REPORT: Thinktank says landlords should pay MORE tax to balance inequality

admin    Uncategorized     agents

Landlords should pay more tax to balance inequalities within the tax system, according to the Resolution Foundation.

The think-tank’s new report points out that while the top tax rate for employees stands at 53.4% including employer NICs, only 28% is paid on property gains.

It says property capital gains (excluding main homes) and rental income should be taxed at significantly higher rates; marginal CGT rates on assets other than shares should be 40%, 49% and 53% depending on income.

Increasing tax rates on rental income and self-employment would then enable the rate of employer NICs to be cut by 1%.

The Resolution Foundation explains how Britain needs to move away from its “simplistic and pernicious cycle of promising tax cuts while delivering tax rises, and towards reforming and improving our tax system so that it supports, rather than hinders, economic growth”.

New class of NI

Its report highlights how rental income is taxed at regular Income Tax rates but attracts no National Insurance. Instead, landlords should pay a new class of NI with a basic rate of 20% and a rate above £50,270 of 8%.

It explains: “Raising the overall basic marginal tax rate on rental income from 20% to 40% would clearly be a significant change for lower-income landlords and would no doubt need to be phased in, for example by 2% a year.

“But there is fundamentally no good reason why landlords should not pay NI equivalent to that paid by their working tenants, particularly given a CGT cut to take paper gains out of taxation.”

The 2025 stamp duty rise should also be cancelled, along with halving stamp duty for main homes and non-residential properties.

Read the tax proposals in full.

View Full Article: REPORT: Thinktank says landlords should pay MORE tax to balance inequality

We sell landlord property portfolios in less than 21 days for higher than market value

admin    Uncategorized     agents

This week the NRLA reported that one in three landlords are going to trim down their portfolios. A whopping 33% of landlords are currently selling throughout the UK. Of that 33%, most landlords agreed that they would be willing to take 80% of the value just to get rid of them because mortgage payments are out of control.

View Full Article: We sell landlord property portfolios in less than 21 days for higher than market value

BREAKING: Lisa Nandy confirms Labour has U-turned on rent controls

admin    Uncategorized     agents

Despite previously saying it would consider rent controls, Labour’s shadow housing minister Lisa Nandy has now confirmed that the party now opposes them, it has been reported.

Speaking at the Chartered Institute of Housing’s conference today, Nandy told delegates that the policy would be a ‘short-term fixing plaster’ to solve the housing crisis.

Her comments put her at odds with Labour’s London Mayor Sadiq Khan who has repeatedly said rent controls are the answer to the capital’s high rents.

There is also consternation within that such a key policy has been jettisoned by Labour, with the green party in Scotland and England accusing Nandy of ‘flip flopping’.

Crisis deepends

Nandy said: “As the mortgage crisis deepens – for homeowners and renters alike – it is perhaps inevitable that the debate has turned again to short term fixes.

“And when housebuilding is falling off a cliff and buy-to-let landlords are leaving the market, rent controls that cut rents for some, will almost certainly leave others homeless.”

Ben Beadle, Chief Executive of the National Residential Landlords Association, welcomed Labour’s change of heart, adding that: “We agree with Labour that rent controls would do nothing to address the rental supply crisis that tenants across the country now face.

“What renters need is a proper plan to boost the supply of homes for private rent alongside all other tenures.

“Housing benefit rates should also be unfrozen without delay to support vulnerable tenants who are struggling to access the rental market.” 

Rent controls also attracted lukewarm comments in the Welsh parliament this week when First Minister Mark Drakeford said they were a ‘blunt instrument’ – although his counterparts in Scotland would disagree, where rent controls were recently extended until next year.

View Full Article: BREAKING: Lisa Nandy confirms Labour has U-turned on rent controls

Tenant’s £120,000 claim threatens entire deposits protection system

admin    Uncategorized     agents

A tenant who failed to convince a judge that his landlord did not give him statutory tenancy deposit information is taking his case to the High Court.

Merryck Lowe’s application – relating to a claim for £120,888 against charitable landlord, the Governors of Sutton’s Hospital in The Charterhouse – is pending – and raises issues about tenancy deposit protection schemes.

During the previous case last October, Lowe claimed to have had a sequence of ten tenancies over the course of 12 years, in respect of each of which his £4,029 deposit was taken and held.

He said he had never received the statutorily prescribed information relating to deposit protection; however, it was thrown out by a county court judge.

Unsuccessful

In 2021, Lowe had also tried unsuccessfully to claim that Charterhouse operated an unlicensed HMO and had harassed him.

The landlord argued that the deposit paid was only £3,300, there were fewer than ten assured shorthold tenancies, that the deposit was protected and there was “no material want of compliance in relation to the provision of the statutorily prescribed information concerning the protection of the deposit”.

The judge agreed and said the landlord’s professional agents had sought to comply with the law and that if they had failed to do this, “it was not in the absence of a genuine attempt”. Any issues only related to the final tenancy agreement.

After the previous case, the landlord failed in its attempt to win costs from Lowe and his legal firm when he tried to claim a rent repayment order.

It said he had acted unreasonably in making an application that it operated an unlicensed HMO and had also harassed him because it was “hopeless”. A tribunal had previously dismissed Lowe’s original HMO claims.

View Full Article: Tenant’s £120,000 claim threatens entire deposits protection system

Tenant’s £120,000 claim to throw deposits protection system into confusion

admin    Uncategorized     agents

A tenant who failed to convince a judge that his landlord did not give him statutory tenancy deposit information is taking his case to the High Court.

Merryck Lowe’s application – relating to a claim for £120,888 against charitable landlord, the Governors of Sutton’s Hospital in The Charterhouse – is pending – and raises issues about tenancy deposit protection schemes.

During the previous case last October, Lowe claimed to have had a sequence of ten tenancies over the course of 12 years, in respect of each of which his £4,029 deposit was taken and held.

He said he had never received the statutorily prescribed information relating to deposit protection; however, it was thrown out by a county court judge.

Unsuccessful

In 2021, Lowe had also tried unsuccessfully to claim that Charterhouse operated an unlicensed HMO and had harassed him.

The landlord argued that the deposit paid was only £3,300, there were fewer than ten assured shorthold tenancies, that the deposit was protected and there was “no material want of compliance in relation to the provision of the statutorily prescribed information concerning the protection of the deposit”.

The judge agreed and said the landlord’s professional agents had sought to comply with the law and that if they had failed to do this, “it was not in the absence of a genuine attempt”. Any issues only related to the final tenancy agreement.

After the previous case, the landlord failed in its attempt to win costs from Lowe and his legal firm when he tried to claim a rent repayment order.

It said he had acted unreasonably in making an application that it operated an unlicensed HMO and had also harassed him because it was “hopeless”. A tribunal had previously dismissed Lowe’s original HMO claims.

View Full Article: Tenant’s £120,000 claim to throw deposits protection system into confusion

EXPERT: Landlords buying via personal mortgages facing more ‘stress testing’

admin    Uncategorized     agents

Landlords buying properties via personal buy-to-let mortgages are facing greater ‘stress testing’ of their affordability as economic jitters unsettle lenders, it has been revealed.

Financial expert Louisa Sedgwick (main picture) from broker Paragaon says that, while landlords applying for mortgages through limited companies are often ‘stressed’ at 125%, those applying as individuals must meet a higher 145% figure.

A stress test normally involves the lender assessing a landlord’s rental income in relation to the mortgage payment, and taking into account various variables such as likely changes in rent and interest rates.

Sedgwick says this, along with the ability of limited company landlords to offset mortgage interest against tax, means those buying properties through company structures is on the rise, with a majority of brokers expecting this to continue over the next 12 months.

Best option

She adds: “While limited company structures may not be the best option for every landlord and we’d always recommend seeking professional, independent advice, these advantages are becoming even more evident in the current market where the unsettled economy has made it necessary for lenders to tighten up stress testing.

“This is why I think the brokers we spoke to have got it spot on and we’ll continue to see a shift towards more limited company lending.”

Further Paragon research found that a profitable full-time income is made by 43% of landlords whose portfolios are owned within a limited company structure, compared to 26% amongst investors who hold properties in their personal names.

And as LandlordZONE reported recently, those seeking to remortgage are also facing stress testing problems.

View Full Article: EXPERT: Landlords buying via personal mortgages facing more ‘stress testing’

BTL mortgage brokers predict strong demand for limited company lending

admin    Uncategorized     agents

Buy to let mortgage brokers are predicting a big rise in limited company lending for BTL landlords in the coming year, a survey reveals.

According to Paragon Bank, 49% of brokers expect to handle a larger volume of buy-to-let mortgages for portfolio landlords who operate through limited companies.

View Full Article: BTL mortgage brokers predict strong demand for limited company lending

WARNING: Landlords who evict illegally to face DOUBLE whammy under reforms

admin    Uncategorized     agents

Illegal evictions and harassment are set to become more expensive for landlords who get caught, as councils will be able to fine them up to £30,000 as an alternative to prosecution under the Renters Reform Bill.

Lawyer Sam Kharabanda Groom (main picture) at Cornerstone Barristers believes this should give local housing authorities a more efficient means of enforcement.

“In the context of other parts of the Bill, seeking to abolish assured shorthold tenancies and fixed term assured tenancies, the implication is that the tightening of opportunities for landlords to obtain possession could cause a rise in unlawful evictions and harassment by landlords seeking a shortcut,” adds Kharabanda Groom.

“It appears that these penalties could be imposed in addition to any rent repayment order secured by a tenant in respect of unlawful eviction, meaning that a landlord who has committed an offence could be on the hook for two fines, one punitive and one compensatory, as long as criminal proceedings have not been pursued.”

Councils must be satisfied beyond reasonable doubt that an offence has been committed. However, no penalty can be imposed if someone has already been convicted of the same conduct, if criminal proceedings are still ongoing or if the person has been found not guilty of an offence in respect of the same conduct.

Civil courts

Tenants can currently pursue a claim for damages against rogue landlords through the civil courts at the same time as a criminal prosecution in a magistrates court.

Illegal evictions and harassment are increasing, according to Safer Renting. Figures compiled by the charity from sources including Citizens Advice, Shelter, and local authorities show there were more than 8,000 instances of illegal eviction or harassment in 2022, an increase on almost 7,800 cases in 2021 and 6,900 cases in 2020.

View Full Article: WARNING: Landlords who evict illegally to face DOUBLE whammy under reforms

New evictions law will be toothless without funding, warn councils

admin    Uncategorized     agents

Councils could struggle to enforce new eviction laws under the Renters Reform Bill, according to the Local Government Association.

It has warned that authorities will need more staff and funding because every council in England already has a shortage of environmental health officers and tenancy relations officers, who investigate potential offences related to private rented housing.

Housing spokesman Darren Rodwell (pictured) told the BBC: “New regulation is important, and we welcome it, but we need to make sure we have the right financial package to be able to enforce and deliver it.”

Rodwell, the Labour leader of Barking and Dagenham Council, added there were “still some unknowns” about how councils would fund enforcement “with the limited resources we have currently”.

Promises

The government has promised to fully fund any additional costs for councils after Section 21 is abolished, while councils can keep any revenue from civil penalties, with this ring-fenced for further enforcement activity. However, Rodwell said fines did not always cover the cost of investigating breaches.

The Chartered Institute of Environmental Health agreed that more funding was needed to ensure the new legislation was effective. Henry Dawson, a member of the organisation’s housing advisory panel, pointed to a “desperate shortage” of environmental health officers and tenancy relations officers.

Raft of responsibilities

“If we’re about to bring in a whole raft of new responsibilities for local authorities, we need to bring in more staffing to support that and also a sustainable model for funding of new staff,” Dawson added.

A Department for Housing, Levelling Up and Communities spokesman said: “We will continue to support councils financially so they have the right resources to put tenants first, that includes fully funding any additional costs that may fall on councils as a result of our proposed reforms.”

View Full Article: New evictions law will be toothless without funding, warn councils

Leash-hold issues? Unusual landlords’ association launches

admin    Uncategorized     agents

Landlords who rent properties to vets are being encouraged to join a new group so they can discuss problems, exchange information and learn about what it means to be a professional landlord.

The Veterinary Landlords’ Association (VLA) which has yet to establish a website, already has 211 members who rent more than 400 properties to firms including IVC Evidensia, CVS, Vet Medics and VetPartners, and smaller independents.

VLA chairman Richard Rowe tells the Vet Times he’s been astonished by how rapidly the group has grown.

“Most of our members are former practice owners and may not fully understand commercial leases or that being a landlord is a big job in itself,” he says.

Unusual position

“Veterinary landlords are in a relatively unusual position, being small businesses leasing premises to multi-billion-pound companies. We hope to redress that imbalance to mutual benefit.”

Vice-chairman Richard Stephenson adds: “We realise the importance of developing good communication and positive relationships with our tenants. We have already had the property director of one of the big corporates – IVC – come to a VLA meeting to explain how he intends to improve their systems to the benefit of both parties.”

The group will hold online meetings every two months featuring speakers ranging from specialists in property law, to valuations, building renovations, dilapidations and rent reviews.

It hopes to offer members a platform where they can better understand lease terms, building valuations, insurance, and maintenance. It will also collect data on rental values, compliance of tenants with lease terms and negotiation outcomes, as well as supporting members during negotiations to renew leases or those selling practices.

View Full Article: Leash-hold issues? Unusual landlords’ association launches