Landlord ‘tax dodging’ is widespread claims think tank

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Unscrupulous landlords are dodging £1.73 billion a year in tax according to think-tank TaxWatch.

It believes the Government’s attempts to recoup payments – including the Let Property Campaign – is failing and instead suggests that lenders should be made to provide data about who owns a buy-to-let mortgage as a way to discover just who is a residential landlord.

Another radical proposal is to give each property a unique reference similar to a National Insurance number, which could be cross referenced with the Land Registry to identify and collect tax from landlords.

Landlords would need this number to let a property and get a buy-to-let mortgage, which TaxWatch believes would be a significantly lower regulatory burden than a full licensing scheme.

In 2013 the Government estimated that up to 1.5 million landlords had underpaid or failed to pay up to half a billion pounds in tax for the 2009-2010 financial year.

It estimates the tax gap arising from those in employment who haven’t declared and therefore not paid tax on lettings income, at £540 million for 2018-19.

But TaxWatch says the English Private Landlord Survey 2018 shows that at least two thirds of tenancies in England are owned by those who don’t receive pay through PAYE.

It says: “If the tax behaviour of the two thirds not ‘in employment’ is similar to those who are, and we have no reason to believe otherwise, the total tax gap is then likely to be as much as £1.73bn.”

The National Residential Landlords Association says it’s always been clear that landlords should declare all their income.

John Stewart, deputy policy director, tells LandlordZONE: “With the Government set to roll out its Making Tax Digital platform and given that there is already a wide range of data available to HMRC, what is needed is not more initiatives which criminal landlords will simply ignore, but better use of the tools already available.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlord ‘tax dodging’ is widespread claims think tank | LandlordZONE.

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Should landlords take advantage of tax incentives, lower property prices and attractive mortgage deals?

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Higher taxes, a stamp duty surcharge, and an increasingly regulated sector had made many landlords question their commitment to buy-to-let, and many landlords were selling down.

But with Covid came a fall in prices and the stamp duty boost, which appears to have resulted in a re-think for many. Helped by the availability of cheap buy-to-let mortgages, a situation that has been gathering pace since the lockdown, and falling property values, investing in buy-to-let again has suddenly become a possible option.

With savings of up to £15,000 on investments that offer better value than before Covid, this all appears to have boosted the appeal of buy-to-let investing again, evidenced by increasing demand in almost all regions.

Mortgage broker Mortgages for Business its MD Steve Olejnik told the Sunday Times newspaper that he had found many landlords building up cash reserves even before the stamp duty holiday. These landlords were “preparing to pounce in anticipation of a fall in house prices,” he said. “Between April and May, almost a third of landlords remortgaged to release cash so they could expand their property portfolios”.

According to the Halifax building society house prices fell 0.9% between April and June, and the Centre for Economics and Business Research thinks this downward trend has further to go with a prediction house prices will fall 5 per cent this year and 10.6 per cent next year.

But Richard Ignatowicz, a broker and landlord himself told the Sunday Times that “landlord investors need to question whether it’s better to buy now and simply save on stamp duty, or buy an even cheaper property once the expected recession hits?”

So, a note of caution enters this scenario, with the end of the furlough scheme in October promising a tough time for many tenants. At that point the government will stop paying 80% of thousands of salaries, which could lead to mass redundancies across the country. According to the Office for National Statistics 649,000 fewer people were in paid employment in June than in March, so job losses are already a real threat to landlords’ incomes.

As more people lose their jobs, when the full impact of a post Covid recession hits, rent payments will come under even more pressure. Many tenants may be struggling to pay their rent, which could precipitate a fall in rent levels over the next year or two, and good tenants may become harder to come by.

However, the risk is somewhat offset by the competitive mortgage situation now developing, with some deals on offer as low as 1.24 per cent and 20% deposits back on the cards.

Despite the temptation to invest now, some experts are counselling caution. They’re advising landlords to do thorough research in the local market, to establish real tenant demand, and for example, to take account of changing tenant preferences, such as the need for outside space and separate office space. Landlords may also consider buying through a limited company for tax reasons.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Should landlords take advantage of tax incentives, lower property prices and attractive mortgage deals? | LandlordZONE.

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Commercial landlords and tenants ask government to pay 50% of rent arrears to ‘save jobs’

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Commercial landlords and tenant groups have urged the Government to introduce a new Property Bounceback Grant for those firms at risk of going under.

Groups including the British Property Federation and British Retail Consortium believe a grant scheme would facilitate negotiations and solve the rent crisis looming over the retail, hospitality and leisure sectors.

They say that without financial support, both tenants and landlords face business failure, hundreds of thousands of job losses, and long-lasting damage to high streets across the UK.

The Government would fund up to 50% of rent and services charges owed by businesses while grants would be conditional on agreement by the landlord and tenant to account for the remaining 50% of the rent.

According to data published last week by Remit Consulting, commercial landlords were still owed 36% of quarterly rent due on 26^th June.

The Government says it’s already delivered a package of around £160bn of support, including loans, rates relief and grants for businesses to help them survive.

But the groups believe that funding the scheme for just six months would cost the Government £1.75bn, while the total return to the Treasury in terms of tax revenue from economic activity would be almost £7bn, and 375,000 jobs would be saved – a return on investment of almost 400%.

In a joint statement the trade bodies say: “Many retail, leisure and hospitality businesses across the UK have been closed for months. Even where they have reopened, footfall remains down significantly on pre-coronavirus levels.

“Similarly, landlords have been walking a tightrope to support their customers and protect the pensions and savings of millions of people invested in commercial property across the country.

“Without urgent action on rents, many otherwise viable businesses are, through no fault of their own, at imminent risk of failure.”

Read about residential bounce-back loans.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Commercial landlords and tenants ask government to pay 50% of rent arrears to ‘save jobs’ | LandlordZONE.

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Scottish blogger claims evictions data shows ‘tidal wave’ on the way – but it’s a 94% reduction!

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Evictions data released in Scotland that reveals 350 possession proceedings have been issued against tenants since the country went into lockdown have been jumped on by housing campaigners as proof that a ‘tidal wave of evictions’ is looming.

Obtained via a Freedom of Information request by an investigative blogger and sourced from the Scottish Courts & Tribunals Service, the article has been re-shared many times on social media.

According to the statistics, 133 households were given notices in the period between the beginning of the pandemic and the legislation coming into effect, meaning people can now be brought through tribunals and face eviction from their homes.

A further 218 tenants have had eviction notices filed against them since 7 April, and are protected until 10 October.

Alison Watson, director of Shelter Scotland, says: “It’s unreasonable to put people out onto the streets when we’re still far from safety and it could affect their health and the health of other people.

“We just have to look to Aberdeen, where clients are coming to us in crisis, facing the threat of eviction when restrictions on movement are being reintroduced.”

But what the many articles covering the release of the eviction figures do not mention is that 350 planned evictions are a shadow of the usual rate of repossessions of properties by landlords prior to Covid within the private rental market.

Last year evictions in Scotland dropped by 15% (compared to the previous year) to 12,407 or 1,030 evictions a month, official data shows.

If Covid had not arrived in Scotland, some 6,000 tenants within the private rental market would expect to be evicted from their homes. This means the eviction rate in Scotland has reduced by 94%.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Scottish blogger claims evictions data shows ‘tidal wave’ on the way – but it’s a 94% reduction! | LandlordZONE.

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Shamplina interviews: Nigel Lewis, the man behind the pen at LandlordZONE

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For the past six months journalist Nigel Lewis has been penning the news articles for LandlordZONE and doing his best to fill the seat of Tom Entwistle. Here Landlord Action’s Paul Shamplina finds out more.

Who is Nigel Lewis?

Nigel is an award-winning property journalist who has worked for national newspapers, magazine and websites including time spent at the Daily Mail newspaper and Channel 4 magazines including working alongside Amanda Lamb and Phil Spencer.

The interview

What was your first job?

Working on Parking Review, the industry monthly magazine for the multi-storey and on-street parking industry. You’ve got to start somewhere, and the UK was in the grip of a recession! But I got the magazine onto the BBC TV show Have I Got News For You as its ‘guest publication’.

How long have you been a journalist?

27 years.  

Why did you choose to be a property journalist?

Three members of my family have been journalists, so I always looked up to their careers. I got offered a job on a new thing called a ‘website’ in 1999 started up by a Rightmove rival and they wanted a deputy editor to help write news, which was my first property writing job.

What was your best ever scoop as a story?

Most recently… LandlordZone reported that lenders were going to include landlords in their mortgage holiday scheme, something their trade association denied flatly on the day. And then HM Treasury confirmed the day after.

What was the strangest ever story you wrote?

I staked out the secret Mallorcan loves-nest villa of nightclub owner Peter Stringfellow with a camera and pair of binoculars trying to work which one of the many ageing millionaires sat by their private pools he was.

In your years of writing, how different is Buy to Let from 20 years ago?

I remember one day during the mid-1990s when several leading banks and building societies got together and sent out a statement via fax saying they were going to start doing specialist lending for landlords. That’s all taken for granted now – then it was a huge story.

We are in the middle of the Covid 19 pandemic and there has been a bounce in the property market, especially because of the Stamp Duty Holiday, What’s your predictions for 2021?

If you look at the data on recent recessions then the rental market does well because rents by-and-large stay static while house values often reduce, increasing gross returns. I think something similar will happen this time.

If you had one bit of advice for a landlord what would it be?

Don’t’ plan your financial strategies based on promises from politicians!

What was your back-up career?

I trained to be a professional violin player when I was a teenager but Nigel Kennedy beat me to it. Entirely, it’s fair to say, because he was much more talented.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Shamplina interviews: Nigel Lewis, the man behind the pen at LandlordZONE | LandlordZONE.

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TECH: HM Treasury gives two hybrid landlord platforms £3.4 million to survive Covid

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Two of the UK’s best-known lettings management platforms for landlords have received £3.4 million in government funding between them, it has been announced.

The taxpayer cash is for Howsy and Mashroom, which are hybrid lettings agencies that enable landlords to manage their properties and tenancies online but also offer more traditional ‘full management’ services for a price, albeit for much less than traditional agents.

The money comes from HM Treasury’s Covid Future Fund which offers tech firms that are ‘pre-revenue’ or ‘pre-profits’ matched funding in return for equity.

For every £1 tech firms raise from investors, the government now offers £1 of taxpayer cash.
Over the weekend Mashroom revealed that it has raised £2 million from private investors, which the government cash has doubled to £4 million.

Howsy has raised £1.4 million from small investors via the Seedrs crowd funding website which the government has matched to a total of £2.8 million.

Howsy offers landlords an online tenant find service and also a tenancy/property management capability, the latter being backed by a central team of telephone-based staff.

Stepan Dobrovilskiy, founder of Mashroom, says: “The experience as a landlord or tenant normally still involves a traditional estate agent who acts as intermediary and charges a hefty fee.

“While plenty of new players have come along with tech to solve certain points in the experience, we are the first to look at the entire process from end to end.”

The Covid Future Fund was established by Chancellor Rishi Sunak during his 20^th April Spring Budget and is a £250 million government-backed initiative.

Read our recent interview with Howsy CEO Calum Brannan.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – TECH: HM Treasury gives two hybrid landlord platforms £3.4 million to survive Covid | LandlordZONE.

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Rent Repayment Order Magic Money Tree is pretty much dead!

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“Rent Arrears must be accounted for BEFORE rent is eligible to be reclaimed under a Rent Repayment Order (RRO).”

At a stroke, this Judgement of the First-Tier Tribunal (in a case defended by Des Taylor of Landlord Licensing and Defence) means that the no-win/no-fee become almost worthless for the lawyers

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