Autumn Statement latest: Chancellor reveals tax rises for landlords

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Landlords face higher bills from next year after Chancellor Jeremy Hunt slashed the annual threshold for Capital Gains Tax from £12,300 to £6,000 next year and £3,000 from April 2024.

Although a rise in CGT didn’t materialise, he followed the Office of Tax Simplification’s advice to reduce the tax-free allowance by more than half – a move that property experts then warned could spark a mass exodus of landlords from the market.

In his Autumn statement, the Chancellor also announced that stamp duty cuts announced in the mini-Budget in September would remain, but end on 31^st March 2025, creating an incentive to support the housing market by boosting transactions.

Predecessor Kwasi Kwarteng raised the threshold to £250,000 and for first-time buyers, to £425,000 – cuts panned by mortgage brokers as a catalyst for stimulating an overheated property market.

Income tax

Other announcements include changing the threshold for the top rate of income tax from £150,000 to £125,000 and freezing allowances and thresholds for income tax, national insurance and inheritance tax until April 2028.

For the most vulnerable, Hunt told those on Universal Credit that their benefit would rise in line with September’s inflation figure of 10.1% from next April, while about four million families in the social rented sector would see rents capped at 7% in 2023/24, meaning an average saving of £200.

Landlords struggling to sort Alternative Payment Arrangements might be heartened to hear that the Treasury will invest £280 million in a DWP crackdown on benefit fraud and error over the next two years.

Energy bills

On the subject of energy bills, while the Chancellor announced a continued price guarantee from April of £3,000 per household and an additional cost of living payment next year of £900 for households on means-tested benefits, he also signalled that he would be getting tougher on carbon reduction – and possibly EPC targets.

“Energy efficiency is important and I have set our country new national ambition, that by 2030 I want to reduce energy consumption from buildings and industry by 15%, which equals a £28 billion saving,” he told MPs. “This is a shared mission with companies and families playing their part.”

Reaction

Sylvie Harris, Director of Lettings at INHOUS, says: “For the many landlords who have been planning to dispose of their rental assets due to the raft of legislation and adverse tax changes, the announcement to halve the Capital Gains Tax exemption in 2023 will come as a blow. 

“This news will make it less favourable for landlords to sell and they will likely continue to let their properties until the conditions improve.  However, tenants will benefit as there is already a shortage of rental properties available on the market.”

Dominic Agace, Chief Executive of Winkworth, says: “The change to CGT is yet another negative move by successive Chancellors against buy-to-let landlords, many of whom are already leaving the sector due to increased taxation, regulation and rising interest rates.

“This is an own goal by the Government as the private rental sector is the only place many people can find a home if they are not in a position to buy.

“With the lack of social housing supply and the need for young professionals to be highly mobile and able to move to London and other major cities, the role of the private landlord is more important than ever and should be encouraged.”

Iain McKenzie, CEO of The Guild of Property Professionals, says: “Bringing stability to the economy is the number one priority for the property sector. 

“These sweeping cuts alongside increases in taxation will spark fears of a deep recession on the horizon, but these decisions have been taken to avoid predictions of it lasting for two years – one of the longest in this country’s history.

“House prices are unlikely to drop dramatically as the unprecedented demand we have seen in recent years has endured. 

“There may be some realignment in pricing to adjust for the rising cost of living, but the market will recover. During the global financial crisis house prices dropped by around 19%, however, it has sustained and grown thereafter.

“Despite the increases in tax and budget cuts announced today, the stamp duty cut will remain in place until 2025, which shows that the government sees the property market as driving growth and stability. 

View Full Article: Autumn Statement latest: Chancellor reveals tax rises for landlords

Autumn Statement 2022 – Landlord Reactions

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The Chancellor of the Exchequer, Jeremy Hunt, has today announced his Stealthy tax threshold increasing budget today in a plan to preserve stability, promote growth and protect public services.

Whilst on the face of it not as severe as many predicted Hunt took great care not to use the words ‘tax rises’

View Full Article: Autumn Statement 2022 – Landlord Reactions

LATEST: Haringey goes live with UK’s first big ‘green’ selective licensing scheme

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Haringey’s new selective licensing scheme goes live today with a focus on prompting landlords to raise energy ratings.

After getting the green light from the government, the London borough has introduced its five-year scheme in 14 of its 19 wards in a bid to improve housing conditions and support the council’s ambition to tackle inequality.

It covers Bounds Green, Bruce Castle, Harringay, Hermitage and Gardens, Noel Park, Northumberland Park, Seven Sisters, South Tottenham, St Ann’s, Tottenham Central, Tottenham Hale, West Green, White Hart Lane and Woodside.

Protecting private renters and ensuring they live in safe and warm homes is a key component of the scheme and the authority promises to, “urge landlords to take maximum responsibility for maintaining effective and appropriate management of their properties”.

Fuel poverty

And with the cost of living continuing to rise, the scheme will also focus on reducing fuel poverty by identifying properties with the worst energy efficiency ratings. Haringey then aims to give landlords the right support and education to adapt their properties.

Councillor Dana Carlin (pictured), cabinet member for housing services, private renters and planning, says more than 40% of households in Haringey live in the private rented sector.

“Unfortunately, many of our PRS tenants are living in homes in poor condition and with low standards of housing management,” she adds.

“These properties also cause frustration to the wider community. Selective landlord licensing will help us to improve housing conditions for private renters, which is a key priority of this administration.”

All properties in the 14 wards that are privately rented to single households or two sharers will need to pay £600 for a five-year licence. The borough already runs an additional scheme for HMOs.

View Full Article: LATEST: Haringey goes live with UK’s first big ‘green’ selective licensing scheme

Property damage and cleaning top tenancy deposit disputes

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More than half of tenancy deposit disputes during the last year concerned property damage and cleaning, The Deposit Protection Service (The DPS) reports.

The DPS offers a free, impartial dispute resolution service to help ensure a fair conclusion to a dispute without the need for complex or expensive legal proceedings.

View Full Article: Property damage and cleaning top tenancy deposit disputes

PROBE: Landlords complain about rent-to-rent firm as deals go sour

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Complaints from landlords and letting agents have been passed to LandlordZONE about a rent-to-rent provider whose founder is lauded online for raking in up to £12,000 a month.

Merleen Gocan (pictured) is a director of the Good Living Group (GLG) and, along with business partner Sammy Hills has in the past boasted of turning over £350,000 from rent-to-rents in a year.

But the company has been ordered by the Property Redress Scheme (PRS) to repay thousands of pounds to two investors and has two more complaints pending.

However, Gocan denies all allegations and says the PRS claims are being disputed.

Nicole Barratt-Rae, MD of Barratt Sales and Lettings in Windsor, says one of her landlords is owed £5,000 in rent after a deal turned sour.

“I manage a block of six flats for a landlord who unwittingly signed up to GLG as part of a rent-to-rent deal, which then turned them into serviced accommodation,” she tells LandlordZONE.

“When the firm stopped paying him rent in July, GLG told us we would be illegally evicting the tenants if we tried to take the properties back.

Luckily, they were empty, the keys had been left in the key safe for all flats and the landlord had put a one-year break clause into his three-year management agreement.”

Ignored

Propertymark member Barratt-Rae adds that Gocan did not have the right to manage the property due to non-payment of rent as laid out in the tenancy agreement. “This was brought to her attention many times and she chose to ignore it.”

Barratt-Rae claims six other people she knows of have had bad experiences including a landlord who paid GLG for furniture that didn’t exist, and then received complaints about his property via Booking.com.

The PRS has recently compensated one landlord £22,628 after he funded repairs and paid rent on the basis that his property was going to be converted into an HMO – but Good Living Group failed to get a HMO licence and did not make the property comply with any legal requirements.

Contested

In another case, the PRS ordered that a finders’ fee of £6,300 was paid back after the investor decided not to go ahead with a deal – which Good Living Group contested.

Merleen Gocan tells LandlordZONE that in the case of the block of flats, GLG kept the rental payment up-to-date for the contract and accuses Barratt Lettings of breaching the agreement and illegally evicting tenants.

She says: “The £5,000 in question is the last four weeks’ rent when she changed the locks during that period. I have an email trail, text communication and video evidence of the full situation. Landlords should be made aware that this agent takes things into her own hands and acts illegally. The six other landlords’ claims [mentioned above] is fake.”

Gocan adds that Hills is not a director of the company and was consulting with her on that particular deal.

LandlordZONE has approached Sammy Hill for comment.

View Full Article: PROBE: Landlords complain about rent-to-rent firm as deals go sour

BLOG: Problem with rent controls is our costs cannot be… controlled!

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The problem with rent controls is that landlord costs cannot be controlled. For example, insurance, service charges, repairs and interest rates are all going up at a faster rate than rents.

Landlords’ margins have already significantly shrunk due to all the new regulation and tax changes, so if rents are capped then there will be even less money available to do repairs and maintenance, meaning a lower standard of accommodation.

Or worse still, more landlords will sell up meaning less properties available which will put further pressure on the already huge supply problem.

If rents are to be capped or controlled in other ways then there need to be incentives for landlords to keep them in the market such as tax credits, guaranteed rent payments by the government for defaults, no council tax for empty properties and lowering the tax rates on profits.

Mortgage costs

One example I have is one of my BTL mortgages has gone up from £289 to £624 per month since December last year but I have only been able to increase the rent by £50 as of this month. And the mortgage will be going up again next month when the new rate kicks in.

My other costs such as insurance and service charges have also gone up over £1000 this year.

This is a common story that I am hearing from our landlords too. Everyone is very concerned about interest rates and the impact to everyone.

Author BIO: Richard Jackson (main picture) is founder and CEO of landlord platform Alphaletz.

View Full Article: BLOG: Problem with rent controls is our costs cannot be… controlled!

Interest rates have gone up but Landlords don’t need to panic

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Landlords have been under a lot of pressure recently, with interest rates going up, house prices dropping, and changes in government, anxiety levels have been at an all-time high. However, despite the current state of affairs, we still have options to help us get through this patch without panicking.

View Full Article: Interest rates have gone up but Landlords don’t need to panic

NEW: Brighton squeezes HMO sector even harder with new policies and guidance

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Brighton & Hove Council is squeezing its HMO sector even harder by introducing a tough new set of policies designed to reduce their impact on local communities.

Its City Plan Part 2 includes new guidance for those applying for planning permission as well as rules covering buying and selling HMOs.

An Article 4 direction already means that landlords need planning permission to change a house to an HMO everywhere within the city, where there are about 5,000 licensed HMOs.

The new guidance relates to both new-build HMO planning applications and changes of use to or from a single-family home to an HMO.

Applications will now only be considered where all the following criteria are met:

• fewer than 20% of dwellings in the wider neighbourhood area are already in use as HMOs;
• the proposal does not lead to three or more HMOs immediately next to each other or in a non-HMO house being sandwiched between two HMOs;
• space standards and cooking and bathroom facilities are appropriate in size to the expected number of occupants.

In future, landlords will be able to buy an existing small HMO and use it as a single-family dwelling without planning permission for a change of use, however if they buy a larger HMO that has housed six or more people to use as a single-family dwelling, they or the vendor will need to apply to the council for change of use.

Read more: Complete guide to renting an HMO property.

Councillor David Gibson (pictured), co-chair of the housing committee, says: “City Plan Part 2 sets out better management of the supply of Houses in Multiple Occupation. I am pleased to say that City Plan Part 1 and its restrictions on HMOs have had a very noticeable impact, and this will be strengthened by the newly introduced policies in City Plan Part 2.”

Read the new Brighton guidance in full.

View Full Article: NEW: Brighton squeezes HMO sector even harder with new policies and guidance

LATEST: Government has ‘broken the PRS’ during its war on landlords

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Landlords have accused the Government of “breaking the private rented sector” with its relentless regulatory and tax policies.

The comments have been made by the NRLA, which says that while demand for rented homes is rising as home ownership becomes less affordable, the number of properties in the market continues to dwindle.

Successive Conservative governments have set out on a “deliberate effort to discourage investment in the private rented housing” for over seven years now, it claims.

This includes measures to restrict mortgage interest relief and imposing a three per cent stamp duty levy on the purchase of homes to rent out, and a looming Capital Gains Tax expected in Chancellor Jeremy Hunt’s Autumn Statement tomorrow.

“The Government’s strategy for the private rented sector lies in tatters,” says Ben Beadle, Chief Executive of the NRLA.

“The fact that the supply of homes to rent is falling despite an increase in demand is a damning indictment of tax decisions which serve only to increase rents and make home ownership more difficult to achieve.

“Further tax hikes on the sector risk making an already bad situation worse. Ministers need to recognise that a healthy and vibrant private rental market needs to sit alongside, rather than be in competition with, efforts to support homeownership.”

250k drop

Official ONS figures show that the number of households in the private rented sector has fallen by over a quarter of a million over the past five years while demand from prospective tenants has soared – up by 142 per cent now compared to the five-year average, according to Zoopla.

And the demand for rental housing is set to grow further as mortgages become more expensive, the NRLA is warning that further tax hikes will serve only to “exacerbate the crisis facing many tenants trying to find housing”. 

Read more: What the renting reforms mean for landlords.

View Full Article: LATEST: Government has ‘broken the PRS’ during its war on landlords

Inventories ‘key tool’ for landlords seeking to comply with looming rent reforms

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Inventories will be key to easing the sector’s fears when England’s rent reform proposals become law, says No Letting Go CEO, Nick Lyons (pictured).

He believes that everyone wants decent homes in the PRS as well as a level playing field for letting agents and tenants.

“This is best achieved through transparency at the outset of a tenancy agreement, regular monitoring throughout its duration and a thorough, detailed inspection when the term comes to an end,” explains Lyons.

He says the Renters’ Reform Bill proposals take what is already best practice and make it a legal requirement.

“Reputable letting agents already operate at a level which is not threatened by these measures, but as an industry, letting agents and those servicing the sector must make sure that they are meticulous in all aspects of their operations”, he says.

Spot on?

Lyons adds that 80% private rented homes already achieve or surpass the Decent Homes Standard and while there are adequate protections in existence, it is important to ensure that protocols and compliance are spot on.

“This is the last line of defence,” he says. “Critical to that is the preparation of a professionally prepared inventory – agreed and signed off by both parties – to underpin every tenancy agreement and reassure agents and landlords that their properties are valued as homes and treated with due care and respect for the duration of the letting term.”

View Full Article: Inventories ‘key tool’ for landlords seeking to comply with looming rent reforms