HMRC Investigation into £9million Property118 ‘Incorporation Relief’ Claim

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In June 2020 HMRC opened an investigation into a £9 million ‘incorporation relief’ claim made by a Property118 client who used the Beneficial Interest Company Transfer structure “BICT” to substantially incorporate their property rental business.

The HMRC manual states:

“TCGA92/S162 applies where a person other than a company transfers a business as a going concern with the whole of its assets (or the whole of its assets other than cash) to a company wholly or partly in exchange for shares.

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Record rent payment order of £109,273 slapped on Slough landlord

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A rogue landlord who built unlawful extensions and squeezed 14 people into an HMO has been ordered to pay back £109,273 in rent, believed to be the largest ever rent repayment order handed to a landlord in England.

Jagtar Phagura, of Hewett Lane, Hook, created five extra bedrooms at a three-bed property in 2015 by building side and rear extensions and a loft conversion, without planning permission.

Slough Borough Council’s planning enforcement team discovered 14 tenants living at the property in Mirador Crescent (pictured) where some of the eight rooms contained three beds.

Each of the rooms could be rented out by single people or couples and in some cases just a bed was rented to tenants. 

The borough issued an enforcement notice for the unauthorised building work to be demolished later that year but Phagura ignored this and continued to collect rent from his tenants.

Failure admitted

During a hearing at Reading Magistrates’ Court in November 2019, the 64-year-old admitted failing to comply with the notice.

In September, retrospective planning permission was granted for two of the previous five rooms in the extended part of the house.

But the council’s corporate fraud team pursued Phagura for the profits he had made from renting out the five bedrooms.

Appearing at a confiscation hearing at Reading Crown Court, a judge ordered him to forfeit the £109,273 in rent he earned, within three months, or face 18 months in jail. Phagura was also fined £18,000 and ordered to pay the council’s court costs of £13,150.

Councillor Pavitar K. Mann, cabinet member for planning and regulation, says: “There is no room in the borough for landlords who do not have the correct planning permissions and make money from unlawful developments. We welcome the judge’s ruling and it indicates to others we will take similar matters extremely seriously.”

Read more about rent repayment orders.

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Prolific copper piping thief who cost landlords thousands of pounds FINALLY jailed

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A prolific copper piping thief who cost landlords thousands of pounds has been jailed for 10 months, highlighting the growing problem of criminals who strip empty properties of valuable metals.

Cameron McLeod, 35, of Glamis Walk in Hartlepool, targeted empty houses in the town where police first found him on 30^th January last year, soaking wet at the back of a house in Harcourt Street (pictured) where water was pouring out, causing £1,000 of damage.

DNA checks from an earlier copper pipe burglary in Eddlestone Walk on 9^th December 2019 linked bloodstains to him.

There, he had caused £2,000 of damage and forced the landlord to delay handing the house over to a new tenant.

He also admitted another burglary where the landlord said McLeod, whose fingerprints were found on a sink, caused £1,400 damage and cost more in lost rent.

McLeod was handed the jail term – suspended for 20 months – by Teesside Crown Court last September. He was also ordered to attend drug rehabilitation, probation and face a curfew.

Breached conditions

However, he breached the conditions of the order, sporadically engaged with probation and drug rehab and did not comply with the curfew.

At his latest court appearance, Daniel Penman, defending, said McLeod’s curfew breaches were linked to anxiety and depression, while missed appointments with the probation service were down to a faulty mobile phone.

He added that McLeod was now clean of drugs after a long-standing addiction linked to his offending. But Judge Jonathan Carroll said he had no alternative but to jail him.

He told McLeod: “I have bent over backwards to help you find a way through all of this. “I’m saddened on your behalf but there are times as a judge when I’m required to make difficult decisions and I’m afraid this is one of them.”

Read more about landlords in Hartlepool.

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‘Screeching U-turn’ by Scottish government over controversial short-lets regulation

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New laws to regulate short-term lets in Scotland have been delayed so the Scottish government can draw up draft guidance.

It has withdrawn legislation for a new licensing scheme to regulate the sector after some MSPs on Holyrood’s local government committee questioned how it would work in practice.

Tourism and hospitality leaders had also called for plans to be halted amid the Covid-19 crisis, labelling them not fit for purpose and a threat to the economy.

The scheme aims to address growing concerns from local residents about the rapid growth of Airbnb-style holiday lets and their impact on communities and rents.

Local authorities could establish designated areas where planning permission was needed before properties were rented out, while it also includes safety requirements for all short-term lets.

‘Timetable change’

The Scottish government insists its proposals and overall timetable haven’t changed; it plans to put a new law before parliament after May’s election and, if passed, local authorities would have until 1st April 2022 to establish a scheme and existing hosts would have until 1st April 2023 to apply.

A working group is to help develop the new guidance which ministers say will help provide reassurance for operators and hosts.

Labour opposition MPs have labelled the SNP’s decision a “screeching U-turn” and say the plans risked unjustly penalising the tourism sector and over-burdening local councils.

Groups including the Association of Scottish Self-Caterers have also welcomed the news.

However, Housing Minister Kevin Stewart (left) insists the legislation will be reconsidered in parallel with draft guidance to address raised concerns.

He adds: “I want the licensing scheme to be as efficient and effective as possible in ensuring the safety of guests and residents, and to provide local authorities with the powers to balance community concerns with wider economic and tourism interests.”

Read more about Airbnb in Scotland.

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The rush to buy second homes is resulting in bidding wars and gazumping

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The impetus behind this appears to be from people, some workers freed of their daily commute to work, are all looking for the same thing: a country or seaside bolthole, the perfect resting place in the midst of a pandemic, providing it has a good internet connection.

With foreign holidays looking very doubtful for another summer, at least ones with no hassle at airports and ferry terminals, the British countryside or coastal locations look increasingly attractive; they look like the perfect alternative.

Try to book a holiday cottage and you are lucky to find one, either one that’s actually operating at the moment or one that has vacancies. Those operators and landlords lucky enough to own one are experiencing boom times themselves, and with Covid restrictions set to continue for months if not years, the prospects for the holiday letting businesses are looking rosy.

Prospective buyers are reporting that properties for sale are flying off the shelves, so an amount of panic buying has set-in, exacerbated by the stamp duty deadline at the end of next month. Though there’s still a three percent surcharge to pay on second homes, there’s still a saving of up to £15,000 on up to a £500,000 purchase.

It is only those who have purchases well underway by now who will benfirt, though there’s a small chance the Chancellor will extend the deadline by six weeks, in his budget in early March, for those purchases already under way. Currently, letting agents and solicitors are working round the clock to get through the bulge in property sales.

One couple, James, 65, and his wife, Michelle, told The Sunday Times, that they are facing stiff competition in their search for a new home. The couple had sold their main home in Maidstone, Kent, but found themselves in competition with holiday cottage hunters, second-home buyers, when they were themselves looking to relocate to the West Country.

“Sometimes we can’t even get viewings because there are a shortage of slots the properties are so in demand. When you are driving hundreds of miles to look at a house you need to be sure you can see it when you get there,” said James.

It is thought that this pandemic-motivated shift in consumer behaviour, a lifestyle choice in housing, will likely continue throughout 2021 and possibly beyond.

Agent, Tim Hayward, director of Jackson-Stops’ Burnham Market branch office in Norfolk says:

“We don’t expect the stamp duty relief coming to an end on March 31 to have an impact on sales in the holiday homes market here, the drivers are different to what they were a year ago and people want a British bolt hole now more than ever.”

Those that are lucky enough to own a holiday home, or who have managed to secure a recent purchase can expect a ready market if they want to let the out to staycation visitors, those wanting and alternative to the continental holiday, or ones further afield.

What has become a nightmare for airlines, cruise companies and package holiday firms has become the gift that keeps on giving for home based holiday home owners. According to the The Sunday Times, Daniel Frost, 46, an architect from Esher in Surrey, bought a holiday home near Lulworth Cove in Dorset shortly before the first lockdown. Thinking this would be perfect for his wife, and their two teenage daughters to holiday there part time, renting it out the rest of the time.

“We spent lockdown renovating and then in September opened it up to rental and got loads of bookings. It’s been quiet this year because of the latest lockdown, but in the last two weeks we’ve had eight bookings for this summer so I am optimistic. I had a little wobble about the timing in the beginning but in retrospect, when I look at the market now, I think we picked up a good deal.”

It looks like his timing was perfect: buyers are now paying extraordinary prices for properties in sought-after locations. One agent, Lillicrap Chilcott, sold a four-bedroom new-build home in the village of St Mawes on Cornwall’s south coast for £4.5 million “sight unseen” this last summer.

David Fell, senior analyst at the estate agents, Hamptons International said:

“Since March there has been a consolidation of favoured second-home locations, pre-pandemic hotspots have got hotter, while ‘warm spots’ have cooled. The ten local authorities recording the highest share of second-home purchases in 2020 have all increased their share from 2019 This has been driven by a shift from urban to rural, underpinned by Londoners accounting for a larger proportion of second-home purchasers outside the capital.”

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Penalty kick! Footballer fined and told to repay rent after ignoring council over HMO licence

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A landlord who is a former professional footballer has been ordered to pay back tenants’ Housing Benefit after failing to licence his properties in and around Nottingham.

Dexter Blackstock, who during his early noughties footballing career played for several high-profile clubs including QPR and Nottingham Forest, had been convicted in 2019 of nine offences of failing to licence properties under Nottingham City Council’s selective licensing scheme, failing to licence two properties under its additional licensing scheme and one other offence under the mandatory licensing scheme.

He has now been fined £24,000, along with £1,100 costs and a victim surcharge of £170 following what the council describes as a ‘long and complex case’.

Nottingham city council has subsequently applied for a Rent Repayment Order for the two properties where Housing Benefit had been paid while the properties were unlicensed.

First-tier Tribunal

The former high-profile striker must now pay back £8,592 after a First-tier Tribunal agreed to the order.

Both tenants and local authorities can ask a landlord for up to 12 months’ rent or for benefits to be repaid, when a landlord is convicted of operating without a licence.

 “Housing Benefit is paid out from the council to support residents in paying their rent,” says Labour Councillor Linda Woodings (pictured), its portfolio holder for planning, housing and heritage.

“Following this conviction, we had to recuperate the money that Mr Blackstock was not entitled to.

“This could have all been avoided if Mr Blackstock licensed his properties or engaged and worked with us. However, when this doesn’t happen, we will always take the strongest action possible to help improve the standards of rented properties.”

Read more about Nottingham licencing.

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Cat and dog allergy issues?

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The government have decided to allow people to have pets whether or not the landlord agrees with this: “The government has released its latest standard model tenancy agreement to cater for responsible tenants with well-behaved pets. Under the new Model Tenancy Agreement

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Party Wall Act – neighbour ignored it!

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The attached neighbour to our rental property conducted works which included a loft conversion and kitchen roof height lift.

The Council have confirmed that no permission was applied for (or retrospectively requested) and possibly PD rights were exceeded.

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5th April 2015 Property Valuations for CGT?

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I am non-UK resident and need to get a retrospective valuation of a UK house as at 5 April 2015. This is because for CGT purposes, the UK tax law says I can use the value of the house as at 5 April 2015 as my “acquisition cost”

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