My Leaseholder wants to sell his flat after 2 years of ownership?

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Two years ago I sold a 125 year Lease on the Garden Flat of my own house.

However, the Leaseholder now wants to sell it and I have a few questions:

1. As the Freeholder, will this cost me anything because it was very expensive having the original Lease drawn up?

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Patrick Collinson has done it again!

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Patrick Collinson has again misunderstood a report with big numbers in it, like he did in the summer: Patrick Collinson “Guardian of Housing Ignorance”

This time it was a report from Scottish Widows which claimed that tenants who retire in the next 15 years need to increase their pension contributions on average by over £6,300 a year until they retire so that they will be able to afford the increases in rent that the researchers assumed would occur during their retirement. 

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Will a ban on letting fees mean landlord ditch agents?

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Ban on Agent’s Fees:

There are two lines of argument here: landlords are already reeling from the government’s tax measures, stricter buy-to-let mortgage criteria, and increased regulation of the private rented sector (PRS). Will the added burden of letting fees – at least that element passed on from agents to landlords – be enough to persuade more landlords to manage their own tenancies?

On the one hand the additional complication of a more regulated PRS is persuading some landlords to rely on agents more than ever. On the other, if letting agents are going to pass on more of their costs to landlords, due not only their inability to pass on fees, but also the additional administration work they now need to do, some landlords might find they have no choice but to be self-managing.

According to one recent survey carried out by mortgage provider Paragon Bank PLC, almost a third of landlords may have to stop using letting agents.

Paragon’s recent report on Private Rented Sector Trends shows there is concern among the landlord community that any ban on agent’s fees to tenants (which the government has committed to impose) would result in an increase in agent’s costs being passed on to landlords.

According to Paragon’s research, around 73% of landlords regularly use letting agents to manage their properties; and 30% of landlords questioned say they would have second thoughts about continuing if their agent’s fees increase.

No date has yet been set for the ban on fees, but the government has recently re-iterated its commitment to such a ban, and it is widely expected next year.

John Heron, Paragon’s managing director of mortgages, says:

“In the midst of ongoing turbulence in the private rented sector, landlords have already had to navigate through challenging policy changes, and rethink their strategies accordingly.

“An increase in landlord costs as a result of a ban on tenant fees would be the latest in a succession of challenges and it is unsurprising to learn that a substantial number of landlords might consider altering their approach to letting out their properties in that circumstance.”

The Paragon survey was based on interviews with a panel of over 200 experienced landlords.

Key Points highlighted in the Survey:

• 30% of those landlords quested may be discouraged from using a letting agent if landlord fees increase
• More than eight out of ten landlords who let direct do not charge any tenant fees
• 68% of landlords believe up to two month’s rent is a reasonable cap for rental deposits
• The majority of landlords (46% – 16% ‘definitely’, 30% ‘probably’) who use an agent or third party said they would not be discouraged from doing so.
• 27% of landlords do not use an agent or third party to let any of their properties. Of those, more than eight out of ten (84%) do not charge any tenant fees, whilst just 16% do.
• The most common fees charged by landlords when letting a property without the involvement of an agent or third party are: credit check (60% of landlords), inventory (55%), referencing (54%) and tenancy agreement (42%), with 33% of landlords charging for other, unspecified fees.
• A reasonable cap on rental deposits – 68% of landlords said up to two month’s rent was reasonable. Of those, almost half (46%) said two months, with 22% indicating one month. 14% of landlords said three months was reasonable, whilst just 7% of landlords believe rental deposits should not be capped at all.

Government action to end letting agent fees

Scrutiny of Government plans to ban landlord and letting agents fees

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Will a ban on letting fees mean landlord ditch agents? | LandlordZONE.

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The LandlordZONE® Christmas Prize Draw

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Our annual prize draw gives our visitors the opportunity to win fabulous prizes by entering their e-mail address.

Could not be simpler, and this year everyone that enters stands a good chance of winning one of 5 – £50 Amazon gift cards.

These prizes have been sponsored by:

The Residential Landlords’ Association (RLA) – The RLA is the leading voice for landlords in England and Wales, representing over 30,000 landlords with a combined portfolio of more than quarter of a million properties. https://www.rla.org.uk

Elfin Kitchens – Suppliers of quick and easy to install pre-build kitchens for work, home and rentals. Ideal for multi-lets and workplaces. http://elfinkitchens.co.uk

Property Master – is a dynamic portal where you can match your funding requirements against every Buy-to-let mortgage on the market across actual lending criteria. Instantly find the best available deals through this powerful and unique comparison website.
https://www.property-master.com

Property Investor Media – The UK’s premier property expo is the “must attend” event for anyone serious about making money from property investment. As always the show is FREE to enter and it is the ideal place for networking, obtaining reliable and up to date property market information and, of course, property to buy. Next show dates: Show Dates – Friday 20th & Saturday 21st April 2018, Doors open at 10.00am http://www.propertyinvestor.co.uk

HomeRenter – The vision behind HomeRenter is to create an AirBnB-style marketplace for private rentals in the UK that delivers superior value to both landlords and tenants whilst putting right several of the imperfections of the current marketplace. https://homerenter.co.uk

Go to the LandlordZONE® Christmas Prize Draw 2017 – https://www.landlordzone.co.uk/prize-draw

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – The LandlordZONE® Christmas Prize Draw | LandlordZONE.

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Self-Assessment Tax Returns for landlords

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Current Taxation Rates:

Landlords don’t always think of themselves as self-employed or running a business, particularly if they have just one property let out. But HM Revenue and Customers think differently. Anyone making money from let property is legally required to complete a self-assessment tax return every year, or risk the possibility of a fine.

If you are employed and have never completed a self-assessment tax return it can be a bit daunting at first. Every year it’s something that you must do.

Tax rules change quite regularly so ideally using a tax accountant is best, to make sure you get it right. But for one or two buy-to-lets it might not be worth the expense, and you can do this yourself with a bit of application.

First off you need to record all the income and expenditure you have relating to the property over the tax year, usually 6^th April to 5^th of April of every year. Also, don’t forget to keep a record of all the capital expenditure you make on the property, including purchase costs, stamp duty and improvements – things can’t claim against income, which will be needed when you sell the property for claims against capital gains.

The self-assessment process is pretty much the same whether you’re a landlord, small business owner or a sole trader; the main difference being, you need to complete the property pages on your return when dealing with rental income. You should register* with HMRC by 31 October in the first year you start trading or letting and receiving income from this.

Once you’re registered you will receive your UTR (unique taxpayer reference) and you can complete and file a tax return, either online or on a paper tax form, though HMRC’s aim is to have all returns online eventually.

Tax deadlines:

Completing the Tax Return

You will need details of all items of income and expenditure from property as well as any other taxable income during the tax year. You will also need accurate and up-to-date information about expense items you are allowed to deduct from income on your tax return – see links below.

It’s very important to keep a record of all your income and expenses during the year, and for just one or two properties recording this on a simple spread sheet is usually sufficient. Keep all receipts and invoices in a lever arch file. Remember you must keep all tax records for at least 6 years.

When you pay the tax, if any is due, you will need your UTR number, which will have been assigned to you when you registered for self-assessment. HMRC will have this number on all correspondence it sends you.

Allowable expenses for landlords

There are a standard set of expenses allowed for landlords, but there are often changes in the budget which will have a bearing on this from year to year. Here are some of the main expenses you can usually claim:

• Certain property repair costs – not improvements
• Like-for-like renewals, for example furniture, carpets etc
• Landlord’s energy savings allowance
• Mortgage interest payments (on a reducing scale to 2020)
• Accountant’s fees
• Building & contents Insurance
• Running costs including utility bills
• Letting agent’s fees
• Light and heating costs
• Council Tax
• Service charges
• Ground rent
• Cleaning costs
• Advertising costs

Remember, rules about what you can and cannot claim for change for time to time, so if you are doing your own tax return make sure you have the latest information from HMRC – see links below.

Guide to UK Tax Rates – 2017/18 and 2018/19

This information for England and Wales is available as at 27 November 2017 following the latest budget announcement, but there can still be changes as the Finance Bill passes through Parliament.

*Register for Self-Assessment – here

Income Tax when you let property: work out your rental income – here

Self-Assessment: UK property (SA105) – here

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Self-Assessment Tax Returns for landlords | LandlordZONE.

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Rent-a-Room tax relief could be restricted for short lets

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Tax Relief & Holiday Lettings

The Rent-a-Room scheme is a tax relief designed to encourage homeowners to provide accommodation for lodgers, the theory being that this facilitates flexibility and mobility in the national workforce.

However, HMRC, though they have denied any intended changes, have evidence that the scheme may be being abused by homeowners using online websites such as Airbnb, Spareroom and GumTree to earn extra money from short-term lets, and then claiming the “rent-a-room” tax break.

A single line buried in last week’s budget documentation implies that the Treasury could be considering placing a restriction on these claims by calling for evidence as top how the allowance is used, as it says, to “ensure it is better targeted at longer-term lettings”.

The rent-a-room tax break now allows homeowners to earn up to £7,500 per year tax free when taking in up to 2 lodgers. The figure was increased from £4,250 to its present level in April last year after more than 20 years at the lower level, under successive governments.

Taking in a lodger – where the landlord must reside in the same furnished house and share facilities – does not create a tenancy but a licence to occupy. This avoids giving the occupants housing rights.

It is thought that thousands of homeowners are now taking advantage of the tax break every year by offering short-term lets, taking people in on “mini-breaks”, mainly visitors from abroad, or elsewhere in the UK. In some cases rooms are let for just one night.

While it has recently become government policy to encourage flexibility and maximise the use of the country’s resources, facilitated by the online “sharing economy”, it has had the effect of encouraging the growth of such short-term lets.

This has not only led to abuse of the rent-a-room scheme, but problems with breaches of lease agreements, where the property is long-leasehold, and also with landlords securing a buy-to-let mortgage on a property used solely for short term lets: buy-to-let mortgages are specifically for assured shorthold tenancies.

Restrictions already exist regarding tax breaks for properties that qualify as furnished holiday lettings (FHL), making it a requirement that any qualifying holiday let property must be available for holidaymakers for at least 210 days in a year.

To qualify as a FHL, several other conditions must be met:

• It must be within the UK (England, Wales, Scotland and Northern Ireland
• It must be furnished for normal living.
• The letting of the property must be run as a business, for profit.
• Other requirements concerning length of stay and availability are as set out in the Furnished Holiday Lettings Rules

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Rent-a-Room tax relief could be restricted for short lets | LandlordZONE.

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Landlords fund-raising for the homeless

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We are interested in setting up a charity or alternatively setting up a crowdfunding page, to help the homeless. The idea is that private landlords, who already play a massive and critical role in housing in the UK – housing around 5 million households

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Setting up the Utilities at Your Commercial Properties 

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Utilities Supplies:

Many commercial landlords let their tenants decide on their utility providers with their own meters, telephone lines, and networks. When you’re in control and recharge these products as a service charge, then it’s up to you to get the best deals. Jason Smith from BusinessElectricityPrices.org.uk explains the best practices for both situations, so you can get the lowest prices for your business and avoid common pitfalls.

1. For Landlords Recharging Utilities as Service Costs

In this scenario, it’s up to you to find the best deals in the market and recharge your clients accordingly. For gas, electricity, landlines and water, it’s prudent to use some form of comparison service. Either select one of the online companies or use the talents of a specialised broker.

Finding the lowest prices

Using a broker saves your time hunting down the best deals, as brokers know their markets inside out. They’ll also manage the administration process on your behalf so that your contracts are set up correctly and on time. Each year they’ll check that you’re on the best rates. All brokers receive commissions from the company they recommend, which is not directly charged to you. They should not favour one company over another as the commission rates are similar among all suppliers.

You could undertake the searching yourself, but you’ll never know if you’ve got the lowest price unless you have time on your side. Although there are five or six companies that supply landlines, there are more than 20 different energy and water companies from which you would have to get quotes. Prices also change each day, so a deal you got yesterday may not be available when you call back.

Recharging your tenants

You may believe that utility costs are an easy way to make additional profits for your tenanted properties, but be aware that many of your customers know what the average price should be recharged to them. You should also adhere to the RICS code of practice where applicable. The Institute of Chartered Accountants in England and Wales (ICAEW) has service charge accounting guidelines you can follow. In general, don’t hike the cost too much—or if you do, expect to receive complaints and be prepared to share your reasoning.

2. For Landlords of Tenants Who Have Their Own Meters

Although this at first appears to be easier for the landlord, it can have some disadvantages. On the one hand, it’s entirely up to your tenant what they do. You don’t need to get involved as they select their utility supplier and pay the bill. There’s no recharging required. However, issues come around when you have separate meters for a currently vacant property.

Dealing with a vacant metered property

Once a tenant has vacated the property and settled their contract, the meter(s) are still supplied by the incumbent energy provider. Immediately after the existing tenant moved, you’ll most likely be charged with “out of contract” rates.

These rates can skyrocket by 100% or more, especially on fixed daily charges. So even if everything is switched off, you’ll be paying up to £3 per day depending on the meter type. There aren’t any contracts for smaller businesses without a standing charge.

Therefore, it’s best to have a new contract billed to your own company during the periods where your property is unoccupied with a standard daily standing charge. Alternatively, ask the current supplier if you’re able to take over the contract until you find a new tenant. In both cases, you’ll save money. Your broker can also handle this change for you.

Arranging change of tenancy notifications

In the same vein as setting up an Assured Shorthold Tenancy, when a new tenant moves into your premises, they need to send a change of tenancy notification to the existing supplier. This letter should be sent as soon as possible to ensure the rates applied are competitive, as energy companies tend to invoke higher charges for companies not under contract. You can find change of tenancy templates on each supplier’s website.

By Jason Smith

Jason Smith is an energy expert who has helped businesses increase their energy efficiency for more 10 years. He manages the website Business Electricity Prices, which advises small and medium-sized businesses on reducing their utility bills.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Setting up the Utilities at Your Commercial Properties  | LandlordZONE.

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Freehold title splitting with Unilateral Notice from JV partner?

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Can anyone please help with problem regarding title splitting. I own a freehold property which is an HMO and a decent size plot of land to the rear. At my request, the lender released the land to the rear from the mortgage security so the land to the rear is technically unencumbered and the mortgage is only on the HMO however

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Tax implication on selling part of garden?

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I have one house where I’ve lived for 3 years and 5 months, I am about to move out and let it out. This house has a large garden and has access to main road, I would like to obtain an outline planning permission for this part of garden and then selling the plot off to a builder

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