SO much for a low-tax economy! Poll shows tax rises hitting landlord activity hard

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The Government’s raft of tax changes has hit landlords’ investment plans, with 52% deterred from buying more properties, finds a new survey.

An LSE study for the National Residential Landlords Association (NRLA) found that despite the seismic impact of Covid, tax changes had affected their plans more than the pandemic.

Its survey of more than 1,400 private landlords across England discovered increasing regulation and bureaucracy along with the government’s negative messaging about private landlords and their role in the housing market had also played a part.

Landlords felt vilified and under attack from the Government and, the report said, “the emotive tenor of many comments and the near unanimity of views were striking”.

Recent changes have included restricting mortgage interest relief to the basic rate of income tax, a 3% stamp duty levy on the purchase of additional homes and a decision to cut Capital Gains Tax to 18% for everything other than on gains from the sale of residential property.

Greatest effect

Overall, a third of respondents said the reform to mortgage interest relief was the tax change having the greatest effect on their rental business. Of this group, 39% said the change meant that they were not going ahead with planned future purchases while 31% had put plans on hold and 28% were taking steps to leave the sector altogether.

Another 60 former landlords said their main reasons for leaving the sector were rising costs, tax changes and potential regulatory change.

The study’s authors said individually and cumulatively, the recent changes had reduced the incentive to be a landlord in England.

The add: “These indications may herald the start of a contraction of the sector, unless the economic environment changes. Disinvestment will probably be led by those economically motivated landlords most affected by the recent changes.

“This includes highly leveraged individual investors who are higher- and additional-rate taxpayers as they can no longer deduct mortgage interest at their marginal tax rates.”

Read more about stamp duty.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – SO much for a low-tax economy! Poll shows tax rises hitting landlord activity hard | LandlordZONE.

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LATEST: Tory tax raid on landlords hitting investment levels hard

admin    Uncategorized     agents

The Government’s raft of tax changes has hit landlords’ investment plans, with 52% deterred from buying more properties, finds a new survey.

An LSE study for the National Residential Landlords Association (NRLA) found that despite the seismic impact of Covid, tax changes had affected their plans more than the pandemic.

Its survey of more than 1,400 private landlords across England discovered increasing regulation and bureaucracy along with the government’s negative messaging about private landlords and their role in the housing market had also played a part.

Landlords felt vilified and under attack from the Government and, the report said, “the emotive tenor of many comments and the near unanimity of views were striking”.

Recent changes have included restricting mortgage interest relief to the basic rate of income tax, a 3% stamp duty levy on the purchase of additional homes and a decision to cut Capital Gains Tax to 18% for everything other than on gains from the sale of residential property.

Greatest effect

Overall, a third of respondents said the reform to mortgage interest relief was the tax change having the greatest effect on their rental business. Of this group, 39% said the change meant that they were not going ahead with planned future purchases while 31% had put plans on hold and 28% were taking steps to leave the sector altogether.

Another 60 former landlords said their main reasons for leaving the sector were rising costs, tax changes and potential regulatory change.

The study’s authors said individually and cumulatively, the recent changes had reduced the incentive to be a landlord in England.

The add: “These indications may herald the start of a contraction of the sector, unless the economic environment changes. Disinvestment will probably be led by those economically motivated landlords most affected by the recent changes.

“This includes highly leveraged individual investors who are higher- and additional-rate taxpayers as they can no longer deduct mortgage interest at their marginal tax rates.”

Read more about stamp duty.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Tory tax raid on landlords hitting investment levels hard | LandlordZONE.

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NRLA commission London School of Economics survey on Landlord tax

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Unsurprisingly, over half of private landlords responding to a new survey say recent tax changes in the rental market have had a negative impact on their investment plans. That’s the finding from a new study by the London School of Economics (LSE) for the National Residential Landlords Association (NRLA).

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Bristol significantly expands HMO and selective licensing schemes

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Bristol has approved plans to extend landlord licensing in Brislington West, Bedminster and Horfield wards in a bid to raise PRS standards.

The scheme includes additional licensing – HMOs with three or more unrelated people sharing facilities – and selective licensing – private rented properties occupied by one or two tenants, or a family, that are not HMOs.

Councillor Tom Renhard (pictured) cabinet member for housing delivery and homes, says it has evidence to prove that licensing schemes are proving successful across the city.

During the five-year scheme in Eastville and St Goerge wards, which ended on 30th June, 3,616 licences were issued and 3,409 inspections carried out, with 88% of properties subsequently improved. 

A 10-week public consultation found that 58% of respondents either agreed or strongly agreed with extending the scheme.

He adds: “We are aware that a significant number of HMOs not covered by mandatory licensing are being poorly managed and maintained in these areas.

“We now have extra powers to take action, and we would encourage all landlords to work with us to help protect vulnerable tenants and make people across the city more comfortable in their homes.”

Bristol City Council charges £1,420 for an HMO licence and £1,000 for an additional licence. All 12 wards in the central area of Bristol (pictured) are covered by an additional licensing scheme.

Despite Bristol council’s commentary earlier this year Clear It Waste named the city as having the second-best landlords in the UK, after Sheffield.

Its points-based index found Bristol had high levels of tenant satisfaction and fewer tenants with landlord issues. However, Verve Research reported that lockdown had seen an abnormally high amount of complaints being made about illegal eviction or complaints relating to evictions during the pandemic, with Bristol’s 135 complaints putting it in second highest place out of 20 cities.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Bristol significantly expands HMO and selective licensing schemes | LandlordZONE.

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Agent admits illegally subletting THREE houses but dodges £136k fine

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A sub-letting HMO managing agent has had a whopping £136,000 fine reduced to £31,500 after a judge ruled Epping Forest District Council had come down on him too harshly.

The First Tier Property Tribunal agreed that Darius Endriukaitis was guilty of failure to licence, failure to comply with HMO management regulations and failure to provide information on fire safety measures to tenants.

But it said the council hadn’t taken any personal factors into account and had calculated each penalty in excess of the statutory maximum.

It heard that Endriukaitis worked with fellow Lithuanian Ceslovas Sasnauskas, the sole director of property management company New Property Move.

In September 2019, Endriukaitis signed an assured shorthold tenancy agreement for 7 Hainault Road, Chigwell, that contained a rule against sub-letting.

A month later he started renting rooms out, with rent paid to New Property Move, and up to nine people later lived in the three-bedroom property.

He did the same at 105 Queens Road, where the four-bedroom property was sublet to about nine people and at 17 Palmerston Road, both in Buckhurst Hill, where the six-bedroom house was sublet to a number of people shortly after the tenancy was signed.

‘Not liable’

Although Endriukaitis admitted he rented out all three properties, intending to use them as HMOs, he said that as an employee of New Property Move he could not be liable for the penalties.

The council argued that the arrangement was a joint business venture between Endriukaitis and his friend Sasnauskas.

The tribunal ruled that Endriukaitis could easily have done some research about HMO regulation and should have known that sub-letting the properties without notifying the agent or owner was dubious conduct.

It was satisfied that his involvement with the tenants was on the basis of a joint business enterprise, however, it challenged the council’s penalty of £136,232, and added that it should also have served notice on Sasnauskas personally rather than just the company, which is being dissolved.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Agent admits illegally subletting THREE houses but dodges £136k fine | LandlordZONE.

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Home Office Right to Rent update

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The way in which Biometric Residence Card (BRC), Biometric Residence Permit (BRP) and Frontier Worker Permit (FWP) holders evidence their right to rent is changing. From 6 April 2022, BRC, BRP and FWP holders will evidence their right to rent using the Home Office online service only

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