Landlord failed by chaotic Universal Credit support system says ‘never again’

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Landlord Moira Lumb has vowed never to rent to tenants on Universal Credit again after struggling to get help with a non-paying tenant claiming benefit.

Despite her tenant being two months’ in arrears and spending the benefits, Moira has been told there’s a four-month waiting list before the Universal Credit office can investigate her problem.

“When I first tried to contact the office the numbers didn’t work, then I tried emailing and the messages bounced back,” Moira tells LandlordZONE. “Now they’ve told me it’s four months – I feel let down by the system.”

Her tenants, a woman and her children, moved into one of Moira’s six properties in Halifax (pictured) in September, funded by the council’s children’s services department using Universal Credit.

After not paying her £520 a month rent for two months without explanation, Moira has been forced to start legal proceedings using Landlord Action.

Six months’ notice

“I’ll have to serve a six-month notice and if she refuses to leave it could be over a year before it gets sorted, while I’m having to use my savings to cover the mortgage payments on that property,” she says.

Moira’s tenant has been uncooperative throughout the short tenancy and tried to force her to lay carpets when the tenants had already got the money from the council to pay for it.

Now she won’t let Moira access the property, who fears if she won’t let anyone in to service the boiler in a few weeks, her warranty won’t be valid if it breaks down.

“I’ve been a landlord for 16 years and never had anyone evicted. We work hard to make sure tenants’ repairs are done quickly and have also had other tenants who claim Universal Credit and never had a problem with them.”

Moira is resigned to paying £2,000 in legal fees for the eventual eviction as she says at least she’ll eventually have her house back.

But with no support for landlords in situations like this – made even harder by the current climate – this experience has changed her views. She adds: “We’re reasonable people but we’re not going to be reasonable anymore.”

Read more about the problems with Universal Credit.

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ROGUE LATEST: Landlords in Warrington and Brighton prosecuted for ignoring law

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A Warrington letting agency boss has been fined for putting his tenants’ lives at risk in three HMOs.

Kristian Johnstone, 28, a director of Easylet Residential, admitted 38 offences relating to the property he owns and rents out in Evelyn Street, and two he rents out Goulden Street and Algernon Street.

He was convicted at Chester Magistrates Court for fire safety offences and failure to licence a HMO, and was fined £19,000, plus £1,000 in legal costs and a £181 victim surcharge.

The magistrate said the offences showed a complete failure to grapple with the regulatory regime and that there was a “significant number of people exposed to serious risk of death”.

Fire safety

Another Warrington landlord, David Cooper, 70, of Thorneycroft Drive, appeared at Warrington Combined Crown and Magistrates Court Centre to deny six HMO offences for letting out an HMO for offences relating to fire safety, the production of gas and electrical safety documentation and failure to provide documentation. He was found guilty and fined £1,895.

Councillor Maureen McLaughlin (pictured), cabinet member for housing, public health and wellbeing, says the properties posed a significant risk of danger to the tenants. She adds: “We’re satisfied that we were able to drive these cases to the point of two successful convictions and bring awareness to landlords of what measures must be taken to ensure the safety of their tenants.”

ROGUE LANDLORDS UPDATE: Meanwhile, a landlady has been prosecuted in Brighton for ignoring an enforcement notice after she unlawfully converted a family home into an HMO.

Shirley White, 56, divided up the property in Bevendean Crescent without planning permission. Her retrospective application and subsequent appeal were refused but White, of Friars Walk, north London, ignored a recent enforcement order preventing her from letting it out. She was fined £7,830 and ordered to pay £2,003 in costs at Brighton Magistrates Court.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – ROGUE LATEST: Landlords in Warrington and Brighton prosecuted for ignoring law | LandlordZONE.

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Join me on 9th December 2020

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I am really pleased to be part of something very exciting this month. Simon Zutshi, the founder of property investors network (pin), has invited me and four other industry experts to join him for the first-ever National pin Meeting!

There are no local pin Meetings held in December

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Crown Estate commits to net zero carbon by 2030

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The Crown Estate is one of the largest property managers in the United Kingdom, administering property worth £14.1 billion, with urban properties valued at £9.1 billion.

It’s an independent commercial business, created by an Act of Parliament, with a diverse portfolio of UK buildings, shoreline, seabed, forestry, agriculture and common land – over the last 10 years it has contributed £2.6 billion to the government’s Consolidated Fund.

The sovereign is not involved with the management or administration of the estate, it being overseen by an incorporated public body headed by the Crown Estate Commissioners. As reported by hospitalityandcateringnews.com the estate is home to countless hospitality businesses across the UK.

The Managing Agents’ Partnership (BPP) says:

“Managing agents have a critical role to play in improving the sustainability performance of the buildings they manage. They are an intrinsic part of the day-to-day management of commercial property and often at the ‘coal face’ of addressing sustainability in the built environment.”

A major thrust in The Crown Estate’s green energy drive is the potential make more use of the seabed, a resource which it manages around the coats of England, Wales and Northern Ireland. It’s green targets include:

1) To become a net zero business by 2030 and be climate positive thereafter, aligning with a 1.5°C climate scenario. This commitment includes all Scope 1-3 emissions associated with the operation of directly managed assets.

2) Rapidly decarbonising its real estate portfolio across the country by reducing carbon embodied in development, improving energy performance of existing assets and procurement of 100% renewable energy across the portfolio.

3) Championing a comprehensive approach to sustainable investment, including application of the TCFD (Task Force for Climate-related Financial Disclosures) framework and an internal carbon price.

The estate aims to be completely fossil-free as soon as possible and will be working with the Science Based Target initiative (SBTi) to agree appropriate decarbonisation targets in line with its 2030 1.5°C trajectory. Progress against these green targets will be reviewed annually.

As manager of the seabed around England, Wales and Northern Ireland, The Crown Estate is committed to develop of offshore wind to help enable the Government’s goal of delivering 40GW by 2030 and enabling new technologies like floating wind, all in a way which protects marine biodiversity and the natural environment.

Dan Labbad, The Crown Estate’s Chief Executive says:

“The impacts of Covid-19 and the wider volatility we face today only underline the importance of businesses like ours stepping up with purpose, pace and ambition to address systemic challenges facing our society and environment.

“This cannot wait, and we make our commitment to net zero today, knowing that we don’t have all the answers. We understand there will be big challenges to solve along the way and to succeed we will need to rapidly innovate in areas like technology and digital, to think differently about how we optimise the green potential of the seabed, as well as find new solutions by collaborating with our many customers and partners who share our ambitions.

“We are committed to investing to support our goal and pushing ourselves to work as hard and as fast as we can towards it, adjusting accordingly if we need to, as we better understand the opportunities and challenges further in the years ahead”.

Anyone managing a property business, of whatever size, can now see the direction of travel vis-a-vis environmental issues – in their own interest they should be looking to play their part. Soon renters and buyers will become much more conscious of the merits of environmentally efficient buildings and the benefits to themselves, so now is the time to plan your own green drive.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Crown Estate commits to net zero carbon by 2030 | LandlordZONE.

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New Year student halls rent strike gathers pace, but will it spill into PRS?

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Thousands of students have threatened a rent strike in the new year in protest at being charged for their empty rooms in halls of residence and a lack of face-to-face teaching.

Strikes on campuses including Oxford, Sussex and Edinburgh are being planned when they return from the Christmas break in what’s been labelled the biggest wave of student renter militancy in more than 40 years.

Nearly 200 students have pledged to withhold their rent in Sussex, while in Cambridge more than 400 students have promised to join a rent strike.

At Bristol University, more than 1,400 students have been demanding rent cuts, more support and no-penalty contract releases.

Strike success

So far, the protests are having an impact; Manchester has now cut rent in its halls by 30% for this term after a mass strike, and Bristol University has announced a similar rebate for seven weeks to account for the staggered return to campus next year.

Rent Strike, a student-led umbrella campaign group, is overseeing the action planned for the new term, backed by the National Union of Students (NUS).

It’s been holding training sessions to encourage protests after research found the average rent for student accommodation formed 73% of student loans in 2018, up from 58% in 2012.

NUS president Larissa Kennedy (pictured) says students have been encouraged to move into halls because universities are heavily dependent on rents and tuition fees, but after finding that almost all teaching has been online so far this year, students feel like they been trapped on campuses so universities can collect rent and fees.

She told The Guardian: “Universities have turned into mega landlords, collecting millions of pounds in rent every year. A massive chunk of the inadequate maintenance support, most students get is funnelled straight into these institutional landlords.”

But will this rent strike spill into the PRS, as it threatened to in April?

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Stamp Duty holiday cliff edge – “I understand concerns”

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Over the past few months, The Guild of Property Professionals along with other industry bodies have been lobbying the Government to extend the Stamp Duty Holiday on behalf of both consumers and the property sector. Along with a letter sent to Government with the backing of several industries bodies and major players in the industry

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EXCLUSIVE: ‘We must take the lead on possessions for the sector to survive’

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While Covid-19 has dominated all our lives since the start of the year the Government is expected to push ahead with its plans for reform the PRS as we enter 2021.  

Plans to abolish Section 21 repossessions – so-called ‘no fault’ evictions’– were announced in December last year as part of the Government’s Renters’ Reform Bill.  

The response to the proposals for the bill can, at best, be described as mixed, with landlords rightly worried about the impact that repealing Section 21 will have on their ability to repossess their rental homes should they need to.  

However, the Government is adamant that this is the direction of travel, and it is now up to us to put forward compelling, evidence-based plans detailing how these changes can work in a way that can benefit landlords and tenants.  #

Legitimate reasons

Essentially this means keeping good tenants in their homes, while retaining the ability to repossess where there is legitimate reason for example anti-social behaviour or non-payment of rent.  

It is with this in mind that we at the NRLA have drawn up our own proposals outlining how the scheme should work, following extensive consultation with our landlord members,  partner organisations and senior members of the judiciary.  

In our submission to Government, we have included a clear and comprehensive list of grounds upon which landlords may legitimately regain possession of their properties. 

These include circumstances in which the landlord or a family member want to move into the property, or they want to sell it or carry out major renovation works.  

They would also be able to repossess where the tenant had built arrears, or was committing antisocial or criminal behaviour, where the terms of the tenancy agreement had been breached or where the tenant has caused damage.  

A full list of all the proposed grounds and their conditions can be found here.

Conciliation service

We also want to see the creation of a new, publicly funded conciliation service, similar to the employment dispute body, ACAS to offer support when problems arise.  

This would seek to resolve disagreements between landlords and tenants without the stress and costs associated with going to court – with legally binding consequences should either party breach any agreement reached.  

Where landlords failed to abide by the terms of the agreement, they would be banned from being able to re-possess the property on the same grounds for six months. Where renters did so, the case would be fast tracked through the courts.  

Throughout the process both parties would be able to access the advice and support they needed to make their case, ensuring it is fair.  

Backlog cleared

There is currently a huge backlog of possession cases and the conciliation service is one way to reduce the pressure by keeping cases out of court where possible.  

While the abolition of Section 21 was the aspect of the Renters’ Reform Bill stealing the headlines, it will also include commitments to strengthen landlords’ rights to repossess, with valid reason, improve access to the database of rogue landlords and agents and improve standards.  

Lifetime deposits

The Government is also looking to introduce lifetime deposits – an idea first mooted by the NRLA – which would allow tenants to ‘move’ their deposit between tenancies, rather than trying to raise a ‘second deposit’ when moving.   

While we are supportive of the idea in principle, we have stressed in our submission it is vital the new system in no way discourages landlords from making valid claims for damage to properties, or leaves them out of pocket when deposits transfer.   

Landlords cannot be expected to give up their right of recourse to a security deposit until such time that they are satisfied there will be no need to make a claim against it.   

Get involved

Now our proposals have been sent to government, the next step is for you to get involved.  

If you support the work we are doing we’d ask you to give your feedback and spread the word via social media.  

We also look to share landlords’ stories to showcase real life examples of the challenges landlords face, so if you have a story to tell, please get in touch.  

It is important Ministers know there is support for this approach on the ground. It is in all our interests to keep tenants in their homes where possible and we need to show we are willing to engage to ensure the reforms are ones that will work for landlords and tenants alike.  

To read the proposals in full click here. 

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: ‘We must take the lead on possessions for the sector to survive’ | LandlordZONE.

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Government issues new Covid-19 guidance for landlords and tenants

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The Ministry of Housing, Communities and Local Government’s (MHCLG) has published (27 November 2020) an updated version of its guidance document for agents, landlords and tenants setting out advice and information aimed at the private and social rented sector (PRS).

This guide applies to England only but there are some measures in the guide which also apply in Wales.

This is non-statutory guidance for agents, landlords and tenants in the private and social rented sectors which includes among other issues:

• Measures relating to notices seeking possession as amended by the Coronavirus Act 2020
• Health and safety obligations, repairs and inspections in the context of coronavirus (COVID-19)

The guidance is advisory and informs about recent changes to the law. All of this guidance is subject to frequent updates and should be checked regularly for currency.

National restrictions were in force in England until the beginning of the day on 2 December.

Following the national restrictions, the tiers of local restrictions have returned. See guidance on the local restriction tiers.

See also the guidance issued for Wales, Scotland and Northern Ireland

The guide covers landlord and issues which may arise during the Covid-19 outbreak including:

• What to do about rent arrears
• Advice around carrying out emergency repairs, access
• Information on re-letting, property viewings and moves
• Mortgage payments
• Tenancy Deposits
• Client Money Protection
• HMOs
• Anti-social behaviour
• Dispute resolution and mediation
• Serving notices
• Possession claims and evictions, etc.

The government is urging all agents, landlords and tenants to abide by this latest government guidance on COVID-19.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Government issues new Covid-19 guidance for landlords and tenants | LandlordZONE.

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Why landlords are an easy target for the taxman

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Anyone with disposable income has a choice whether to spend that money on holidays and luxury goods or to save it. Arguably, there is a middle way: investing in property. The path of a landlord, if done right, can deliver a sustainable income well into your future, making it an attractive retirement plan.

However, far from being an easy way to guarantee income, investing in property is proving costly for many landlords. It seems, perhaps, that landlords have become an easy target in the eyes of the taxman as they have a physical tangible asset. 

Tax changes affecting landlords

Over the past few years, landlords have been hit with a series of tax changes that could seriously diminish their income. Here are the biggest recent changes that affect landlords:

• Purchasing property as an individual vs company – It now makes more sense to buy property via a limited company rather than as an individual due to the tax breaks afforded to companies.
• No more wear and tear allowance ‒ Previously landlords could include reasonable wear-and-tear expenses in their tax allowances for fully furnished rental properties.  This could be anything up to 10% of your net annual rental income. Now landlords can only claim for costs arising from replacing items that HMRC deem to be domestic items that have been subject to wear and tear in their properties. It only applies when the item is unusable and genuinely needs replacing – not just repurposed for some other use. 
• Additional 3% stamp duty on second homes ‒ Building a portfolio of properties just became more expensive as the government clamps down on second homes, introducing an additional 3% stamp duty on top of an already hefty fee.
• Reduction of the full mortgage interest relief ‒ From April 2020, landlords can no longer reduce their tax bill by deducting mortgage expenses from rental income. This has been replaced by a flat tax credit of 20% of mortgage interest payments.
• Potential rise of capital gains tax ‒ While it is unclear what will happen when, it’s expected that Capital Gains Tax will rise in the coming years to bring it into alignment with income tax rates.

And, as if this wasn’t enough, HMRC are introducing a new way of tracking, calculating and submitting tax returns for landlords, known as Making Tax Digital (MTD), potentially causing further pain for Landlords. 

As part of the MTD regulations, taxpayers will need to submit their annual tax return along with four quarterly submissions using recognised MTD software. If you outsource everything to an accountant, it’s inevitable that your costs will go up as you will need to submit five returns a year. 

Get started with a free MTD account from APARI.

How can landlords rise above all these changes and still come out on top?

Despite the situation looking pretty gloomy for landlords, not to mention the challenges brought about by the coronavirus, there is light at the end of the tunnel.

By preparing now for future tax changes, while rapidly adapting to the recent changes, landlords can develop a long-term financial plan that will help balance the books.

Here’s a few ideas of what can landlords do to help themselves:

• Keep good/efficient digital records ‒ With the new MTD regulations, tax records need to be kept constantly up-to-date. While this can be difficult to achieve, it is even more difficult to pull all your records together five times a year for your accountant to process. However, tax software designed to meet the needs of MTD, such as the free version of APARI, is now available, so you can register and get used to the process well in advance. What’s more, APARI has been engaging with HMRC to provide landlords with software which is easy to use and reduces the cost of using an accountant.

• Prepare for longer-term tax planning – Where an accountant may be able to add value is in your long-term tax planning. With all the changes to the tax system that have recently happened or are planned for the near future, ensuring that you don’t overpay is going to become difficult. Your accountant should be able to help you formulate a long-term tax plan to ensure that you never overpay.
• Plan for capital gains, inheritance and income taxes ‒ Part of your long-term tax planning needs to consider potential changes to the tax rate for things like capital gains, income and inheritance. While the situation is still evolving in response to the coronavirus lockdown, you can get regular updates as part of the APARI community or through your accountant.
• Expect the government to introduce the payment of quarterly bills ‒ The APARI tax experts expect, from their conversations with HMRC, that the result of the new MTD regulations will be that landlords are expected to pay their tax bills quarterly. By getting ahead of the new MTD regulations, you can avoid being stung for two tax bills in one year, ensuring you have enough saved for your quarterly bills, if introduced.

To help minimise future pain, landlords should start their long-term financial planning now. Part of this plan will need to involve keeping good, digital records using MTD-eligible tax software to minimise accountant fees. By starting with MTD software now, you’ll be well-practiced and prepared for the tax changes. You can then engage your accountant in more value-added advice and long-term planning to avoid becoming an easy target for the taxman.

Get started with a free MTD account from APARI.

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Government Announces that XMAS Comes Early For Property Investors & Developers

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Property investors and developers have been waiting for the Government to announce the NEW Permitted Development Rights for repurposing commercial buildings for residential use. IT’S HERE!

The Government have issued a consultation document and are looking to bring in these new permitted development rights early next year.

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