LATEST: Leicester landlords to face tough new HMO planning controls

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Leicester could see a tough clampdown on new HMOs following a consultation on an Article 4 Direction in the city.

Leicester City Council wants feedback from landlords on plans that would control the number of homes being converted to HMOs across a much larger area.

An Article 4 Direction has already been in place since 2014 in several areas of the city, but the latest proposals will expand, and in some cases join together, those areas to include thousands more buildings in areas with high numbers of HMOs.

The existing direction covers parts of the West End, streets near to De Montfort University’s campus and Leicester Royal Infirmary, numerous streets in the area between New Walk and HMP Leicester, as well as most of Clarendon Park and a section south of Lancaster Road.

The latest proposals would extend the West End zone to stretch from Rowley Fields, to Westcotes, Newfoundpool and parts of the Waterside area, while the Clarendon Park area would be extended to incorporate much of Knighton Fields, Knighton, Stoneygate and part of Aylestone.

A third new area would include much of Spinney Hills and Highfields.

Leicester City mayor Peter Soulsby (pictured) says that so far, its legislation has been focused on areas where high numbers of HMOs risk having a real impact on the rest of the community, to protect them from becoming saturated.

He adds: “Over the last seven years, areas of concentration have expanded, with higher numbers of HMOs appearing beyond the original areas. It is therefore important that this legislation is available to us to prevent unrestricted numbers of HMOs from appearing elsewhere in the city.”

The consultation runs from 18^th November until 13^th January and if the proposals get the go-ahead, the extended Article 4 Direction would be in place 12 months later.

In January last year neighbouring Midlands city Birmingham brought in similar HMO controls.

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Councils STILL offering gas boiler replacement subsidies, leading landlord reveals

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Nottingham landlords are being encouraged to apply for funding to fit gas boilers in their properties, despite the government’s push to swap them for heat pumps.

An email from Nottingham City Council promoting its Warm Homes Hub initiative tells them: ‘Landlords, you and your tenants may be eligible for heavily subsidised 1^st time gas central heating and/or insulation measures for your property. You and your tenants could be eligible for services like gas connection, 1^st time gas central heating, loft insulation, cavity wall insulation, community scheme. The offer is heavily subsidised for landlords, however a contribution of £500 is needed.’

The government recently launched its Heat and Buildings Strategy, offering home owners and landlords grants of up to £5,000 from next April to buy heat pumps to replace their old boilers over the next decade through a new £450 million three-year Boiler Upgrade Scheme.

Incredulous

Incredulous landlord Tricia Urquhart asks why this scheme is offering subsidised installation of a heating system which is supposed to be phased out. 

She tells LandlordZONE: “The contradictory messages from the government make it impossible for landlords to plan for the future. I want to do my bit for climate change but the mixed messaging at the moment is unbelievable!”

A Nottingham City Council spokesperson says its Warm Homes Hub initiative replaces carbon-intensive, costly and polluting fuel sources, bringing a number of benefits to alleviate poverty and cold-related health conditions.

He adds: “The project ends in March next year, when we hope to be able to secure funding from the government’s recently-released clean energy programmes to continue our important fuel-poverty reduction work, but crucially free of fossil-fuel use.

“This aligns with our ambition to become the UK’s first carbon-neutral city by 2028 and increasing the proportion of renewable energy technologies in Nottingham homes.”

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3 tips to help landlords tackle tightening buy-to-let regulations

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Over the past few years, the UK government has made it increasingly difficult to run a profitable buy-to-let business.

New regulations such as section 24 tax changes, EPC regulations, safety rules, and others have all made it harder for landlords and decreased profit margins.

Despite all of this, it is possible for landlords to make their buy-to-let properties profitable and ensure they are a sensible long term investment.

In this article, we take a look at a few of the key recent and upcoming regulatory changes that landlords need to be aware of, as well as three top tips for running a successful buy-to-let business.

Big changes

Restrictions to allowable expenses

It used to be that as a landlord you could deduct almost every expense related to the management of your let, this isn’t the case anymore.

One example is the section 24 changes – these phased out mortgage interest as an allowable expense. Today, you can no longer deduct mortgage interest at all, instead, you receive a tax credit equal to 20% or whichever is the lower out of:

• total mortgage interest and the final finance costs
• total profits less any losses brought forward
• total income that exceeds your personal allowance.

Making tax digital

Making tax digital is the government’s plan to push all taxes into a digital format. The eventual goal is to increase efficiency for taxpayers whilst decreasing data entry errors.

Overall, they say this should help with tax planning but it comes with a few caveats such as requiring suitable software for quarterly updates. Changes are planned to come into effect in April 2024 for all landlords earning over £10,000. Find out more about how MTD will affect you here.

The easiest way to track your income and expenses digitally is with software like Landlord Studio. You can try it out free for 14 days here. If you’re currently using spreadsheets, you may also find our free expense tracking template useful, which you can download here.

EPC

A minimum EPC requirement was fully implemented in 2020 with all tenancies needing a minimum of a band E. However, in recent consultation documents, it has been revealed that this minimum EPC requirement will be raised again to a band C as early as 2025.

Also, the cost cap may also be raised from £3,500 to £10,000. This is going to affect the majority of landlords in the UK who will need to make sure they have a plan to spread the cost out.

Landlords will also need to effectively track all the related expenses so that when they meet that cost cap of £10,000 they can file for an exemption from further improvement. Find out more about the proposed EPC changes.

Capital gains tax changes

There’s been lots of talk about whether or not the UK government will make changes to the current capital gains tax rules and it is looking increasingly likely that within the next few years they will. In a consultation document from November 2020, it was suggested that Capital Gains Tax rates be brought in line with Income Tax rates, as well as getting rid of the inheritance tax uplift. This could be a huge increase in potential tax liability for landlords.

3 top tips

Know the basics

Things you need to know, including, how to efficiently find tenants, setting and signing a legally binding tenancy agreement, running routine property inspections, and managing property maintenance in a timely and cost-efficient way.

Other important aspects include things like ensuring you have an up to date EPC, as well as fire and electrical safety certificates, and more.

Keep your tenants happy

With all of these restrictions in place effectively reducing profit margins, you need to focus on areas you can control. One of these is keeping vacancies to a minimum. Vacancies are costly because of lost rent revenue as well as additional time and marketing costs.

Landlords should run regular property inspections, respond to maintenance requests quickly, and have clear lines of communication with tenants.

Treat your buy to let as a business

Keeping detailed financial records isn’t just essential for tax purposes, it’s absolutely vital for understanding cash flow. If your business isn’t making the margins you were expecting, you need to be able to quickly identify why. It may be that you underestimated expenses, your tenants are late with the rent, or you’re simply not charging enough. Once the issue is identified you can take action such as consolidating assets or raising the rent.

Other things to consider include making sure you spend time researching industry updates, staying on top of new regulations, and maintaining quality industry contacts. In this way, you can get advice and tips on a range of issues as you face them, such as what is a fair repair time, finding quality contractors, and what to do if you’ve got a renter from hell.

Final words

The first step to tackling the tightening buy-to-let regulations is to make sure that you are aware of them and how they will impact your property business.

The second step is to make sure you’ve got effective processes in place. When dealing with your business finances you should use an effective system to track all of your income and expenses, making a note of which ones are deductible, which need to be capitalised, and which are not allowable.

You can track your income and expenses on an expense tracking spreadsheet or via property management software like Landlord Studio. This will allow you to gain insights into your buy to let business, identify weaknesses, improve cash flow and of course, submit an accurate tax return.

Download Our Free Expense Tracking Spreadsheet Here.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – 3 tips to help landlords tackle tightening buy-to-let regulations | LandlordZONE.

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Unadopted road walled off by neighbour?

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Access to my property is via a very narrow private road. Turning space has always been limited, but previously, the adjoining unadopted road was accessible to use for 3-point turn etc.

However, the neighbours in front of me have now bricked up that access to extend their rear garden.

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Guaranteed rent disaster on new Nightmare Tenants Slum Landlords episode tomorrow night

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The popular TV show, Nightmare Tenants Slum Landlords, returned to Channel 5 last week with episode seven of the 12-part series after a pause in the programme’s airing.

Showing at the later time of 10pm

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