Landlord Incorporation To Pay less Tax for Landlords in 2022

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Hundreds of thousands of property landlords are paying too much tax and in this video, I am joined by Mark Alexander from Property 118 to tell you what you can do about it.

Section 24 is a massive tax burden on Buy to Let landlords.

View Full Article: Landlord Incorporation To Pay less Tax for Landlords in 2022

LAW: Landlord brothers lose appeal against being fined £10,000 EACH over illegal HMO

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Two landlord brothers have lost their appeal against both being fined for failing to licence their HMO.

Gurmail and Jarnail Gill were each fined £10,000 by Greenwich Council for not licencing the property in Conway Road, Plumstead.

After a First Tier Property Tribunal backed the decision, however, they appealed to the Upper Tribunal which has now ruled that they are both liable because both had control of the HMO.

The court heard how the brothers had inherited the property from their parents in March 2017 and let it to a single tenant, Mr Pradhan, who was holding over under an expired tenancy granted to him by their father. 

£1,400 a month

The original tenancy had included a ban on sub-letting but Mr Pradhan did not live at the property and instead sub-let it to five elderly residents.

He paid £1,400 a month to the Gills and collected rents totalling £1,800. In October 2017, the house became subject to an additional licensing scheme.

The pair argued that joint landlords should jointly be liable for a single financial penalty as there was only one person with control, albeit a person comprised of two individuals.

They said that this was reinforced by the fact the rent was shared equally between them, so neither was a person having control who could commit the relevant offence.

However, the tribunal judge ruled: “Each was a person having control of the HMO and each held that status while the HMO was occupied in circumstances which required a licence but where none had been obtained. 

“The appellants did not jointly commit the offence, they each committed it and each could have been separately prosecuted. In the same way, each could be the subject of a separate financial penalty because each has committed his own offence.”

Read more about HMOs.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LAW: Landlord brothers lose appeal against being fined £10,000 EACH over illegal HMO | LandlordZONE.

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EXPERT: Why HMOs are a landlord favourite once more

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HMOs are rapidly gaining in popularity with a wider range of renters on a budget, according to the boss of one of the country’s largest property investment firms.

Mish Liyanage, founder and CEO of Mistoria Group, believes HMOs now appeal to more people including professionals, especially those who are progressing through their careers and want to keep costs down.

“Rentals are high, and not everybody can afford to live in the city centre for example, so HMOs become a viable and affordable option,” he tells TheBusinessDesk.com.

Demand has also remained strong throughout the pandemic, particularly in university towns and cities such as Liverpool and Manchester where HMOs continue to be the property of choice for students looking to live with friends.

Risk spread

Liyanage adds: “For investors, HMOs often provide higher yields compared to single-let properties, risk is spread and there is more than one source of income, and we expect to do work with more investors in this area over the next year.”

He has previously warned of the pitfalls of buying properties at auction to convert into HMOs, pointing to increasing numbers of investor landlords who face expensive legal battles when they try to recover losses, due to vendors misrepresenting the legal pack.

Liyanage says: “After going through the purchase process, investors are finding that the development or conversion plans they have proposed to carry out are no longer possible as there are sitting tenants, with no evidence that the deposits have been protected with an approved scheme.”

He advises investors who are considering buying property with tenants in situ via an auction to do their homework on the legal pack, especially the AST, well in advance.

Mistoria Group owns more than 100 residential and commercial properties and manages another 1,000 properties and 3,000 tenancies across the North West.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXPERT: Why HMOs are a landlord favourite once more | LandlordZONE.

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HMO platform raises £275,000 as it bids to become ‘Airbnb for house sharing’

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A tech platform that enables landlords to manage HMOs more effectively has raised £275,000 in new funding as its bids to become the ‘Airbnb for shared living’.

The money comes from asset management giant Mercia which has ten offices around the UK. Its MEIF Proof of Concept & Early Stage

Fund has made the investment in COHO, whose CEO Vann Vogstad (main pic, centre).

He came up with the idea of an online property management platform just for HMOs after living in house shares in Birmingham when he was a student.

COHO, which is unique within the housing tech space, is hoping to accelerate the growing trend for co-living amongst people of all ages. It allows property investors to manage their portfolio and tenants to find a suitable house share with like-minded people.

The platform, which Vogstad co-founded with Liam Cooper last year, has since then signed up 80 landlords.

The funding will allow the Worcester-based company to expand the team with the addition of five new jobs and develop a host of new features to improve the management of shared living.

Mainstream

“By making house sharing easier to manage for both landlords and tenants, COHO aims to bring it to the mainstream,” says Vogstad.

“The support of our investors will enable us to move forward at a much faster pace to achieve our ambition of making shared living more accessible to both property investors and tenants, and become the Airbnb of house shares.”

Kiran Mehta, Investment Manager at Mercia, says: “The property management sector is ripe for innovation with many landlords, in particular those with HMOs, having to patch together multiple management tools.

“COHO offers a one-stop shop for property management. Vann and the team have carved out a strong niche in the HMO market and have plans for some exciting additions to the product roadmap.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – HMO platform raises £275,000 as it bids to become ‘Airbnb for house sharing’ | LandlordZONE.

View Full Article: HMO platform raises £275,000 as it bids to become ‘Airbnb for house sharing’

Landlords are their reducing leverage requirements

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“Since the end of lockdown, we’ve seen an increasing population of landlords who do not wish to leverage their properties as much as they may have done previously. As a responsible lender, we have launched some 50% and 60% LTV products to cater for this market and reward this prudent approach.

View Full Article: Landlords are their reducing leverage requirements

Interest Rate Rise Impact Calculator Wizard

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Calculating the extra amount of interest you will pay as a result of the recent 0.25% interest rate rise isn’t exactly rocket science for some people. However, if numbers isn’t your thing and/or you would like to understand how the Bank of England decision will affect your cashflow and your tax position I’ve designed the wizard below for you to use free of charge.

View Full Article: Interest Rate Rise Impact Calculator Wizard

£1.5 billion fund launched by government to back SME rental home construction

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SME developers and builders will soon have access to £250,000 home-building loans through the government’s Levelling Up Home Building Fund, announced as part of its new White Paper.

It wants to encourage innovative projects to build rental and for-sale homes, such as community-led housing projects and groups of small firms working together to deliver larger sites and will share out the new £1.5 billion fund in the hope it will lead to 42,000 new homes being delivered.

Individuals and UK firms will be eligible for finance as long as their project is financially viable, they are planning on building or refurbishing five or more homes on a site in England, and their project would stall, or progress much less quickly, without the cash.

They need to have a controlling interest in the land and a clear route to achieving planning consent.

Managed by Homes England, the fund offers finance from £250,000 for a five-year term but the government has also partnered with Invest & Fund to hand out loans of between £400,000 and £2.5 million for applicants who are planning fewer than five units.

Brian Berry, chief executive of the Federation of Master Builders, says the loans should be targeted at reversing the decline in SME housebuilders, who are now delivering only 12% of the country’s housing stock, down from 40% in the 1980s.

“Local housebuilders develop on underutilised land that will be vital for hitting housing targets. However, these plans must make sure we’re helping to deliver new homes where demand is highest.”

He adds: “It’s positive that the government is taking steps to improve the quality and energy efficiency of our existing housing stock in the private rented sector. Local builders will be critical to the success of this policy and should be considered at each point of its implementation.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – £1.5 billion fund launched by government to back SME rental home construction | LandlordZONE.

View Full Article: £1.5 billion fund launched by government to back SME rental home construction

Are Gove’s ‘levelling up’ plans a step too far for landlords?

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Taxes. Regulations. Rental changes. Reforms. High standards. Section 21 being scrapped. Is this all too much for some landlords?

The government’s dramatic Levelling Up White Paper feels like another knife in the back to the private rental sector.

A national landlord register, crack-down on rogue landlords, the implementation of a national ‘decent homes standard’ and moves to abolish section 21 ‘no fault’ evictions; it’s easy to see why so many landlords are anxious about the changes.

Frustration

Many landlords are already worried about the looming EPC and ‘decent standard’ refurb costs being forced through by the government.

On a £60,000 property, which may only earn £6,000 a year in rent, a £10,000 to £15,000 refurb raises the question: is it worth it, or is there a way out?

What’s more, many landlords have been hit with the mammoth task of incorporating their portfolios. It’s safe to say, the landlord sector isn’t what it used to be. But what are the solutions?

Limited company

Incorporate, absorb the costs and hope things get better could be an option, and there are plenty of companies out there that are rising to the challenge and providing landlords with a service to do so.

Property118 are landlord incorporation specialists who can solve Section 24 problems by efficiently transferring property rental businesses into Limited Companies.

This solution works well for those who can fork out the fees, and are resisting selling because of Capital Gains Tax, but is CGT really a problem?

A deeper dive shows it might not be as bad as landlords think. With the decision of how best to manage the equity in portfolios, another option could be to sell up and cash in.

Selling up

It’s a route that many landlords are taking. Landlord Sales Agency is the leading portfolio exit specialists that have a credible track record when it comes to selling, and they’ll sell your entire portfolio in one sitting for 80 – 90% of the market value.

It takes handles all the hassle and delivers a lump sum for the whole portfolio in your bank in 7 to 21 days.

Expert view

David Coughlin, CEO of Landlord Sales Agency says: “You can either look at the changes as a frustration, or an opportunity to get out now while you still can.

“I’m selling my own portfolio and at Landlord Sales Agency our team know exactly what to do to help other landlords do the same.

“Between £2 million in the bank and the chance to lose the headaches and retire, or all the money we’re going to end up forking out as the government makes things tighter and tighter, I’d pick cashing in right now.

“We’ve had a good run of it, it’s now time to take the lump sum and reinvest in other business projects or retire and relax.”

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©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Are Gove’s ‘levelling up’ plans a step too far for landlords? | LandlordZONE.

View Full Article: Are Gove’s ‘levelling up’ plans a step too far for landlords?

LATEST: Renting reforms legislation ‘still a long way off’ admits government

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The government has admitted that its long-awaited rent reform White Paper won’t be published until the Spring – more than two and a half years after it was first announced.

While announcing its Levelling Up White Paper yesterday, Michael Gove admitted that plans for ending Section 21 evictions and giving all tenants a strong right to redress were still not finalised.

The raft of reforms were first announced in November 2019 and again in the Queen’s Speech in May 2021.

In the Levelling Up White Paper, it announced it would be, “Publishing a White Paper in the spring setting out how the UK government will support those in the Private Rented Sector including ending so-called ‘no-fault’ Section 21 evictions and giving all tenants a strong right to redress.

“It will explore proposals for new minimum standards for rented homes, introducing a National Landlord Register and taking tough action against rogue landlords.”

Gove say he would only provide more details once his department’s review into the planned Decent Homes Standard review had concluded.

Rogue landlords

In the Commons yesterday, Gove explained: “Our white paper this Spring will cut the number of poor-quality rented homes by half, will also address the injustice of no-fault evictions and bear down on rogue landlords.”

He added that it would deliver a “tough focus” on decent standards in rented homes by setting a decent minimum standard that all rented properties must meet.

However, Shadow Communities and Local Government Secretary, Lisa Nandy (pictured), launched a vigorous attack on Gove’s levelling-up announcement, accusing the government of “fiddling the figures” and “cobbling together a shopping list of recycled policies”.

She added: “The system is completely broken and the government is out of ideas…these are recycled watered-down ambitions with some announcements that are so old – one is from 2008.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Renting reforms legislation ‘still a long way off’ admits government | LandlordZONE.

View Full Article: LATEST: Renting reforms legislation ‘still a long way off’ admits government

Bank of England increases Base Rate to 05%

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The Bank of England’s Monetary Policy Committee (MPC) has voted by a majority of 5-4 to increase Bank Base Rate by 0.25 percentage points, to 0.5%.

The members of the committee that voted against actually wanted to increase the rate by 0.5 to 0.75%

View Full Article: Bank of England increases Base Rate to 05%