – I don’t want to get into the moral maze of what these loans should or shouldn’t be used for, but to keep it factual.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – INVESTIGATION: the ‘property gurus’ pushing Bounce Back loans as ‘free money’ | LandlordZONE.

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LATEST: Welsh landlords excluded from stamp duty ‘holiday’ scheme

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Welsh landlords are to miss out on a property tax handout aimed at helping first-time and cash-strapped buyers in the region.

In a similar move to the Scottish government last week, Welsh finance minister Rebecca Evans has cut the rate payable for properties valued at between £180,000 and £250,000 from 3.5% to zero from 27th July until the end of March 2021.

The change means that about 80% of house sales in Wales will be exempt from paying tax.

But, like Scotland, the change to land transaction tax – the Welsh equivalent to stamp duty – won’t apply to second homes or buy-to-let properties, which have to pay an additional 3% in tax on top of the existing rate for their value.

Evans says: “It will support people looking to purchase their first home or those seeking to move up the property ladder.

“So it will offer more targeted help to those who may be affected by the economic challenges resulting from the pandemic.”

She adds that her decision was “very much a response” to Chancellor Rishi Sunak’s change to the system in England last week, saying the “porous” nature of the Wales-England border was a motivating factor.

In England and Northern Ireland, anyone completing on a main residence costing up to £500,000 between 8th July and 31st March won’t pay any stamp duty, and more expensive properties will only be taxed on their value above that amount.

Scotland also announced a rise in the threshold of land and buildings transaction tax, from £145,000 to £250,000.

In England and Northern Ireland, landlords and second home buyers are also included, but will still have to pay the extra 3% of stamp duty they were charged under the previous rules.

Read more about legislative changes in Wales affecting landlords.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Welsh landlords excluded from stamp duty ‘holiday’ scheme | LandlordZONE.

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Landlord Law HMO Day – 19th August

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A new virtual training event for HMO landlords from Landlord Law: book your place here

Are you an HMO landlord?  Or do you work with HMO landlords or manage an HMO property?

If so

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Is Sunak planning to raise landlord Capital Gains Tax rates to fund his Covid spending?

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Chancellor Rishi Sunak has ordered a review of the Capital Gains Tax (CGT) system amid fears that he is to claw back some of the £188.7 billion the government has spent propping up the economy during the coronavirus pandemic sooner than expected.

The review by the Office for Tax Simplification (OTS) will not be good news for landlords, who are one of the key sources of CGT revenue for the government and who already pay up to 28% on gains from residential property.

One area the OTS may consider hammering include the CGT tax-free allowance that mitigate much of the impact of the tax on residential property gains, which is currently set at £12,300.

The chancellor is also likely to look closely at tax bands – depending on a property owner’s income, the level of CGT varies between 18% and 28%.

According to a report in today’s Times newspaper, Sunak is looking at whether to raise ‘historically low’ CGT rates to match equivalent income tax rates, and raise £90 billon over the next five years.

But sources at the Treasury have said the review of CGT should not be read as an automatic plan to raise levels of CGT, although The Times notes that the move ‘will prompt speculation’ ahead of the Autumn budget announcement.

A tax hike would not be a surprise – the government is scheduled to spend in total £370 billion this year, and that in order to bring spending back down to 75% of GDP, £60 billion will have to be found every decade from tax raising or spending cuts for the foreseeable future.

But landlords can have their say. The OTS has already published an online survey and a call for evidence to seek views about Capital Gains Tax.

Read about the CGT rule changes that came in earlier this year.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Is Sunak planning to raise landlord Capital Gains Tax rates to fund his Covid spending? | LandlordZONE.

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Chancellor requests review of CGT by the OTS

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The Chancellor, Rishi Sunak, has requested a review of Capital Gains Tax (CGT) in an open letter to the Office of Tax Simplification (OTS). This could indicate the Chancellor is considering a future increase in the CGT levy in an attempt to shore up the UK’s finances.

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