Why the nonsense £65 landlord database tax is just the start

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Why the nonsense £65 landlord database tax is just the start

There is something almost insulting about being told by the government that £65 is not much money.

It is apparently small enough for it to describe its new annual PRS database charge as ‘fair and sustainable’, yet not important enough to mention in the official announcement’s section headed ‘What landlords need to know’.

Funny that.

We will pay £65 for every property, every year, to register on a database we are legally compelled to join.

We must provide the information, keep it updated and, according to the NRLA, landlords themselves must register their properties rather than simply handing the job to an agent.

Fail to comply and the penalties can reach £7,000, rising to £40,000 for repeated or continuing breaches.

And what exactly are we paying for?

Compliant landlords hit

Partly, it appears, the machinery that will enable councils to police us more effectively.

So, the compliant landlord who already has the gas certificate, electrical report, EPC, correct tenancy paperwork and possibly a council licence gets another bill for the privilege of proving yet again that he or she is compliant.

Meanwhile, the genuinely rogue landlord, the person this entire apparatus is supposedly designed to catch, is presumably not sitting eagerly beside his laptop waiting to enter his credit card details.

This is where the debate about £65 misses the point.

A landlord with one property will probably survive £65.

A landlord with 20 properties faces £1,300 every year before the time involved in maintaining the records is considered.

Someone with 50 properties faces £3,250.

Then add the selective licensing bill where it applies.

Add the coming landlord redress scheme.

Add safety compliance costs.

Add accountancy fees and don’t forget Making Tax Digital.

Add higher borrowing costs and tax rises heading the landlord’s way next year.

Then add the growing amount of professional help landlords increasingly need simply to avoid falling foul of the rules.

Can we afford £65?

Listen, every individual cost that comes with being a landlord can be dismissed as manageable.

But collectively they change whether providing a home makes financial sense.

That matters particularly at the cheaper end of the PRS, where landlords cannot endlessly absorb hundreds of pounds of extra annual costs while keeping rents artificially low.

The comments from Property118 readers beneath the PRS database story show that landlords immediately understood this.

Some are already calculating how much more they will need to charge a tenant each month.

Others are asking why they are paying twice where councils already operate licensing schemes collecting much of the same information.

I’ve mentioned before that landlords are approaching the moment when the straw finally breaks the camel’s back.

The reader comments make clear that some landlords are now considering selling.

That should worry ministers considerably more than whether a £65 bill sounds reasonable in Whitehall.

Duplication risks

The NRLA has at least challenged the duplication.

It says the database should use information the government already holds rather than becoming little more than another national directory requiring landlords to upload documents and pay again.

If government wants a national compliance database, then build one.

Link the information already held on EPCs and work with licensing authorities.

Verify ownership intelligently and remove duplicate, costly bureaucracy.

Above all, if the national system replaces work landlords currently must do elsewhere, there might actually be something in it for responsible landlords.

An interesting twist

However, there is another interesting twist that worries me.

The registration service will collect extensive information from landlords, while the same government announcement confirms that HMRC’s Valuation Office will eventually determine tenant challenges to rent increases.

I am not suggesting anything improper about that.

The Valuation Office already has substantial experience of rent evidence and may well be better placed than an overstretched tribunal.

But landlords are entitled to ask how all this information will be used and what safeguards will exist when the state both collects increasingly detailed information about the PRS and adjudicates disputes over market rents.

Our Labour Party overlords repeatedly tell us these reforms will protect tenants.

Perhaps somebody should explain to them that the most basic economics of providing those tenants with homes.

Landlords do not have a secret pot from which £65 database fees, £700 (or usually more) licensing bills, letting agent charges, tax rises and compliance costs magically appear.

Costs are recovered through rents where the market allows.

Where they cannot be recovered, landlords will reconsider the investment.

Some will, inevitably, sell.

Then our politicians will express astonishment that tenants cannot find an affordable property.

So no, £65 is not the straw that breaks the camel’s back.

That tired phrase gives our clueless, hopeless ministers far too much comfort.

The problem is that they keep adding straws while refusing to look at the camel.

Let them know that you can tax, licence and register a landlord, but you cannot regulate us into making a loss.

Until next time,

The Landlord Crusader

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One million landlords set to use tenant deposit alternatives

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Property118

One million landlords set to use tenant deposit alternatives

More than one million landlords could end up using deposit alternatives if government plans to scrap insured tenancy deposit schemes go ahead, research reveals.

Zero Deposit found 9% would move directly to a deposit alternative, which it calculates could represent about 266,736 landlords.

A further 26% said their decision would depend on what the tenant preferred, potentially bringing another 755,751 landlords into the market for an alternative.

And two-thirds (64%) would opt for a traditional custodial tenancy deposit scheme.

Landlords weigh deposit options

The firm’s chief executive, Sam Reynolds, said: “These findings show landlords are approaching any potential changes to tenancy deposit legislation pragmatically.

“While many will naturally move to custodial schemes, there is also clear evidence that a significant proportion are open to alternative solutions, particularly where they offer greater flexibility for tenants.”

He added: “What’s becoming increasingly clear is that landlords aren’t looking for a single replacement for insured tenancy deposits.

“They’re looking for a broader toolkit of trusted solutions that help them manage risk, navigate regulatory change and meet the needs of an increasingly diverse tenant market.”

Damage protection tops priorities

The survey of 800 private landlords found that protection against property damage was the most important consideration for 25% of those questioned.

Faster dispute resolution was chosen by 17%, while 16% pointed to regulatory certainty.

Lower costs and reduced administration each ranked 15%, with tenant affordability at 9% and cashflow at 3%.

More than half of landlords (58%) said they would like the flexibility to give tenants more than one deposit option if insured schemes were abolished.

The remaining 42% would prefer to offer a single option.

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