LATEST: Landlords and housing campaigners unite to slam government over LHA rent freeze

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Landlord groups and housing charities have united to denounce the recent local housing allowance (LHA) freeze.

The benefit was frozen despite widespread rising rents, which will leave tenants in some parts of the country facing a shortfall of more than £100 a month, says Shelter.

Chief executive Polly Neate believes housing benefit should be there as a safety net to protect people who’ve hit rock bottom, and if it’s not fit for purpose, homelessness will rise. 

She adds: “The government can step in and keep more people safe in their homes, by reversing the freeze on housing benefit. Without this, a rising tide of homelessness could be the legacy of the pandemic.”

The National Residential Landlords Association says the pandemic has highlighted the need for a welfare system that provides tenants and landlords with confidence that benefit payments will cover rents.

A spokesman tells LandlordZONE: “For this reason, we strongly oppose the Chancellor’s decision to freeze the Local Housing Allowance in cash terms.

“It will serve only to make it more difficult to sustain tenancies. The Chancellor should think again and, at the very least, restore the allowance to the 30th percentile and preferable ensure it covers average rents in any given area.”  

However, rental agency Pick My Pad reckons that despite the freeze, many tenants on benefits are in a position to cover their rental costs. 

CEO Mish Liyanage says that in Manchester, the LHA rate is £138.08 per week for a one-bed property while the average private rent is £120 a week. He adds: “An agent can secure a higher rate per week eligible for the DSS tenant, vet the tenants, and get a non-cash damage bond on your behalf.”

Read more about Shelter.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Landlords and housing campaigners unite to slam government over LHA rent freeze | LandlordZONE.

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Leaseholder bringing his own builder in to quote?

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We are a small group of leaseholders who are also shareholders in the management company that owns the freehold to our flats. I recently took over from the chap who ran the management company as he sold his flat and nobody else wanted to do it.

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Lease and repair issues – I may need profession help?

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This is a tricky one – we are a newish development (old offices) of 3 new floors and one existing (residential) on the 4th floor. The 4th floor lease has a clause that excludes them from 1st works to the roof as it was to be provided in good order.

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EU citizen’s Right to rent in the UK?

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Does an EU citizen who arrived in this country six months ago have the right to rent a property without having settled or pre settled status?

Advice from our agent who, of course, has an interest in placing this tenant

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Changes to evictions paperwork ‘do not comply with law’ claims lawyer

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Alteration made by the government to a key form that landlords use to evict tenants are inaccurate and ‘do not comply with the law’ a leading legal expert has claimed.

On Friday LandlordZONE reported that legislation covering Section 8 notices had been amended to require landlords to include multiple references to and provisions for the ‘breathing space’ debt respite scheme from today onwards within Form 3.

At the time we flagged up to the housing ministry that many legal experts within the sector were concerned that the update to this template was inaccurate.

The ministry subsequently said it would update the guidance in time for today’s deadline.

Not compliant

But leading property lawyer David Smith (pictured below) of JMW Solicitors says the now updated template does not comply with the law despite his flagging up the problem to the ministry.

“The new form is meant to have its first and second bullet points in the ‘earliest date proceedings can be brought section’ replaced with five bullet points,” he says.

“This hasn’t happened. The first three bullet points have been replaced and one of the other bullet points has been interpolated in between the five new ones. It makes more sense that way but it’s not what the legislation requires.”

The Debt Respite or ‘Breathing Space’ Scheme is designed to protect a variety of people who may have built up problem debt caused by the pandemic.

As the form template sets out, the scheme impacts both the evictions process and how landlords interact with guarantors.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Changes to evictions paperwork ‘do not comply with law’ claims lawyer | LandlordZONE.

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Who do I pay back?

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The tenant has moved out and Rent in Advance pays everything up to date, so there are no arrears and everything is squared up.

As she left after the Benefit Assessment Period, it will mean I will get her Universal Credit rent paid to me for the last month

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LATEST: Housing ministry closes eviction ‘reactivation notice’ window as it clears backlog

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A key evictions window for landlords has been closed by the government as part of its plans to clear the possession hearings backlog.

Until before Friday 30^th April at 4pm landlords and their solicitors were able to apply to a county court to continue an eviction by submitting a ‘reactivation notice’.

This applied to landlords who had issued eviction notices prior to 3^rd August 2020 and who, in many cases, had been waiting since then with tenants who are in severe arrears.

But the Ministry of Housing, Communities and Local Government says that now that the deadline has passed landlords will have to apply to the court for a possession hearing and pay a fee. This will also put them at the back of the queue.

The deadline, which was previously extended from end of February, was designed to force landlords who have been wavering over whether to continue the evictions process against tenants. It was hoped landlords would come to a debt agreement with their tenants or hope they leave of their own accord before having to make a decision about continuing court action.

The updated MHCLG advice says: “You should consider whether making a possession claim is appropriate before confirming that you wish to proceed.

“For example, if you are making a claim on rent arrears grounds you may wish to negotiate a rent repayment plan with your tenant rather than proceed with the possession claim.”

Paul Shamplina of Landlord Action (pictured), says: “The re-starting of bailiff evictions on 1^st June cannot come soon enough for the 20,000 or so landlords waiting to regain possession of their properties, many of whom have been waiting a year or more to eject tenants who stopped paying their rent before Covid struck.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Housing ministry closes eviction ‘reactivation notice’ window as it clears backlog | LandlordZONE.

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Interest Only vs Repayment on Buy To Let Mortgages

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So you are buying a buy to let property, but what mortgage should you get?

An interest only mortgage or a Repayment mortgage?

In today’s video, I’ll explain the difference between an interest only mortgage and a repayment mortgage and which one best suits your needs.

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Tax changes for Furnished Holiday Lets (FHLs) ‒ What you need to know

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Earlier in the year, HM Treasury published a number of reviews and proposals relating to tax policy, dubbed “Tax Day”, aimed at creating a more modern and open tax system in the UK.

One such review likely to concern landlords and property owners was around the tax and allowances of Furnished Holiday Lets (FHLs). These policy changes are a reaction to the increasing number of homeowners using sites like Airbnb to make additional income on their homes.

Owners of FHLs receive a number of tax reliefs and allowances, providing that they meet the criteria set by the government. For example, properties that qualify as a FHL are subject to business rates instead of council tax. Business rates are cheaper, as they are deemed to be commercial premises, and the majority of FHLs are also viable for small business rates relief. This means that you could end up paying no rates at all.

While this is great for FHL owners, it does, unfortunately, mean that many homeowners try to claim their property as a FHL, even if they don’t meet the criteria to benefit from the relief.

Up until now, FHL owners have not been required to prove that they meet these requirements. However, with the number of homeowners claiming FHL tax benefits increasing, HMRC will be asking owners to prove that their property qualifies as a FHL.

To qualify as a FHL, your property must be:

• Based in the UK or in the European Economic Area (EEA) – including Iceland, Liechtenstein and Norway. All FHL properties in the UK will be treated as one business and all FHL properties in the EEA will be treated as another.
• Furnished – your property must include sufficient furniture for normal occupation, such as beds, sofas and white goods.
• Commercially let, i.e. you must intend to make a profit from the rental. Letting a property out of season to cover costs still counts as a commercial let, even if you did not make a profit

As well as the property conditions, there are also three key occupancy conditions that must all be met in order to qualify as a FHL.

1. Availability ‒ Your property must be available as a FHL for at least 210 days in a year. You cannot count any days that you live in the property.
2. Letting ‒ You must let out the property as a FHL for at least 105 days in the year. You cannot count any days that friends or relatives stay in the property for free or for a reduced rate.
3. You also cannot count any lets of more than 31 continuous days. The exception to this would be if something unforeseen happens, such as the holidaymaker either falling ill or having an accident that delays their departure, or they have to extend their holiday due to a delayed flight.
4. Pattern of occupation

There is a bit more wiggle room on the 31 day limit. If the total FHL bookings exceeding 31 continuous days is less than 155 days during the year, your property still qualifies as a FHL.

If you don’t end up letting your property for at least 105 days, you have two options (known as elections) that can help you reach the occupancy threshold:

• Averaging election – if you have more than one property and, between them, they average out to over 105 days of commercial let. You get a bit of time to make your averaging election ‒ one year from the 31st of January following the tax year. It sounds complicated but, essentially, you can make an averaging election for your 2017/18 tax year up until January 31st 2020.
• Period of grace election – if you intended to let out your property as a FHL but did not reach 105 days occupancy, HMRC will accept proof that there had been a pattern of FHL activity by looking at previous years, for example.

Broadly speaking, if your property is furnished, vacant and advertised as a holiday let for seven months of the year and you let it out for at least three months, it should qualify as a FHL and be eligible for certain tax reductions and allowances.

While it’s currently unclear how HMRC will be checking that eligibility requirements have been met, it is important to check whether your property qualifies as a FHL and to collect any and all evidence to prove that this is the case. It seems likely that, with the introduction of MTD, you will be required to upload evidence to a digital platform in the near future.

What are the tax benefits of FHLs?

As well as paying business tax rates rather than council tax, FHL owners benefit from being able to:

• Claim capital allowances on your property, meaning you can furnish it and deduct the cost from your pre-tax profits.
• Classify income generated from a FHL property as “relevant earnings” for pension purposes.
• Split FHL profits equally between yourself and your spouse flexibly for tax purposes – unlike with long-term rental properties where profits are divided based on the official ownership split.
• Claim certain Capital Gains Tax reliefs when you sell the property, e.g. Business Asset Rollover Relief.

What FHL owners should do now

If you are thinking of buying a property or using a property as a FHL, you should make a clear distinction between your residential or commercial lettings and begin gathering evidence as you go.

As well as gathering evidence that your property qualifies as a FHL, you should keep good records relating to your FHL property and the income received. By using a platform like APARI that is tailored to the needs of landlords, you can keep up-to-date digital records of your income, expenses and relevant documents preparing you for both the coming evidence requirements as well as MTD.

For all the latest information, join the APARI Community here.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Tax changes for Furnished Holiday Lets (FHLs) ‒ What you need to know | LandlordZONE.

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EXCLUSIVE: Time for radical action to rid sector of rogue agents, says property chief

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The boss of a Midlands estate agency and property services firm has come up with a radical new idea to address council inaction over rogue landlords and poor housing standards.

He reckons a new landlord licensing scheme similar to Wales’ scheme but with fit and proper persons checks along with a three-year property MOT would rid the sector of most unsafe properties and generate millions in additional local authority revenue for social housing and vital repairs.

The agency MD, who wants to remain anonymous for fear of a potential backlash, says the check would cost £250 annually. He tells LandlordZONE: “Although a similar check is currently done to get an HMO licence, it only covers the building, not the person, and there’s nothing at all for standard residential properties.” 

His idea was sparked by two local cases, one where a landlord running an HMO was jailed for concealing cameras in his property and filming students but is now back running HMOs, while the other concerned a rented property where the ceilings were caving in for three years before the council took action.

Property MOT

“There should also be a property MOT check on everything including the electrics,” he says. “At the moment not all landlords get this done and there’s no one actually monitoring it – it’s just done on trust. This would cost £300 every three years per property and would cover a council inspection and admin to record electrical and gas safety certificates.”

He believes that if landlords were licenced and registered along with their properties, it would give local authorities the ability to enforce legislation, rather than hoping they might catch landlords out once tenants have moved in.

However, his local council has dismissed the idea and were more concerned in protecting private property rights. Unsurprisingly, local landlords weren’t keen either but he adds: “I think it has potential – I’m hoping someone else might take up the idea.”

Read more: Why selective licensing doesn’t work.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: Time for radical action to rid sector of rogue agents, says property chief | LandlordZONE.

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