Disappointment as six-month notice period introduced in Wales

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Landlords in Wales will need to give tenants six-months’ notice when repossessing homes under new rules announced by the Welsh Government today in response to the Covid-19 crisis. Landlords have reacted with anger and disappointment to the plans, which will leave some without rent for over the year and are being implemented with immediate effect. […]

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Scrapping Section 21 to be delayed until Covid is over, minister confirms

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The government has indicated that that it will not be bringing the much debated Renters’ Reform Act forward as draft legislation until the Covid crisis is over, which LandlordZONE has been informed means at earliest next year.

Given the six to nine month lead times for legislation to make it through parliament, even with cross-party support, this means it will a year until Section 21 notice evictions are abolished.

The Renters’ Reform Act as proposed is the tool that the government intends to use to do away with Section 21 of the Housing Act 1988 ‘no fault’ evictions, which many landlords use to regain possession of a property when they wish to sell it or move in themselves.

Chris Pincher told parliament yesterday in reply to an urgent question from shadow housing secretary Thangam Debbonaire about giving tenants greater rights, that the draft legislation will see the light of day ‘in due course, when we have [a] stable terrain on which to do so’.

“That will improve tenants’ rights. We will also ensure that there is provision for a lifetime deposit scheme in that Bill,” he said.
The act has, by any measure, been severely disrupted by the Covid crisis,” he said.

The Renters’ Reform Act announced in the Queen’s Speech on 19^th December just after the general election following a consultation that ran from July to October 2019 which sought views on abolishing Section 21.

Originally announced in April last year, the proposed legislation was described by Ministers as an attempt to ‘modernise’ the rented sector, and has been heralded by government as a ‘fairer deal for both landlords and tenants’.

But so far the government has yet to even publish its analysis of the feedback, a sure sign that Ministers at MHCLG have neither the time nor inclination at the moment to tackle this thorny issue.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Scrapping Section 21 to be delayed until Covid is over, minister confirms | LandlordZONE.

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Chancellor Rishi Sunak has ordered a review of capital gains tax (CGT)

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Ostensibly the review is to look into whether the current tax on gains from asset sales – Capital Gains Tax (CGT) – is “fit for purpose” and to see if the current rules “distort behaviour.”

Whether this results in changes or not, the fear is that as revenue, and lots of it, will need to be raised post the massive Covid borrowing, so this could be the precursor to a “tax grab” on the wealthy?

Landlords and home owners would be an obvious and an easy target given the transparency of property asset translations. Tweaking the current regime of allowances, exemptions and reliefs is a simple paper exercise for the government.

Home owners are currently and always have been exempt from capital gains tax on their principle residence. Second homes, holiday lets and buy-to-lets are all subject to CGT when they are sold. But recent rule changes mean that the CGT is now payable 30 days after a sale rather than as previously, payment was delayed until after the tax reporting period end on the 31^st of January.

It’s always a stated aim of governments to simplify tax rules and collections, even though it never seems to happen; so it would make perfect sense that the Chancellor asks the Office of Tax Simplification, an independent arm of the Treasury, to identify opportunities to simplify CGT.

Capital gains on assets ranging from shares to second homes and buy-to-lets are traditionally taxed at lower levels than income tax, and therefore the very wealthy usually try to arrange their affairs so that they pay CGT in preference to income tax.

Having a lower rate for CGT would seem fair given that to make a gain with shares, property or from building a business entails taking a risk, whether it’s a business risk or as a pure investment. Income from employment and cash savings attracts a higher tax rate as there’s no risk – though good luck to anyone who can find an income from savings at present.

On the 11^th of March the Chancellor announced an increase in the capital gains tax (CGT) allowance, but a significantly reduced entrepreneurs’ relief in his spring Budget. The CGT allowance was increased to £12,300, but the time to pay CGT on property sales was cut to 30 days from the date of sale, as from 6 April 2020.

The most significant change was the lifetime limit on entrepreneurs’ relief in CGT, which costs the Treasury over £2bn. It was reduced from £10m to £1m. However, corporation tax remained unchanged at 19%, though it seems the planned 1% annual reduction has been dropped.

CGT is payable on the gains above the CGT allowance, so a couple selling a buy-to-let owned jointly would pay CGT only on any gain above their combined allowance of £24,600.

The actual gain is calculated by: Selling Price minus the Buying Price and buying / selling Transaction Costs, and including any Capital Costs expended on the property during the course of ownership.

The actual amount of tax paid will be determined by an individual or couple’s other income.

Rates for Capital Gains Tax

From 6 April 2017 onwards the following Capital Gains Tax rates apply:

• 10% and 20% tax rates for individuals (not including residential property and carried interest)
• 18% and 28% tax rates for individuals for residential property and carried interest – carried interest is a share of any profits that the general partners of private equity and hedge funds receive as compensation regardless of whether they contribute any initial funds.
• 20% for trustees or for personal representatives of someone who has died (not including residential property)
• 28% for trustees or for personal representatives of someone who has died for disposals of residential property
• 10% for gains qualifying for Entrepreneurs’ Relief
• 28% for Capital Gains Tax on property where the Annual Tax on Enveloped Dwellings is paid, AEA is not applicable
• 20% for companies (non-resident Capital Gains Tax on the disposal of a UK residential property)

Capital Gains Tax – A Brief History

Capital Gains Tax was introduced for the first time by the Labour government in 1965. The then Chancellor set CGT at 30pc to prevent individuals avoiding paying income tax by switching their income into capital. The CGT allowance was £9,500.

Under the Labour government of 1970s inflation reached 27pc, so in 1982 the Conservative Chancellor Geoffrey Howe, introduced indexation relief, an allowance for the effects of inflation on asset prices.

In 1988 income tax for high-rate taxpayers was reduced from 60pc to 40pc. Basic rate taxpayers had their rates reduced from 30pc to 25pc. CGT at this time became a dual rate tax following the income tax rates, above a new allowance of £5,000

By 1997 the CGT allowance had reached £6,500 and in 1998 Gordon Brown replaced indexation with taper relief. The meant that the length of time an asset was held was taken into account, with a lower the rate of tax for longer ownership.

By 2002 the allowance had reached £7,700 and 2008 saw Alistair Darling’s first budget scrap the dual rate of CGT and introducing a new lower, single rate of 18pc, but with no taper relief. By 2009 the allowance £10,100.

2011 saw rates at 18% and 28% for individuals for lower and higher rate tax payers, and 10% for gains qualifying for Entrepreneurs’ Relief.

2016 saw 10% and 20% tax rates for individuals, 18% and 28% tax rates for individuals for residential property and carried interest, still 10% for gains qualifying for Entrepreneurs’ Relief, and 20% for companies (non-resident Capital Gains Tax on the disposal of a UK residential property).

Properties owned before 1982 and Capital Gains Tax

If you dispose of a property by sale or transfer acquired before 1 April 1982 and disposed of after 5 April 1988 any gain is ‘rebased’ to 31 March 1982. What that means is that CGT is charged only on any gain attributable to the period since that date. You will need to get a professional valuation for the property to determine its market value then – as at 31 March 1982.

Capital Gains Tax rates and allowances

Capital Gains Tax – background History – House of Common Library

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Chancellor Rishi Sunak has ordered a review of capital gains tax (CGT) | LandlordZONE.

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Ipswich duo fined £6,726 over shocking HMO failures

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A landlord and building manager who removed fire alarms from their HMO where too many tenants were living have each been fined more than £3,300.

Ahmet Ali, 36, of Valley Road, Ipswich, admitted nine offences including failing to ensure all fire alarms were maintained at the property in All Saints Road (pictured) in the town, and failing to keep all common areas in a good state of repair.

The former building manager, Dorel Nastase, was also charged with seven offences but failed to appear at Suffolk Magistrates Court.

The pair also faced charges for failing to inform Ipswich Council that Nastase was acting in a managerial role at the property.

The court heard that Ali had turned the house into an HMO in 2018 and licenced it the following year but, after struggling to make it pay, employed Nastase to help him find Romanian tenants.

But Ali then struggled to keep up with the maintenance on the property.

Following concerns that too many people were living there, once inside officials found tenancy agreements that suggested seven people lived in the six-bedroom property – one too many – and that several fire alarms had been removed along with general maintenance issues.

The building has since been refurbished and is now managed by the YMCA.

Ali was fined £3,388, including costs and surcharge while Nastase was found guilty in his absence and fined £3,338.

Read more about Ipswich landlords.

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I wasn’t worried until I tried to sell?

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I purchased a buy-to-let property at Auction in 1996 which I believed to be freehold and was registered as such when my ownership was recorded with UK Gov Land Registry. The legal work involved was carried out by a solicitor with whom I had a long-standing association at the time.

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EXCLUSIVE: Government gives ground to landlords over eviction proposals

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Landlords can heave a significant sign of relief today after the government resisted pressure from tenant groups to make the grounds for eviction under Section 21 and Section 8, Ground 8 discretionary rather than mandatory.

This may have opened the floodgates for thousands of possession claims to be rejected by the Courts once hearings restart on August 24th. The proposals adopted are similar to those recommended by the NRLA.

Such a change would have also led to significant extra costs and time delays for landlords and made evictions much harder for landlords.

Today, housing minister Chris Pincher made a statement on the latest changes to the possession hearing regulations laid before parliament on Friday, which – as we have reported – require new rules to be followed

Normalise proceedings

“We are moving through a transition phase and it is right that we normalise proceedings and procedures,” Pincher said.

“To that effect I have had conversations with the Master of the Rolls and with Sir Rob Knowles, who have been quite clear that they want to ensure that the courts act properly to hear landlords’ and tenants’ concerns.

“I want to be very clear that should a landlord not provide the requisite information to the courts about the effect of Covid on a tenant when a landlord is bringing forward an application then the courts will have powers to adjourn the case which will hit the landlord in the pocket.. and focus their minds.”

But the respite may only be temporary – the government has also today re-stated that it is committed to bringing forward both reforms designed to increase the security that tenants need and measures to strengthen the rights of landlords to regain their property when they need to do so. Legislation will be brought forward in due course.

Ben Beadle, Chief Executive of the NRLA says: “We welcome the balance that the Government has struck between protecting both tenants and landlords by focusing on hearing priority possession cases in the courts from 24th August.

“For tenants and neighbours whose lives are blighted by anti-social tenants, for victims of domestic violence in rented housing and for landlords who may not have had any rental income for months due to severe rent arrears built up before the pandemic, the news that landlords will be able to apply to regain possession of these properties again will be a relief.

“That said, the changes to the Court process will inevitably add delay to an already slow process. Trying to reach a resolution away from the Courts, where possible, is essential and guidance to help tenants and landlords agree rent repayment plans is available.

“Eviction is not, and should not be seen as the inevitable outcome of getting behind with rent payments.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: Government gives ground to landlords over eviction proposals | LandlordZONE.

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Landlords – Don’t complain!

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Landlords: don’t complain when you pay more tax than everyone else; you are, in fact, receiving a gift from Government.

There has been some controversy since the announcement of a Stamp Duty Land Tax (SDLT) ‘holiday’ a fortnight ago.

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Shelter challenged over ‘wrong’ assumption that landlords discriminate against DSS tenants

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A possession company boss has challenged Shelter for judging landlords following the recent no-DSS court ruling that prevents them from renting to housing benefit claimants.

Following the appearance of its chief executive Polly Neate on Radio 4’s Woman’s Hour earlier this week, Chris Daniel, director of possession company Possession Friend, says the homeless charity is wrong to suggest landlords are reluctant to rent due to stigma around claimants.

On the programme, Neate told listeners: “Landlords might think that people on housing benefit are much less likely to pay their rent – they think it’s going to damage their pockets, but it’s not. I don’t think the image of people on benefits, the stigma, helps – that’s why we feel passionate.”

However, Daniel says there are a number of reasons why many landlords have actively diverted away from considering tenants on benefits.

“The point the programme host made about direct payment to landlords being deliberately removed under Universal Credit plays a massively important role,” he says.

“If payments have been going direct to a landlord, and it’s discovered that the claimant was for a period not entitled to state benefit (perhaps working while not disclosing – something the landlord would be unaware of) Universal Credit will immediately demand repayment by the landlord.”

Daniel tells LandlordZONE: “Lots of rented properties are inherited by landlords who themselves are on the minimum wage or are key workers. Such people cannot afford to sustain a year’s worth of rent claimed back in the form of benefit or Universal Credit. Neither can they afford to wait for the best part of a year it takes to evict a rent-defaulting or otherwise bad tenant.”

Adds Daniel: “There are people scamming landlords – it would be an idea to create a rogue tenants’ database so the courts know who keeps being evicted.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Shelter challenged over ‘wrong’ assumption that landlords discriminate against DSS tenants | LandlordZONE.

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LATEST: Slick virtual reality smartphone game for property investors launches with a million players

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A virtual reality property investment game called Landlord Go has officially launched today in the UK following four years of development and is so addictive that a million people have already signed up to play during its pre-launch phase, it is claimed.

Available on both Android and Apple smartphones, the game is being launched via a slick marketing campaign, and enables property investors and landlords to have a go at building a virtual property portfolio of both real commercial and residential properties without having to risk their real-world cash.

The game can be played globally, but its UK representative tells LandlordZONE it will have local interest for players because many landmarks in their area from corner shops to apartment towers have already been mapped and therefore can be ‘bought and sold’.

The game has been developed by London-based Reality Games, and enables players to buy, sell, and collect rent on local famous buildings and landmarks.

Property empire

Players start small but with skill can quickly amass a real estate empire through investing, it is claimed, by engaging in bidding wars with other players, recreating the experience of competing in the high-stakes real estate market, all via their smartphone.

The game also enables players to stand in real places and then use their phone’s GPS position to see a ‘gaming version’ of the buildings around them including values and who owns them, as well as the personal wealth of other players nearby.

Landlord Go has used NASA data to divide the world up into 10 billion plots and its developer says that once it has enough players and property valuation data, it will eventually linked to the real world of newbuild development.

“The level of realism is what sets Landlord Go apart,” the promotional material for the game says. “For the Buildings in the game have the correct simulated height that correspond with the real world versions, with image recognition and location data available through the AI camera feed.”

Watch the YouTube trailer.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Slick virtual reality smartphone game for property investors launches with a million players | LandlordZONE.

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Dilemma – Rent to Rent/Company Lease contract basics?

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I am looking to possibly move to another Agent in regard to a Rent to Rent/Company Lease arrangement for one of my properties.

I’m not happy with the current company at all – dire call back response, never reply to emails etc among other things.

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