REVEALED: HMRC’s double snooping trouble for landlords

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Landlords face two new schemes designed to help HMRC snoop on taxpayers’ financial activities following the launch of two recent government initiatives.

This includes an HMRC consultation on proposals to force Airbnb and other online short-let platforms to report individual property owner’s revenues from holiday lets.

This would include fines for the company’s involved for filing incomplete or inaccurate information or failing to collect such information at all but be more serious for landlords who not honest about their revenues within annual tax returns.

If HMRC adopts the key points of its proposals within the consultation, then landlords’ income from short lets would not only be more transparent, but available for up to five years after a booking has been made and a property owner has any received income.

Bank requests

The other is the Finance Bill 2021 which received Royal Assent in June. It allows, for the first time, HMRC officials to approach a taxpayers bank and make a request for financial details directly from their bank or building society without their permission.

Until now those being investigated have had to give permission for this information to be released on their behalf.

HMRC has been given these powers in to speed up requests by overseas tax authorities for information, saying the current system whereby these requests must go through a tribunal process takes too long and does not meet international standards.

“International obligations are no excuse for sweeping away established self-assessment safeguards and enabling HMRC to obtain information on taxpayers from financial institutions without prior approval, argues the accountancy industry trade body the ICAEW.

Read more: HMRC omits CGT from tax reforms but there’s a sting in the tail for holiday lets

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As the weather warms up, the risk of subsidence rises – are you covered?

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August got off to an unsettled and changeable start this year, with heavy rain and flooding in many parts of the UK. But the long-range weather forecast is now predicting warmer than usual conditions in late August, and potentially even a heat wave, with temperatures set to soar across some parts of the country.

Rising temperatures during the summer months can be problematic for some properties, increasing the risk of subsidence which can result in costly damage. With claims for subsidence increasing, it’s important that landlords make sure they have sufficient insurance cover in place and know when they may need to take action.

How common are claims for subsidence?

But how common are claims for subsidence? Melissa Choules (pictured), Senior Claims Technician at LandlordZONE’s insurance partner, Hamilton Fraser Total Landlord Insurance, explains. 

“When it comes to claims, subsidence is often overlooked as it is not as common as claims relating to perils like escape of water or storm, accounting for only 6.5 per cent of all our claims in the period 2015-2020.

“But subsidence claims have been increasing since 2014, resulting in a 24 per cent increase year on year.

“And the damage caused by subsidence can be particularly costly, with our average payout in the 2015-2020 period being £3,567.18 and individual claims of up to £82,900 in that same time frame. In extreme cases like this, the damage is so extensive that houses are uninhabitable while repairs are being carried out.”

What is subsidence?

Subsidence is the downward movement of the ground supporting the building. Typically, claims for subsidence increase over the warmer months as the lack of rain causes shrinkage of clay soils which expand and contract with changes in their moisture content. As a result, the property becomes unstable and can begin to crack and sink.

Although we’ve had a particularly wet start to the month, the ground can dry out very quickly – as illustrated by what happened in 2017, when 65 per cent of subsidence claims to Hamilton Fraser Total Landlord Insurance were reported between May and October, despite having a wetter than average summer that year.

What are the causes of subsidence?

Subsidence can be caused by a range of things including clay shrinkage, trees growing close to the foundations, water washing away soil beneath the property, used or disused mines, the formation of underground caverns and poor foundations.

But warmer weather causing clay soil shrinkage is one of the most common causes of subsidence – in 2018 alone, subsidence claims increased by 20 per cent because of the heatwave in the UK that year.

Settlement and subsidence are often confused so it’s important to understand the difference between the two. Settlement is when the ground beneath a property is compacted by the weight of the building, which usually happens in the first 10 years after the building is built – it is quite common and cracks in the walls caused by settlement are usually harmless.

Some insurers, including Hamilton Fraser Total Landlord Insurance, will cover subsidence, but not normal settlement.

What are the signs of subsidence?

Since it’s not possible to see what is going on underground, you’ll need to be aware of the signs above ground, such as ripples in the wallpaper. doors and windows that no longer fit and cracks. Although most cracks in the walls are harmless, cracks caused by subsidence tend to have certain characteristics. For example:

• They are wider at the top than at the bottom
• They are wider at any point than a 10p coin (about 3mm)
• They can be seen from both inside and outside the property
• They are close to weak spots like doors, windows and where extensions join the house

What should you do if you suspect subsidence?

Steve Barnes, Associate Director at Hamilton Fraser Total Landlord Insurance, urges landlords not to ignore subsidence if they suspect they may have a problem with it. He advises, “The key thing with subsidence is to take action right away.

Because in most cases, subsidence happens slowly, it can be tempting to put off dealing with it. But the longer you leave it, the more expensive your repairs will probably be, creating bigger problems such as a loss in your property’s value, serious structural damage and higher insurance premiums in the long run.

Cracks that appear and continue to grow, should be investigated to make sure that the property is structurally sound.”

How can you reduce the likelihood of subsidence?

There are a number of steps you can take to reduce the likelihood of subsidence damage to your property. Assessing your level of risk is the first step you need to take. For example, is your property built on clay ground? Are there any large trees in close proximity to your property? Does the ground your property is built on become water-logged during heavy rain or extremely dry during droughts?

How do you fix subsidence?

If you think you have a subsidence problem, the first thing you should do is contact your insurer. They will be able to advise on what to do next and you can find out more information on some of the solutions to subsidence, along with answers to other questions, such as whether you should buy a property with subsidence, in Hamilton Fraser Total Landlord Insurance’s guide, Subsidence: What is it, how do you spot it, and what should you do if you have it?

Can you insure a property with a history of subsidence?

This varies from insurer to insurer, but Hamilton Fraser Total Landlord Insurance will cover properties with subsidence issues. 

If you would like more information on subsidence, you can download Hamilton Fraser Total Landlord Insurance’s free infographic on buying, selling and letting a property with a history of subsidence here.

If you have questions about subsidence, or want to discuss subsidence in your property, feel free to contact the Hamilton Fraser Total Landlord Insurance team. A comprehensive policy such as our Essential and Premier policies will cover all of the costs to repair damage caused by subsidence.

As a valued LandlordZONE reader you’re entitled to 20 per cent off Hamilton Fraser Total Landlord Insurance’s policies, call the team today on 0800 63 43 880 quoting code LZ2021 or get a quote online in under 4 minutes. 

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Ministers can’t say how successful Fitness for Habitation act has been

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The government says it is not tracking how many landlords have been prosecuted under the Homes (Fitness for Habitation) Act 2018 suggesting a lack of interest in its effectiveness as a regulatory tool at the top of government.

Given Royal Assent in December 2018 and sponsored by Labour MP Karen Buck with cross-party support, the act amends the Landlord and Tenant Act 1985 so that, where a landlord fails to let and maintain a property that is fit for human habitation, tenants have a right to take action in the courts.

The act enables tenants to seek court orders forcing their landlord to carry out repairs – and receive compensation for having to ensure sub-standard living conditions – and established much stricter rules on what constitutes a property that’s fit for habitation than the previous legislation.

But the Ministry of Justice (MoJ) has revealed that collating details of landlord prosecutions under the act would take more than three-and-a-half days to complete and therefore, the cost of complying would be too great.

This follows a Freedom of Information request made by businessman Ajay Jagota.

The 52-year-old, who recently founded online claims management firm Veriwise, says: “It’s startling how many renters don’t know that there is a law which can force their landlord to repair their homes and even pay them compensation – it’s alarming that the government doesn’t seem to know either.

“I have no idea why you would bring in a new law and then make no effort to see how many times it is actually being used, and the inconsistent nature of the government’s response leads me to speculate that they know a good deal more than they are letting on and are simply embarrassed about the ineffectiveness of this legislation.”

But the lack of data about prosecutions available does not mean legal action is not taking place. In June several lawyers told Inside Housing magazine that the social housing sector had seen a strong uptick in fitness for habitation claims largely due to no-win, no-fee solicitors targeting disgruntled tenants.

Read more about the Homes (Fitness for Habitation) Act 2018.

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31% of properties still selling over asking price

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Propertymark’s July housing report indicates nearly a third (31%) of properties sold for more than the original asking price. This is a significant decrease from June which reported 40% sold over asking price, but closer to May’s figure of 33%.

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It’s Bad News For First Time Buyers As Property Prices Soar, Apparently

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The Guardian is reporting that 1 in 16 companies are on the brink of bankruptcy and that today’s youth will never be able to buy a home due to soaring property prices.

But is it really THAT bad for first-time buyers?

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LATEST: Demand for rental property surges as Covid rules relax

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A surge in demand for rented homes with tenant enquiries reaching a five-year high has been reported by landlords.

So says the National Residential Landlords Association (NRLA) which polled its members in England and Wales on the housing markets.

Of these, 39% confirmed that demand for homes to rent had increased in the second quarter this year – an eight per cent increase on the first three months of the year.

This rise takes the rental market to its busiest since 2016, the NRLA says, saying the relaxation of COVID restrictions and a more buoyant economic outlook have been the key drivers.

But the figures mask a trend which is seeing a two-tier rental market developing across some regions.

In Yorkshire and the Humber, Wales, the South West and the South East over 60 per cent of landlords said that demand for homes to rent had increased.

Stark contrast

In stark contrast, just 15 per cent of landlords in Central London said demand had increased in the second quarter of the year, compared with 53 per cent who said it had fallen, explained by the large numbers of
tenants quitting the capital as home working has taken off.

But despite this boom, the NRLA says a significant percentage of landlords have been negatively impacted by the demands of the pandemic, with 20% looking to sell rental properties.

Chris Norris, Policy Director for the National Residential Landlords Association, says: “The evidence is clear that nationally whilst the demand for homes to rent is increasing, landlords are more reluctant to invest in new properties.

“The only losers will be tenants as they struggle to find the homes to rent that they need. The Chancellor needs to recognise the harm being done by tax hikes imposed on the sector.

“There is a significant flight of tenants from the capital in response to the COVID pandemic. With lockdown restrictions having ended, and offices beginning to reopen, the jury is out as to whether this trend will continue.”

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Demand increases but landlords more reluctant to invest

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The demand for private rented housing has reached a five-year high according to new research released by the National Residential Landlords Association following the easing of COVID restrictions.

The wide-ranging survey of private landlords across England and Wales

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