Landlord slapped with than £17,000 penalty for fire-risk unlicenced HMO

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A landlord in Reading is the latest to be slapped with a huge penalty for operating an unlicensed HMO which also posed a fire risk.

The prosecution was initiated by Reading Council which takes an ‘Olympic’ approach to licensing management; awarding good landlords gold, silver and bronze medals but coming down hard on those who don’t join in the ‘games’.

Mohammad Basharat, 57, of London Road in the town, admitted operating the property in Blenheim Road (pictured) without a licence and failing to maintain smoke detectors, following an investigation by the council’s private sector housing team between May and July 2019.

Reading Magistrates Court fined him £14,065 for the offences as well as £3,000 costs and a victim surcharge of £170.

Lead member for housing, Ellie Emberson, says it’s yet another example of how its housing team is helping to protect the rights and safety of private renters.

Prosecution

She adds: “The successful prosecution should be seen as a strong warning to landlords all over the borough that they must comply with the rules or face the consequences.”

The team enforces the borough’s HMO licensing scheme, which covers 1,300 licensed HMOs, while its Reading Rent with Confidence Scheme aims to improve housing standards in the borough by accrediting landlords’ achievements based on criteria which also work to produce good property management services.

Emberson (pictured) adds: “Our Reading Rent with Confidence scheme is helping by awarding gold, silver and bronze standards based on the quality of accommodation and good management practices.

“By providing good landlords with a market advantage and potential tenants with confidence, along with prosecuting substandard landlords, we are showing our commitment to high-quality housing for all of Reading’s renters.”

Basharat got off lightly, it can be argued. In January Mohammed Zahir was was given a £66,000 fine for a similar offence.

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7 Things Landlords Need To Know About Making Tax Digital

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Making Tax Digital (MTD) is an ambitious scheme by the HMRC to move all tax administration to a digital system. The HMRC believes this transition will reduce bookkeeping errors making compliance easier for businesses and self-employed.

The new Making Tax Digital scheme necessarily means a dramatic change to how you will need to track and report your income and expenses for your buy-to-let properties.

In this article, we explore seven major parts of the MTD transition that landlords need to be aware of.

Find out more in our Landlord Studio’s latest MTD Guidebook.

1. Key MTD Dates

MTD came into effect for VAT registered businesses earning over £85k in April of 2019.
From the 6th of April 2023, it will apply to all self-employed, partnerships, and landlords whose combined gross income for the year exceeds £10,000.

2. Keeping Digital Records

To ensure you can submit all your updates in a timely fashion, you will need to have systems in place to keep up-to-date digital records. The easiest solution is to adopt a cloud accounting software like Landlord Studio that allows you to track your income and expenses on the go, connect your bank account for easy reconciliation, and digitise receipts at the point of sale.

3. Multiple Tax “Updates” Per Year

The number of returns (termed ‘updates’) to be submitted under the new MTD system will increase. Regulations state that individual landlords must submit separate quarterly ‘updates’ for each property business category (i.e. separate ‘updates’ for lettings, furnished holiday lets, and overseas lets) plus an end-of-year final statement. The minimum number of submissions will be five per tax year but could be as many as 20 if you have income from multiple business categories.

4. New Dates To Submit Your Taxes.

Taxpayers will need to submit updates every quarter (rather than just a single end-of-year statement) between 10 days before the quarter-end to precisely one month from the end of each quarter. You will also be required to confirm your previous submissions with a finalisation statement to be submitted by January 31st after the tax year-end.

5. Digital Documents And Receipts

While you won’t need to submit receipts and documents unless requested by the HMRC, this backup information must still be kept. You will want to make sure you are keeping them for your records and posterity.

It’s a good idea to find software that, as well as enabling digital record-keeping, will allow you to easily digitise receipts. For example, an income and expense tracking tool like Landlord Studio allows you to use your phone camera to snap a picture of a receipt at the point of sale and attach it to your recorded expenses for future reference.

6. Use approved software for quarterly submission

To be compliant you will need to have an approved software in your arsenal of tools so that you can digitally submit your quarterly returns as required by the new MTD rules.

Compliance is covered in more depth in our free MTD Guidebook.

7. Late Payments and Penalties

In conjunction with the launch of MTD, the HMRC will be updating its penalty scheme for late payments and submissions. There will be some leeway, especially during the first year as people become used to the system.

The new points system will designate one point for every missed submission deadline with a penalty of £200 once the threshold for the points is reached.

Once the points have reached the threshold, which for landlords will be 4 over 12 months, the taxpayer must bring everything up to date and then remain compliant for the following 12 months to reset the points back to zero.

If a taxpayer misses a payment, after 15 days grace period a 2% penalty will be applied. Should the taxpayer fail to pay after 31 days the penalty will be increased to 4%.

Final Words

April 2023 may seem a long way in the future, however, it is never too early to start preparing. Landlords need to be aware of the changes taking place and put together processes to ensure that the transition goes as smoothly as possible.

Landlord Studio is a cloud-based property management and accounting system that allows you to manage your tenancies, track income and expenses, digitise receipts and more through either the mobile app or desktop portal.

To learn more about MTD and the upcoming changes, download our free MTD Guidebook here.

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Consultation on commercial rent arrears – the evidence is in

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Government policy throughout the COVID-19 pandemic has been to help viable businesses – and the millions of jobs that they provide – to survive.

Early on the government introduced measures to protect tenant businesses from the threat of eviction or insolvency when they found themselves unable to pay their rent due to restrictions on trading.

These measures coupled with a code of practice published with the help of industry bodies have encouraged many landlords and tenants to come together to agree to share the impact of the pandemic in fair and sustainable ways.

Many landlords agreed to waive or defer some or all of the accumulated rent debt to enable their tenant businesses to survive, preserve jobs, and make their contribution to the recovery. However, there have remained many landlords and tenants that have been unable to reach agreement on this, and the level of accumulated rent debt still threatens the existence of many tenant businesses and in turn the millions of jobs they support.

What’s the true picture?

To get a true picture of the situation on the ground the government launched a consultation process, a call for evidence inviting landlords, tenants, and other interested parties to describe their experience in seeking to negotiate settlements of rent debt during the pandemic.

The thinking is that this evidence and the views of stakeholders will be used when deciding on the various options for withdrawing or replacing the existing tenant protection measures as the country moves towards a recovery from the pandemic.

The consultation elicited around 500 responses. Based on the evidence received the government announced on the 16^th of June that legislation is to be introduced during the current parliamentary session to work towards an orderly resolution of rent arrears accrued by commercial tenants over the period of the pandemic to-date.

The new legislation is to ringfence rent debt accrued from March 2020 for tenants who have been impacted by COVID-19 business closures until restrictions are removed for their sector. It will also introduce a system of binding arbitration between landlords and tenants.

Arbitration is seen as a last resort, after encouraging negotiations to take place between the parties to work towards and amicable solution. Ahead of the legislation the government is to publish the principles on which the legislation is to be based in the form of a revised code of practice, giving landlords and tenants time to negotiate on that basis.

Eviction ban

Section 82 of the Coronavirus Act 2020 currently prevents landlords of commercial properties from being able to evict tenants for the non-payment of rent and this will continue in force until the 25th March 2022, unless new legislation is passed in the meantime to change this.

The government expects those tenants who have not been affected by closures and who have the means to pay, should pay. Additionally, government expects commercial tenants to begin paying rent as per their lease from the point of restrictions being lifted for their sector.

As soon as the new legislation is passed, the moratorium on evictions will only apply to ringfenced arrears. This includes rent debt accrued from March 2020 by commercial tenants affected by COVID-19 business closures until restrictions for their sector are removed.

This means that landlords will be able to evict tenants for the non-payment of rent prior to March 2020 and after the end of restrictions for their sector, and who have not been affected by business closures during this period.

What were the options?

The two most favoured options for withdrawing protection measures based on the consultation responses were to allow the tenant protection measures to lapse on the 30th June 2021 (89.5% of responding landlords were in favour of this option) and to introduce a scheme of binding arbitration to resolve rent debt (66.3% of responding tenants were in favour of this measure).

Overall, 57.3% of respondents were against letting measures expire on the 30^th of June, whilst a significant group (33.7%) were in favour of it. 49.2% of respondents were in favour of binding adjudication, whilst only 27.4% were against it.

A dichotomy of views

Acknowledging that there was a clear dichotomy of views expressed by landlords and tenants the government had to consider its options in the light of its original policy objective; to preserve viable tenant businesses and the millions of jobs that they support.

This has led to the decision to bring forward legislation to ringfence rent debt accumulated during enforced closures and to set out a process of binding arbitration to be undertaken between landlords and tenants that are still unable to reach agreement on rent debt.

UK Hospitality estimates that around 332,000 jobs could be lost in the hospitality sectors if measures expired on the 30^th of June – about a sixth of the remaining workforce of 2 million.

The government’s decision also acknowledges the fact that a number of large commercial landlords, together with sector representative bodies from both landlords and tenants, have recently published proposals for binding arbitration and the ringfencing of rent arrears independently of the call for evidence.

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LEGAL LATEST: Landlord’s leasehold cancelled after ignoring anti-social tenant complaints

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A London landlord has had his leasehold cancelled after ignoring neighbours’ pleas to deal with an aggressive, anti-social tenant for more than a decade.

Neighbours Mr and Mrs Kandala claimed Andrew Cripps, who owns the leasehold on a property in St Ann’s Way, South Croydon, was in breach of lease covenant for allowing his tenant to cause damage, annoyance or inconvenience to the neighbourhood for 11 years.

Prolonged abuse had taken its toll and led to serious mental and physical health issues for Mrs Kandala.

Failure to respond

A First Tier Property Tribunal heard that despite writing to the landlord many times, he had failed to respond constructively to their letters or take any action. In an email from October 2019, Cripps replied to a letter complaining about the sub-tenant’s conduct, saying: “I apologise for any inconvenience/damage caused and please be advised I am taking this matter extremely seriously.

“We will of course give him notice if he continues to behave in this way.”

In 2010, the tenant was issued with a harassment warning by the police after setting fire to the Kandala’s back garden, but Cripps again did not reply to letters and the cost of repairs was met by the residents association.

“The tenant also let his dog foul in neighbours’ front gardens, parked across their garage and made regular threats of violence, screaming and shouting directly at the couple.

They said: “The residents association recently informed us that a notice requiring possession was served on the subtenant by Andrew Cripps. The subtenant immediately took to making repeated offensive sexual gestures to Mrs Kandala.”

The tribunal was satisfied that this was clear evidence of completely anti-social behaviour, amounting to breach of covenant. It also ruled that as Cripps was not named as a joint party on the building insurance policy, this was also a breach of covenant.

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