NEW: More students failing referencing as cost-of-living crisis hits sector

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The number of students who passed referencing dropped from 50% to 40% this autumn and is likely to fall even further, due partly to the growing cost-of-living crisis, according to a leading rent guarantee firm.

As demand for university places and a lack of suitable homes puts the student accommodation sector under intense pressure, it reports that the tsunami of students meant many needed last-minute support to find somewhere to live.

“Given the current economic pressures, a higher number of applicants are failing referencing and require a suitable guarantor to progress their rental arrangements,” says Graham Hayward, chief operating officer of Housing Hand.

He adds that the number of UK students applying for rental guarantors has almost matched the number applying from overseas. However, of those international students, a higher proportion was from outside Europe as the impact of Brexit makes itself felt.

Accommodation providers have stepped up to help students find places, reports Housing Hand, which has seen a 25% rise in custom arrangements across purpose-built student accommodation, build-to-rent homes and HMOs.

Lack of supply

“Many universities are seeking ways to support their students, particularly where a lack of supply in the local accommodation market may exclude many if they were required to pay full accommodation costs up front,” says James Maguire (pictured), its head of sales and business development.

“Additionally, universities are now seeking the inclusion of their own halls of residence in bespoke rental guarantor arrangements with Housing Hand to help level the playing field for those who would otherwise struggle to find an affordable home.”

View Full Article: NEW: More students failing referencing as cost-of-living crisis hits sector

House prices continue to fall as market cools

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The average house price in the UK fell by -0.4% in October – the third price drop in four months, Halifax data reveals.

Prices fell by -0.1% in September and the annual rate of growth has now fallen to +8.3%

View Full Article: House prices continue to fall as market cools

Are you ready for the switch to digital tax submissions?

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The Making Tax Digital initiative (MTD) is a HMRC scheme that aims to modernise income tax accounting and reporting, making the process fully digital. The idea is to improve HMRC’s efficiency and reduce costs to the taxpayer by processing business, property and individual tax affairs on-line.

Under Making Tax Digital Income Tax Self Assessment (MTD-ITSA) landlord taxpayers will be obliged to submit quarterly up-dates instead of just one annual tax return, traditionally due by 31st January following the end of the previous tax year ending 5 April.

In addition to the quarterly returns there’s also required an “end-of-period statement” (EPOS) submitted to HMRC as before by 31 January following the end of the financial year. This will confirm that the data entered in the quarters was accurate, adjusted if necessary.

Other issues such as expenses that landlords can claim and the restriction of mortgage interest, as well as any other taxable income will be taken into account before submitting a “finalisation statement”, a declaration to confirm and take account of any final “updates” needed to calculate an accurate final tax bill.

Extended timescale

In recognition of the challenges faced by many UK businesses, landlords and individuals as the country emerges from the pandemic, the introduction of MTD ITSA has been extended by one year, from it’s planned start in April 2023, to April 2024.

The next phase follows the introduction in April 2019 of MTD for those VAT-registered businesses with taxable turnover above the VAT threshold and also the introduction of MTD for VAT-registered businesses with turnover below the VAT threshold from April 2022.

HMRC says that there is a growing body of evidence from research and insights from taxpayers already operating MTD VAT demonstrating that MTD is securing a range of benefits for those that use it in practice. The users are reporting that the discipline of preparing and submitting returns makes life easier in the long-run, and that MTD has increased their confidence in managing tax their affairs and the use of technology.

Get ready now!

From 6th April 2024 Making Tax Digital will be introduced for all landlords, the self-employed and partnerships whose gross income from those sources combined exceeds £10,000 a year. There are two main requirements for MTD, (1) all transaction records must be kept digitally and (2) an HMRC approved software product must be used to do this so that the quarterly returns can be submitted to HMRC.

There will undoubtedly be greater demands place on the taxpayer under the new regime, but these accounting demands may not be too onerous if regular recordings are made. The spin-offs from this will be that income and expenditures are recorded as they happen obviating the annual scramble to bring to mind events that occurred 12 months ago, and once digitised the software – depending on the product used, whether a general property management suite with tax capabilities or a purposed MTD package -will allow detailed analysis of the profitability of your operations.

The extension gives plenty of time to prepare but by getting your affairs in order now, the transition from your paper based or already digital accounting system will be so much easier. You need to search out the best accounting software to meet your own needs from the extensive list of HMRC approved products, some of which are free while others are incorporated into mainline accounting and property management packages.

Many accounting packages are now “cloud based”. Sage, Quickbooks and Xero as well as some others work in this way. It means that all your accounting data once entered can be accessed from anywhere on most devices. The then means that your accountant will instantly be in a position to work on your accounts. Here is a complete list of HMRC approved MTD ITSA software

Who will MTD apply to?

The new MTD Self Assessment Income Tax requirements apply to all landlords with a combined property and/or business income of £10,000 or more per year. Gone will be the current process of completing and annual Self Assessment tax return from 6 April 2024. All those landlords and business owners with a combined business and/or property income between £1,000 and £10,000 per year will for now continue file annual tax returns through current Self Assessment process.

The new MTD rules will require landlords to:

– keep accounting records in digital form ready for submission to HMRC using approved software

– record all property and/or business income and expenses, capital and repairs / maintenance costs.

– submit quarterly returns for your property and/or business income and expenses to HMRC

– submit an “end of period statement” (EOPS) and a “final declaration” to HMRC

Here are some key dates to bear in mind:

The are deadlines for submitting quarterly returns after the start date of 6th April each year from April 2024:

– 5th August

– 5th November

– 5th February

– 5th May

After the final quarterly submission and at the end of the tax year the landlord will be required to submit:

– the end of period statement (EOPS) for each source of property or business income

– a final declaration which in effect is the replacement for the traditional annual Self Assessment tax return.

When submitting these final statements (due 31 January each year) for each source of income it gives you the opportunity to make adjustments noting details of any relevant other income sources and tax reliefs you may have received during the tax year.

As landlords you might think you’ve enough to worry about right now with a cost of living crisis, mortgage rate hikes, new regulations due out soon and looming EPC rating uplifts, but don’t leave planning for MTD to the last minute. It’s a great idea to start to digitalise your accounts now using one of the approved packages to that you have a year to get familiar with it, for when the time comes to submit your quarterly returns.

Useful sources:

Extension of Making Tax Digital for Income Tax Self-Assessment to Businesses and Landlords

Updated 2 February 2022

Sign up as an individual for Making Tax Digital for Income Tax

Income Tax (Making Tax Digital) end-to-end service guide

View Full Article: Are you ready for the switch to digital tax submissions?

REFORMS: ‘Rethink your plans on Section 21 evictions’ landlord tells MPs

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Successful landlord and property developer Kathy Miller has urged the government to rethink its plans to abolish Section 21 or face a big rise in court cases and spiralling bills for unpaid rent and property damage.

A Wiltshire landlord for more than 20 years, Miller (pictured) has submitted evidence of her personal experience renting out family homes – some of them to tenants with pets or on Universal Credit – along with 233 other individuals and organisations as part of the LUHC committee’s inquiry into reforming the PRS.

She believes the government’s White Paper proposals won’t result in a fairer private rented sector but instead will decimate it by removing the means to evict bad tenants.

Trash my house

“During Covid I had a tenant completely trash my house which cost £30,000 to put right, along with rent arrears of £7,500,” Miller tells the committee. “I couldn’t evict for 10 months despite being down for emergency eviction by the courts. I had to stand by helpless as my house was destroyed.”

Section 21 is mainly used for problem tenants – without it, there will be a massive increase in Section 8 evictions, she says. “The courts need to record why tenants are being evicted and make the statistics available.”

Proposals to give tenants the right to have a pet will also make evicting tenants with destructive animals even harder, adds Miller. “A pet policy can be cancelled in 14 days and in many cases the insurance won’t pay out. It leaves landlords with a garden full of waste, doors damaged by cats using them as scratching posts, fleas hatching six months later, and urine-soaked carpets. How do you evict these tenants without Section 21?”

The committee’s final examination of witnesses takes place on Monday.

Read Kathy’s evidence in full.

Pic credit: Wiltshire Times.

View Full Article: REFORMS: ‘Rethink your plans on Section 21 evictions’ landlord tells MPs

Chancellor ‘planning tax raid on landlords’ to plug £50bn hole in public finances

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Landlords could be hit with a rise in capital gains tax (CGT) along with cuts in reliefs and allowances as part of the Chancellor’s autumn statement due on November 17th.

According to a report in The Telegraph, Jeremy Hunt and PM Rishi Sunak have agreed that those with the “broadest shoulders” should bear the brunt of efforts to help plug the £50 billion hole in Britain’s public finances.

Treasury sources said sweeping changes to CGT, including to the headline rate, are being considered but cautioned that much can change before the statement. It is understood that reductions in capital gains tax reliefs and allowances are most likely to get the green light.

CGT re-alignment

The idea is not new, as a report from the government’s tax advisers two years ago suggested that it could bring CGT – currently 28% on residential property and 20% on other assets – in line with income tax so that higher-rate taxpayers faced a flat rate of 40 or 45%.

The Office of Tax Simplification also suggested reducing the annual CGT allowance threshold from £12,300 to £5,000 or less. Property experts warned then that this could spark a mass exodus of landlords from the market.

Previous Conservative initiatives include a rumoured plan this summer by former PM Boris Johnson to tempt buy-to-let landlords into selling properties to first-time buyers by charging lower capital gains tax.

There will be no extension of the stamp duty cut adopted by Liz Truss, the source revealed, meaning no extra intervention targeted at propping up property prices, nor is the Treasury working on a new scheme to help people who face mortgage defaults.

View Full Article: Chancellor ‘planning tax raid on landlords’ to plug £50bn hole in public finances

TECH: How Richard Jackson persuaded over 1,200 fellow landlords to ‘go digital’

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For the millions of UK landlords who operate just a handful of rental properties, the take-up of tech to manage their bricks and mortar, financials, tenants and compliance has been slow.

Most get by with a simple spreadsheet, a few Outlook reminders and keeping an eye on their bank account.

But Buckinghamshire landlord Richard Jackson (main image), who has built one of the leading digital management platforms used within the sector, says tech is now becoming a necessity rather than a nice-to-have for landlords of all sizes, but particularly those with medium to large portfolios.

He launched Alphaletz two years ago and the platform now has 1,200 landlords using its service, which can be accessed via a laptop or either Apple or Android smartphone app.

“Our landlords range from a few properties up to the largest, which has just over 100 units on Alphaletz,” he says.

“Quite a few have 70 or 80 properties and it’s also popular with HMO landlords – they might have only ten properties, but each one will house five or six rooms so they’re managing 50 or 60 ‘units’. We also have a few build-to-rent operators using us too.”

Jackson says Alphaletz, which is also used by letting agencies, was born out of his own need. As his portfolio grew, he gathered an increasingly large and disjointed array of tools to run it.

Out of control

“It became apparent that I needed a single system in place because things were getting out of control – I couldn’t remember where everything was and, although doing it that way was OK in the early days, the increasing complexity of being a landlord in the private rented sector demanded something more sophisticated,” he says.

“It became obvious that many landlords like me were cobbling together their own systems – task and financial management widgets, spreadsheets, supplier databases, insurance reminders, all bolted together.

“But they didn’t talk together and could be only run off a home computer and not a smartphone – so you couldn’t update or view data while you were out and about.”

Efficiency is not the only driver of landlords using Alphaletz and platforms like it, though.

Red tape

The increasing red tape that the sector has seen (deposit protection, EPCs, gas safety certificates and electrical checks) and the looming extra regulation within the Renters Reform Bill (landlord registration, periodic tenancies, pets rights and the Decent Homes Standard) all mean landlords will be required to face a lot more compliance responsibilities and, if they trip up, fines.

“On top of all this you have HMRC’s looming Making Tax Digital rules which will require landlords to keep digital tax records of everything pertaining to their properties and submit their tax return quarterly rather than annually, which is going to be a pain in the backside for everybody,” he says.

“I understand that many landlords see tech as an optional extra – but they are going to need some sort of digital platform to help them as a ‘must have’ when all this kicks in.”

Jackson also says that the market is slowly moving towards a more ‘professionalised’, larger-portfolio form.

Punches

“There are still a lot of people with one, two or three properties who have bought them as a pension pot and, consequently, just want them to break even until they retire and, therefore, they’ll remain in the market and roll with the punches,” he says.

“But the ones who will really thrive are the larger portfolio operators. I think the government will eventually incentivise that end of the market, which includes build-to-rent operators too.”

Alphaletz recently became LandlordZONE’s Official Technology Platform Partner.

Find out more about its service.

View Full Article: TECH: How Richard Jackson persuaded over 1,200 fellow landlords to ‘go digital’

Why a rent freeze in England just took a giant step forwards

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Where to begin? With the media buzzwords? With various organisations calling for a rent cap in England? Or the real reason a rent freeze is coming which was revealed on Thursday (which I will come to)?

Leaving aside that there is a perfect storm brewing

View Full Article: Why a rent freeze in England just took a giant step forwards

Seven in 10 landlords have properties with an EPC rating of D or below 

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The scale of the situation for landlords having to improve their rental properties to meet the energy performance certificate (EPC) standard of C has been laid bare in new research.

According to Shawbrook, seven in 10 (71%) landlords in the UK still own rental properties with an EPC rating of D or below.

View Full Article: Seven in 10 landlords have properties with an EPC rating of D or below 

Northern Ireland report rejects rent controls

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The Northern Ireland Assembly has published independent research on what a rent decrease of up to 10% and/or a rent freeze for up to four years will do the private rental sector.

Under the Private Tenancies Act (Northern Ireland) 2022

View Full Article: Northern Ireland report rejects rent controls

LATEST: Under-Secretary faces critical MPs frustrated by delays to renting reform

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Frustrated MPs have rounded on the government for again failing to confirm when it will timetable the long-awaited Renters Reform Bill.

During a Commons debate DLUHC Under Secretary Felicity Buchan (main picture) who appeared to be reading a pre-prepared script in the absence of any ministers able to speak during the debate, told them the Government was determined to deliver a new deal but only reiterated that it would “publish next steps in due course”.

But she reassured good landlords that the new system would continue to be a stable market for them to invest and remain in.

“No one will win if our reforms don’t support landlords as well as tenants,” said Buchan.

“This government is committed to reforming the PRS in a fair and balanced way – strengthening and clarifying landlords’ rights when seeking possession.”

Urgent

MPs across the House agreed on the need for urgent legislation. An exasperated shadow minister Matthew Pennycook said all 12 proposals in the white paper should be translated into legislation as a matter of urgency. “Problems have become acute,” he told MPs.

“Rents are surging. We could have fast-tracked legislation this winter – instead we just have a vague promise to introduce the bill in the next two years.”

Lloyd Russell-Moyle MP said although he welcomed the abolition of Section 21, it must not allow the next crisis to be the use of Section 8.

Loophole

“If we abolish Section 21 but allow landlords to increase rents uncontrollably, we would have a loophole you can drive a lorry through.”

The Brighton MP suggested one way to address the issue of student landlords dealing with proposed periodic tenancies would be to place a duty on universities to house all their students.

“They could engage in tenancies with the PRS which would be permanent, and universities could license those rooms out to students to give the PRS security and students the wraparound support they need.”

He also called on mortgage providers to give landlords buy-to-let mortgages when buying a property with a sitting tenant, to prevent the loss of private rented homes.

Watch the debate in full.

View Full Article: LATEST: Under-Secretary faces critical MPs frustrated by delays to renting reform