HMRC is targeting residential landlords with ‘nudge letters’

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HMRC is targeting residential landlords in its latest ‘nudge campaign’ that it suspects are not declaring their full rental income, warns tax advisers Kreston Reeves.

The campaign comes in advance of Jeremy Hunt’s first Autumn Statement and rumours of a further attack on residential landlords with higher rates of Capital Gains Tax (CGT) on property disposals and higher rates of National Insurance.

View Full Article: HMRC is targeting residential landlords with ‘nudge letters’

Average house price falls £4,159 in a month

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The average price of a property in the UK fell by 1.1% or £4,159 in October, data from Rightmove reveals.

And despite the weight of financial uncertainty, the fall is in line with the average 1.1% drop recorded in November during the pre-pandemic years of 2015-2019.

View Full Article: Average house price falls £4,159 in a month

Landlords slam London Mayor for excluding them from ‘rental summit’

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The NRLA has slammed London mayor Sadiq Khan for holding an emergency summit on the private rented sector without inviting any landlords.

Khan’s summit in the capital today will bring together private renters, charities, advocacy groups and politicians to address issues facing renters – but no landlord groups.

NRLA chief executive Ben Beadle (pictured) says it is disappointing in the extreme that the mayor feels he can solve the challenges faced in the capital’s rental market without any input from those who actually provide homes.

“The stark and simple reality is that whilst the demand for private rented housing in London continues to increase, the supply of such homes is falling,” says Beadle.

“This is a direct consequence of government policy aimed at shrinking the size of the sector, along with rhetoric from the mayor that suggests private landlords are simply a problem to be managed.”

Tinkering

He adds that if the mayor wants to address the cost pressures faced by households across London, he needs to focus on boosting the number of homes available.

“Anything else would merely be tinkering with the symptoms of the challenges in the rental market, without tackling the root cause of them.”

The mayor’s office reports that the average advertised London rent has hit £2,343 a month, which is more than double other parts of the country.

Khan insists: “Ministers must take this crisis seriously and act now. There is no time to waste so we have come together today to speak with one voice.

“Our demands to ministers are simple: implement your long-promised renters reform legislation and take action now to make rents more affordable for Londoners, using all powers at the government’s disposal.”

View Full Article: Landlords slam London Mayor for excluding them from ‘rental summit’

Legal: landlords cannot shift the blame for civil penalties on HMO landlords

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There is a licensing regime in England for houses in multiple occupation (HMOs) which comes under the Housing Act 2004. It requires that landlords of properties occupied by a number of tenants in two or more households, those who share facilities, to apply to the local authority for and to hold a licence to operate an HMO.

Holding such an HMO licence obliges landlords to comply with regulations pertaining to the condition of the property under section 234 of the Housing Act 2004. The regulations are prescribed under the “Management of Houses in Multiple Occupation (England) Regulations 2006” known as the “HMO regulations” and these relate to fire safety, gas and electrical safety, the decoration and cleanliness of the property, rubbish disposal etc.

Responsible person

The HMO regulations hold the responsible person individually or collectively as landlord, owner, manager or agent to account for the condition of the property to a higher degree than would be the case with single family lets.

Instead of going through with the complex and time consuming process of prosecuting a landlord for the offence of failing to comply with the regulations through the county courts, a local housing authority now has the power to impose a financial penalty on a landlord under section 249A of the Housing Act 2004, up to a maximum of £30,000 for each offence.

Dorval v Tendering district Council

In the case of Dorval v Tendering district Council Mrs Dorval and her husband were joint landlords and registered proprietors of an HMO for which Mrs Dorval applied for and obtained HMO licences for two adjacent properties and was permitted up to eight and six occupants respectively.

In 2018 managing agents were appointed to manage both properties but after officers from the local housing authority visited on a number of occasions, Mrs Dorval was sent schedules of work that needed to be done. There were also police visits following complaints about anti-social behaviour by the tenants. In August 2019 both the HMO houses were closed down following the service by the Council of Emergency Prohibition Orders under section 43 of the Housing Act 2004.

The Council then imposed financial penalties on Mrs Dorval amounting to £90,000 on the charge that she had committed five separate offences in respect of each property. Mrs Dorval then appealed the final financial penalty notices to the First-tear Property Tribunal (FTT).

The appeal

The appeal was listed for a hearing in November 2021 and again in January 2022, but following a number of requests by Mrs Dorval for the adjournment the Tribunal decided to go ahead with the hearing under its written representations procedure. This meant that a review with a view to a re-hearing was not possible and only a review of the FTT’s decision was possible.

Mrs Dorval was represented by solicitors earlier in the proceedings but later was unrepresented.

The financial penalties had been imposed on the basis that Mrs Dorval had failed to comply with the regulations and had committed offences at each property under the following paragraphs of the HMO regulations:

– Regulation 4(2), which requires the manager of the HMO to ensure that firefighting equipment and alarms are in good working order;

– Regulation 6(1) and (3) which relate to the testing of gas appliances and electrical installations;

– Regulation 7 which imposes a number of requirements about the cleanliness and decoration of the property, and the condition of handrails, banisters, stair coverings, ventilation and of any garden and boundary fences;

– Regulation 8 which requires the accommodation and any furniture supplied with it to be and to be kept clean and safe; and

– Regulation 9 which requires adequate arrangements for disposing of rubbish.

Witness statements were made at the proceedings by four local authority officers and two police officers, but the FTT in its decision acknowledged the witnesses were called and cross-examined, but said nothing about the content of their witness statements.

A bundle of 158 photographs indicated that the two properties were “in miserable condition”, but there was no labelling to indicate which photographs referred to which offences.

Mrs Dorval also made a witness statement and gave evidence to the FTT which was referred to briefly that her argument was that the condition of the property was the responsibility of the managing agents and that considerable damage was done by the tenants.

A witness statement by a director of the managing agents was in the bundle but there is no reference to this it in the FTT decision. There was an explanation by the FTT that there was a conflict between the agents and Mrs Dorval as to who was responsible for arranging repairs. It found that Mrs Dorval was primarily culpable under the HMO regulations. Her defence of reasonable excuse was turned down.

The decision largely upheld

The FTT said it was satisfied beyond reasonable doubt that Mrs Dorval had committed all the offences bar one or two and set out its findings about each instance of breach.

Mrs Dorval stated during tribunal hearings that some work had been done to the properties, and that some of the damage was caused by the tenants – saying she was a victim to the occupiers, a view recognised by the tribunal panel in its ruling. Dorval had no previous convictions.

That tribunal slightly reduced the fines, and following a subsequent appeal over the level of penalty another tribunal panel reduced the penalties again to £23,000. The Council had originally set fines of £90,000 but the tribunal panel ruled the issues were a rapid deterioration over a short period of time and therefore there was less culpability.

Judge Ruth Wayte concluded that the penalties “will in large measure remove any financial benefit to the applicant as manager over the period of the council’s involvement with the properties”.

Paul Honeywood, TDC Cabinet Member for Housing, said the level of fine showed landlords they must maintain their properties.

“We are not afraid to take action against rogue landlords who think it is acceptable for our residents to live in sub-standard housing – whether that’s issuing our own fines, or following various appeals through the tribunals.

“The vast majority of landlords in Tendring properly maintain their properties and want the same thing as us; decent quality homes for tenants, and in turn a rental income for them. We will always work with and support landlords who share this view.

“Unfortunately this case highlights the issues which can happen, rarely to this level, and we will not hesitate to take strong action to clamp down on landlords who flout the rules.”

The case has important implications as it confirms that tribunals must take into account a council’s policy when imposing civil penalties for these offences.

View Full Article: Legal: landlords cannot shift the blame for civil penalties on HMO landlords

Landlord reveals how she got going in property despite being told she was ‘mad’

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An entrepreneurial landlord has just bought her fourth buy-to-let property and started her first estate agency by scrimping and saving since she was a teenager.

Rachel Ollington (main pic), 41, purchased her first house aged 19, her second at 23 and a third at 24 after leaving school at 16, first by saving cash from her £100-a-week estate agency job.

She and husband Mike who are based in Wickford, Essex, now own properties worth £990,000 after paying £592,000 for them – and have their sights set on buying even more buy-to-lets.

Ollington, who trained as a mortgage advisor in 2020, saved hard as a teenager then continued to tighten her belt with a young family. She later went on to work for several estate agencies including Sarah Beeny’s firm Tepillo.

The couple first put down a £37,000 deposit on a £91,000 two-bed bungalow in Wickford, renovated it, then sold it for £187,000 – raking in nearly £100,000 in profit.

Other purchases were funded by doing DIY and repairs themselves, upcycling and making second-hand purchases. They now live in a four-bedroom house worth £475,000 which they bought for £183,000.

Help people

“I have a rental property portfolio and co-own an estate agency business, which people have said we were mad to start in the middle of the recession, but I really want to help people to do the same as me,” she told Mirror Online.

Ollington’s property firm boasts 11,000 followers on Instagram and aims to get others onto the property ladder. She advises investors to keep in contact with their mortgage broker to keep on top of available finance deals.

She adds: “Find a property you can do work to, or one that’s outside of your key area such as not being near a station as the house prices will be cheaper.”

Pic credit: Rachel Ollington/eXp

View Full Article: Landlord reveals how she got going in property despite being told she was ‘mad’

Time to talk? Professional financial advice is more important than ever

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Professional financial advice is more important than ever to help landlords cope with portfolio pressures, advise the experts at Belvoir.

It will not have escaped your notice that rising inflation and interest rates are constantly hitting the headlines, sending ripples of anxiety throughout the nation. This being the case, is it time for landlords to review their Buy to Let (BTL) mortgages and see what can be done to help reduce costs? Michelle Brook is Belvoir’s Financial Services Director and was the founder and Managing Director of Brook Financial Services, which trades as the Mortgage Advice Bureau (MAB) and was bought out by the Belvoir Group in 2017. This month Michelle shares her views on rising interest rates and how this might impact on landlord clients.

“In my view there has never been a more crucial time for landlords to talk to an MAB advisor,” said Michelle. “With interest rates on the rise we are already seeing deals that were available at the beginning of the year and the latter end of last year have now increased and will cost substantially more. It is predicted that interest rates could continue to rise, so clients are advised to talk to us now to see what we can do to help.

“At MAB we are able to shop around and source the right deals to suit a client’s individual circumstances. A mortgage amounts to a big proportion of a client’s outgoings, but of course with other utility bills also on the increase, anything we can do to help people minimise their outgoings will be a real help. There will be clients who are coming to the end of two-to-five-year deals who will be shocked at what deals are looking like now, and by talking to us we can get them the best deal and help them to manage their finances.

“Landlords with BTL mortgages will currently be taking a hit on rate rises, and it will be especially useful for them to talk to us so that we can review their situation. Many landlords are self-employed, and we know how to position self-employed buyers to lenders, putting them in a much stronger position than they would be by going directly to a lender. Lenders will have their own criteria, which the applicant will either fit or not. However, the client will not know how to challenge that whereas we can correctly package the application to lenders.

“Many Belvoir offices specialise in sales as well as lettings and will be organising landlord events to raise awareness of what the government is trying to do in terms of the rental market and how this can impact their business. Look out for news of these events in your local area or call into your local Belvoir office to ask about talking to an MAB broker.

“It is worth noting that lenders are currently looking much more closely at each application from an affordability perspective are taking longer to turn around applications. By talking to us we can help to educate people on what is really going on and ensure they don’t panic. We can also reassure them that whilst rates are rising, they are still relatively low, compared to when they were at a 15-16% high. Fears over the cost of living and other factors going on in the world can deter landlords from making decisions about increasing the size of their portfolio. After speaking to us, and understanding the situation better, they are not as likely to be put off before they even start the process and may well be surprised to discover what they can afford.

“In conclusion, although rates are going up and are higher than they were at the beginning of the year, it is not all doom and gloom. The Government is looking at support packages to help with the cost-of-living crisis, and when these are announced we can talk these through with people and help them to see a way forward. There has never been a better time to talk to MAB.”

Important information

Your home may be repossessed if you do not keep up repayments on your mortgage.

There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

View Full Article: Time to talk? Professional financial advice is more important than ever

FAO Shelter – This is not a love note from The Landlord Crusader

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It’s a good job I was sitting down when I read a striking story on Property118 this week because it would normally have knocked me off my feet otherwise.

Was it, I hear you ask, the Government announcing that their Rent Reform white paper is nonsense and will be ditched?

View Full Article: FAO Shelter – This is not a love note from The Landlord Crusader

Transfer of Ownership of tenanted property – the practicalities?

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Hello, I have recently sold a tenanted property and the completion date is a week away.

Does anyone have any experience of handover of details/rent accounts to the new owner, especially in regard to UC recipients?

All tenants have UC paid directly to me

View Full Article: Transfer of Ownership of tenanted property – the practicalities?

Leicester to widen HMO planning restrictions covering ‘thousands’ of houses

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Leicester city council councillors are to vote next week on plans to significantly widen local planning laws to clamp down on the spread of HMOs.

The measures are to be brought in following a public consultation that finished in January this year.

Leicester has had an Article 4 Direction in place for nearly ten years in several areas of the city, but following the eight-week consultation this is to be expanded to cover ‘thousands’ more houses.

The existing Article 4 Direction covers parts of the West End, streets near to De Montfort University’s campus and Leicester Royal Infirmary, numerous streets in the area between New Walk and HMP Leicester, as well as most of Clarendon Park and a section south of Lancaster Road.

The West End zone will now be extended to stretch from Rowley Fields, to Westcotes, Newfoundpool and parts of the Waterside area, while the Clarendon Park area would be extended to incorporate much of Knighton Fields, Knighton, Stoneygate and part of Aylestone.

A third new area will include much of Spinney Hills and Highfields.

HMO spread

Part of the justification of the Article 4 Direction is that although only just under seven percent of its housing stock is HMO properties, in some parts of the areas covered by the Article 4 Direction, HMOs account for between 25 and 38 percent of its stock.

The plans, along with an enlarged selective licensing scheme due to be introduced in the city, has drawn criticism from local property figures.

As LandlordZONE has reported previously, Irving Hill of local student lets firm Stulets, said: “If the council stops more houses being converted into HMOs by using the Article 4 directive it will have a direct impact on students, restricting choice and driving up the price so that poorer ones are priced out and won’t have anywhere to live.”

Read the consultation detail.

View Full Article: Leicester to widen HMO planning restrictions covering ‘thousands’ of houses

Tenant fraudster who tried sell landlord’s house jailed

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A tenant who tried to sell the house he rented without his landlord’s knowledge has been jailed.

Andrew Smith, 41, was only caught out in his ‘truly brazen crime’ when a prospective buyer conducted a drain survey at the property.

View Full Article: Tenant fraudster who tried sell landlord’s house jailed