‘We’ll show you how to do it properly’ council tells landlords as it eyes private rental market

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Shropshire Council is the latest local authority looking to launch directly into the private rental sector, saying it aims to ‘set an example to local landlords’.

Cornovii Developments Limited (CDL) aims to build and sell about 2,000 homes to address housing needs while generating income for the local authority.

Work starts on its first development – Frith Close (pictured) in Crowmoor – next month, where homes will sell from £180,000.

CDL is now looking to hire a property consultancy to advise it on market opportunities for the private rented sector and will soon draw up an 18-month marketing plan, including a social media launch strategy.

Jane Trethewey (pictured), Shropshire Council’s assistant director of homes and communities, tells LandlordZONE: “We think it could play a key role in maintaining high standards in the county’s rental offer, and ensure there is a range of good quality and well managed property types for those who want to rent by preference.

“The intention is to support typically younger, economically active households who want to maintain their mobility in the jobs market in Shropshire, as well as those for whom renting is a more affordable option than purchasing a home directly.”

She adds: “It’s quite an exciting opportunity for us to be able to set a challenge to other private sector landlords out there as to how to do this extremely well.”

Not convinced

But Gavin Dick (pictured), the National Residential Landlord Association’s local authority policy officer, is not convinced.

He tells LandlordZONE: “It’s a case of thinking they know best and saying they’ll bring up standards, but they will just chase the money rather than house those who are struggling.

“The result will be that they’ll show just how efficient private landlords are at giving value for money and the council will have to up its game to compete with them. If they think it’s easy, they’re in for a surprise.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – ‘We’ll show you how to do it properly’ council tells landlords as it eyes private rental market | LandlordZONE.

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Making Tax Digital: What landlords need to know

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Those of you who keep up with all the latest tax rules will be well aware of the upcoming Making Tax Digital (MTD) regulatory changes from HMRC and will be making preparations for this biggest ever tax change.

For the 99% of landlords who prefer not to think about tax at all, this news might be worrying. You might be wondering what the new regulations are all about and how they’ll affect you.

Worry not ‒ APARI’s team of tax nerds love simplifying tax rules into language understood by real human beings. You also have a bit of time to prepare and get used to using new tax software, but more on that later.

Here’s what you need to know…

What is Making Tax Digital?

Making Tax Digital (or MTD, for short) are a set of new regulations from HMRC designed to transition the UK to a more efficient and accurate digital tax system. Some businesses paying VAT have already transitioned to MTD and will apply to every VAT-eligible company from April 2022.

MTD for Income Tax was announced by the Government in July 2020 and will affect landlords, self-employed and tradespeople.

How to comply with Making Tax Digital for Income Tax

To meet the requirements for the MTD regulations, landlords will need to keep digital records of property-related income and expenses, submitting a summary directly to HMRC via registered tax software once every quarter.

Additionally, you will also need to submit an end of year report, finalising all accounts and other income to form your self-assessment. The right tax software will compile these reports for you, based on your digital accounts, and submit them directly to HMRC.

The result is very similar to now ‒ MTD won’t change what you need to pay or when you need to pay it. 

Key Changes: a) use MTD software; b) keep digital records and c) submit account summaries once a quarter to HMRC.

Who does MTD for Income Tax apply to?

Making Tax Digital for Income Tax is for UK landlords who usually submit a Self Assessment tax return. It is a requirement for anyone with more than £10,000 of combined turnover from business and property income. 

When does Making Tax Digital for Income Tax come into effect?

Making Tax Digital for Income Tax comes into effect from the 6th April 2023. 

It’s possible to voluntarily register for MTD for Income Tax before then, which will allow you to get ahead of the game and familiarise yourself with the MTD process. Don’t worry, you can still revert back to a standard tax return if you want.

Using tax software now could also save you money on accounting fees and provide you with a summary of your profit and loss as well as real-time estimates of your tax liability.

Get started with a FREE APARI account today. 

Understanding the MTD process

While the process for MTD is roughly the same for everyone, every piece of MTD software will work a bit differently. To give you an idea of what to expect, here’s how APARI MTD software works:

Step 1: Keep digital records

You will need to record relevant transactions, both income and expenses, in your MTD software. Some software, like APARI, allows you to upload bank statements or your existing spreadsheet to help automate and speed up the process. You can then tag the relevant transactions and assign them to your properties.

Step 2: Sign up for MTD

Complete the sign-up process on the HMRC website and enter your Government Gateway ID into your tax software. This allows you to submit data to HMRC securely via your software. 

Step 3: Receive reminders about key dates

APARI will remind you about key dates, such as your quarterly and annual tax submissions, as well as insurance and tenancy renewals.

Step 4: Submit your tax information to HMRC directly from APARI

Your tax software should automatically prepare your quarterly summaries from your digital records, ready to review and submit directly to HMRC. You’ll get an immediate confirmation from HMRC.

Then, at year-end, you finalise your property income, add in any other tax information and complete a legal declaration that all information has been submitted. Finally, you need to pay your tax bill by the deadline (APARI will remind you). You should have an accurate estimate of your tax liability in advance, so there shouldn’t be any nasty surprises.

And that’s it! I know it probably sounds complicated just now, but with the right tax software it should make accounting easier, faster, cheaper and more accurate.

What do you think about MTD? Tell us via this short survey.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Making Tax Digital: What landlords need to know | LandlordZONE.

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Landlord to fight £18,000 fine for under-sized rooms in HMO

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A London landlord has said he intends to appeal a court decision to fine him and his company a combined £18,400 for failing to provide adequate living conditions for tenants at an HMO property following a long-running battle with the local authority.

Hersch Sternlicht, a director of North London firm Palmview Estates Ltd, is to appeal fines and costs handed down by Chelmsford magistrates last week.

These include a fine of £7,000 for his company plus a victim surcharge of £190 and costs of £3,551. Sternlicht was also fined £4,000, plus a victim surcharge of £190 and costs of £3,551.

The fines followed an investigation by Thurrock Council in Essex back in 2017 at an address in the town operated by Sternlicht on London Road (pictured).

It found that four of the rooms were under-size but during an earlier hearing it was claimed that the council’s room measurements were inaccurate. At the same earlier hearing Palmview estates and both Sterlicht and another family member were cleared of failing to apply for an HMO, and the council accepted that their tenants had been ‘difficult’.

Nevertheless, prohibitions orders were made on the four rooms but, when inspectors returned in 2019, it was found that two of the rooms had been let to new tenants.

Sternlicht was also issued a Civil Penalty Notice for the same property for breaches found under the HMO management regulations including inadequate fire safety measures, a water leak and a defective boiler.

Barry Johnson (pictured), cabinet member for housing, said: “Landlords and letting agents must ensure any properties they rent out are up to code and are licensed, where appropriate. Failure to do so is an offence which can result in prosecution or a fine of up to £30,000.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlord to fight £18,000 fine for under-sized rooms in HMO | LandlordZONE.

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Landlord case study required for The Telegraph

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Dear Property118 readers, I received the follow request for assistance today from a Daily Telegraph journalist.

I’m writing an article today looking at the mounting problems landlords face in the time of coronavirus – ie, rent losses, the six month eviction notice period

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Webinar: Evictions expert to give landlords free advice tomorrow morning

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Landlords seeking advice and the latest information from the coalface on the evictions front should log-on at 9.30am tomorrow morning to the latest Goodlord webinar.

Free for those who register, it features evictions expert Tim Frome, Legal Director at Landlord Action, who will provide clarity on evictions at the moment for landlords.

If any are unsure of what has changed recently, they can be forgiven for not knowing.

The rules on evictions and the procedures required to enact them have changed on an almost weekly basis in recent months.

These have followed the twists and turns of Covid, which have seen the government execute several U-turns as it has moved England both into the first lockdown, into the later tiered regional system, out again and now back into a national lockdown.

Rapid change

This has had meant rapid change for those seeking possession orders via the courts, issuing Section 21 or Section 8 notices and instructing county court or High Court bailiffs to complete evictions.

Frome’s webinar session, which will be co-hosted by Oli Sherlock, head of insurance at Goodlord, promises to provide clarity.

“It is more important now than ever to fully understand the eviction process,” says Frome.

“The rules have repeatedly changed over the last nine months and we are still in a transitional period with amended time periods for giving notice.

“I recommend you listen in to the webinar to hear the latest on what you need to do if you need to get your property back and what is happening on the ground in current cases.”

Register here to attend.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Webinar: Evictions expert to give landlords free advice tomorrow morning | LandlordZONE.

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Demand for rented property jumps by 20%, says Zoopla

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The squeeze on mortgage lending, renters’ reassessment of lifestyle priorities and students returning to university have all prompted demand for rented property to rise 20% year-on-year across most UK cities.

This is pushing average rents up by 1.7% to £744 a month, while supply into the rental market is flat, according to Zoopla’s quarterly Rental Market Report.

However, these increases in rental prices are not being seen across the board.

Manchester and Birmingham’s average rents have dropped by 0.1% and 0.5% respectively as they, like other cities, feel the impact of office workers continuing to work from home.

Despite average rental prices falling overall by 5.2% in London to £1,596, the data reveals that most Londoners aren’t desperate to escape the capital – in fact, the proportion looking to stay in the city has risen compared with last year. 

Gráinne Gilmore (pictured), Zoopla’s head of research, says that for most of the UK, the demand/supply gap is underpinning moderate levels of rental growth.

“At the same time however, muted earnings growth will start to limit the headroom for rental growth in some markets.”

She adds: “The search for additional space, both indoor and outdoor, within the rental sector is also set to continue as the country goes through additional periods of lockdown.”

Zoopla also says renters’ wish lists have begun mirroring buyers’, as with renters looking for ‘gardens, parking, garages, balconies and pets’.

And as they yearn for outdoor space and the freedom to cope with lockdown, its finds evidence that this is speeding up the market for rented houses more quickly than for rented flats; the average time to rent a house is now 16 days, compared with 18 days for a flat.

MORE info: How to legally increase your rent.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Demand for rented property jumps by 20%, says Zoopla | LandlordZONE.

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Retailer brings CVA process into disrepute…

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Family owned footwear retailer and manufacturer Clarks – along with many other struggling retailers – recently entered into talks with its landlords about store closures and rent cuts.

Tensions are now running high between shop-owners and tenants over what landlords see as unfair tactics being used by tenants to avoid their legal responsibilities under their leases.

Covid-19 has brought into sharp focus what was already a retailing crisis on the high street. As the country enters another lock-down it is abundantly clear that the competitive advantage now lies with out of town supermarkets and online retailers, and it is having a devastating impact on town centres.

Clarks and its advisers went into talks with landlords to discuss a restructuring plan that would see the long established footware chain switch to a ‘turnover rent’ model for future rent payments.

The proposed deal must be approved by its landlord creditors which would take the form of a company voluntary arrangement (CVA). This is a form of insolvency and a convenient mechanism now commonly used by retailers to lose existing lease obligations, closing existing uneconomic stores, while retaining the core of the business operation on a reduced scale.

However, landlords are now accusing Clacks and its advisors of abusing the CVA insolvency process, presenting landlords with a fait accompli: pushing through a restructuring plan that landlords have little chance of overturning.

What has raised the ire of the landlords, large and small, is the fact that Clarks, a private limited company, has continued to pay out dividends to its family member shareholders.

Clarks is a 195-year-old manufacturer and retailer of shoes which are familiar to almost every family in the UK where its products have been worn by infants to OAPs for generations. It remains largely owned by descendants of Cyrus and James Clark who founded the business in Somerset nearly 200 years ago.

The Clarks CVA launched last week will result in most of its 320 UK high street stores moving to turnover rents, while 60 of its estate will move to zero rents, and all the arrears built-up during the pandemic will be written off to the detriment of landlords.

According to the Sunday Times the Clarks’ CVA process has been compromised because the total of £160m debt owed by Clarks, almost exclusively to its landlord creditors, has been voted through when they have only 25% of the votes, and a CVA needs 75% of the votes to pass.

A Hong Kong-based private equity firm, LionRock Capital, has come in with an offer of £100m in financing for a majority stake in the Clarks business, on the condition the CVA is approved and is passed without legal challenge. LionRock’s injection of the funds into Clarks business is seen as critical to securing the company’s future.

The British Property Federation (BPF), an organisation which represents commercial landlords, had previously launched an attack on the fashion retailer “New Look” for what it referred to as ‘weaponising’ CVAs simply in order to cut its costs.

Melanie Leech, BPF’d chief executive, has been reported as saying:

“The BPF supports a rescue culture for businesses in distress – including CVAs, which were designed to support a struggling business back onto its feet, with store closures and rental discounts, as part of a wider restructuring to safeguard the business’ future.

“It is in property-owners’ interests to support tenants working hard to create a sustainable future for their business.

“The CVA process, however, is increasingly being used by businesses to simply walk away from debt owed to creditors, including local authorities, and to rip up leases freely agreed with property owners, without the business addressing its wider issues. This abuse must stop.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Retailer brings CVA process into disrepute… | LandlordZONE.

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New normal has hit London rental market – Hometrack

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The latest Hometrack Rental Market report for quarter 3 2020, based on data from Zoopla, is indicating that while annual rental incomes are on average for the whole of the UK up  1.7% the London market has fallen 5.2%.

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