Overseas Lettings – Tax Implications Following Brexit?

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For several years we have let our house in Mijas, Spain, as a holiday let. On preparing my quarterly tax return for Spain, I find that expenses are no longer allowed, due to Brexit, as we are no longer in Europe as UK residents.

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Will Landlords be able to apply for heat pump grants in April 2022?

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A piecemeal approach risks undermining efforts to improve the energy efficiency of the private rented sector, the NRLA is warning.

The Heat and Buildings Strategy published today announced that grants of £5,000 will be made available to households to replace gas boilers with systems such as heat pumps.

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LATEST: Heat source pump grants to be introduced in April next year for landlords

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Landlords are included in the government’s heat pump grant system announced yesterday, the Natoinal Residential Landlords Association (NRLA) has been confirmed.

The new grants will offer up to £5,000 to property owners to transfer from gas boiler to low-carbon systems such as air and ground source heat pumps.

Although this sounds generous it will only be a contribution to the substantial cost of these systems.

The Energy Saving Trust estimates that a typical air source heat pump installation will cost between £6000 and £8000 while a ground source system will cost between £10,000 and £18,000 depending on the amount of heat required.

Following discussions between the government and the NRLA, officials have indicated that these grants will be available from April next year onwards.

Critical

But the NRLA remains critical of the government’s plans, saying it has ‘again failed to provide the clarity needed by private landlords to plan for the future of their businesses’ and that the detail needed by the sector is unlikely to be revealed until the end of the year.

“Eighty per cent of private rented households have gas central heating and replacing such systems will be both costly and vital to achieving net zero,” says NRLA Chief Executive Ben Beadle (pictured).

“Providing grants to assist householders and landlords to install heat pumps is a welcome step, but much more is needed to make the Government’s targets achievable.

“Once again private landlords have been left waiting for the Government to publish details of the standards they will be required to comply with, the deadlines they must meet, and how such work should be funded.”

Scepticism of the plans is understandable – the government’s much lauded Green Homes Grant scheme fell well short of expectations.

Problems administrating its voucher system both for landlords and the suppliers tasked with providing the green upgrades eventually led to its cancellation in March this year.

Watch a video explaining all the different types of heat pump (water, air, ground, etc) available for houses.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Heat source pump grants to be introduced in April next year for landlords | LandlordZONE.

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NI consults on new renting model to lure tenants away from private sector

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Tens of thousands of renters in Northern Ireland could be lured away from the PRS if a new intermediate renting model gets the go ahead.

The Northern Ireland government has come up with its version of affordable rent schemes in the UK and Ireland – Intermediate Rent – that sits between private and social renting.

It aims to provide affordable homes for tenants who can’t or don’t want to buy their own home and are unlikely to have a chance of accessing social housing in an area of their choice.

The Department for Communities estimates there are about 135,000 households in the PRS, 50,400 of which pay 25% or more of their income on rent, with 20,000 spending more than 40%, and who could benefit from access to an Intermediate Rent home.

A further 2,000 new households are set to access private rented homes each year, 800-900 of which will experience affordability issues.

Intermediate rent

Intermediate Rent is more affordable than private renting, with rents at up to 80% of market prices and with longer tenancies than the usual 12 months. It also connects tenants with a network of support services.

Unlike the process for accessing a social home using a points-based waiting list, an application process based on a first-come, first-served basis would be used to match tenants with properties, while rents would be reviewed regularly.

The department says it is keen to start rolling out a programme – funded by government loans and private finance – beginning with the acquisition of already developed properties to use as Intermediate Rent homes, before scaling up to new build development, including an element of new mixed tenure developments.

A public consultation is open for responses to the plan until 14th January 2022.

Read more about PRS reforms in NI.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – NI consults on new renting model to lure tenants away from private sector | LandlordZONE.

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Minister rebuffs calls for legislative change to help landlords accept more pets

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The government has rebuffed calls for the law to be altered to make it easier for landlords to accept tenants with pets.

Housing minister Eddie Hughes at the Department for Levelling Up, Housing and Communities, has told parliament that Ministers have no plans at this time to amend the law relating to pets in the private rented sector.

The MP for Walsall North once again referenced recent changes to the official but only ‘advisory’ Model Tenancy Agreement, which he told MPs make it easier for tenants with pets to find private landlords who will accept them.

“The revision aims to strike the balance between protecting private landlords from situations where their properties are damaged by badly behaved pets and ensuring responsible pet owning tenants are not unfairly penalised,” he told Labour MP and housing campaigner Zarah Sultana in response to her question on the subject.

The housing minister’s comments will be a disappointment to the considerable number of campaigners both within and outside parliament who have been lobbying for changes to the Tenant Fees Act.

Deposits

Its regulations, which became law in full last year, now make it difficult for landlords and letting agents to ask tenants for an additional ‘pet deposit’.

As the law stands, these are considered to be prohibited payments.

This was a point that David Amess MP, along with over 40 other MPs and Lords, had been pressing the government to consider before his tragic death last week.

Amess, who was the Conservative MP for Southend West was due to ask a question in parliament this week on behalf of the campaign about changing the legislation.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Minister rebuffs calls for legislative change to help landlords accept more pets | LandlordZONE.

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Should holiday-let owners be paying council tax?

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However, Carol Lewis writing for the Sunday Times newspaper thinks that holiday let owners should be paying council tax.

“Given that levelling up is the government’s buzzword du jour, it is time to level the playing field and bring holiday-home owners in line with everyone else,” she argues.

Lewis thinks there are thousands of holiday-let owners who have benefited from council tax exemption, business rates relief and have had access to “generous government grants” during the Covid pandemic.

Business Rates Relief

She quotes Colliers figures in her argument for this that local authorities across England and Wales have lost around £110 million per year because of business rates relief given to holiday let owners, money Ms Lewis argues, that could have been used to “help level up the property markets between second-home owners and residents.”

The difference between a vanilla buy-to-let business and a holiday let business is that HMRC view the former as generating investment income (unearned income) whereas the holiday let business, in HMRC’s eye is a true business generating business income. That would seem to make sense because there is far more hands on work in involved in running holiday lets.

There are undoubtedly certain tax advantages to having your landording business classed as a pure business as opposed to an investment, and HMRC says:

Self-catering and holiday let accommodation is classed as a true business if the property is in England and available to let for short periods that total 140 days or more per year; it will be rated as a self-catering property and valued for business rates.

If your property is in Wales it will be rated as a self-catering property and valued for business rates if it’s both: (1) available to let for short periods that total 140 days or more per year and (2) actually let for 70 days. There are different rules in Scotland.

The Valuation Office which is a part of HMRC will work out the rateable value of the property based on its type, size, location, quality and how much income you’re likely to make from letting it.

If as a holiday let landlord you only let one property and its rateable value is less than £15,000 you may be eligible for small business rate relief.

According to Lewis there are 67,578 registered holiday lets in England and she says that 96 per cent of these claim business rates relief based on figures obtained from business tax specialist Altus Group. By definition, these holiday lets are not liable to pay council tax, and the concession on business rates allows them to pay reduced business rates.

Government grants

During the Covid lockdown restrictions hospitality businesses, and holiday lets come under this broad umbrella term, were able to take advantage of the government’s Covid grants – landlords were paid for leaving their premises empty during lockdowns. Altus estimates that 11,476 second homes in England changed their registered status from a second home to commercial holiday premise since the start of the pandemic.

It has been reported widely in the media and Lewis highlights this fact, that Cornish locals are finding it very difficult to find somewhere to rent long-term when the county is seeing a steep increase in second home ownership.

Something of a buying frenzy has been going on during the pandemic as people realised the benefits of having a city escape and that work from home could be in a pleasant place such as Cornwall just as easily as in Camberwell.

Lewis cites a recent Cornish council meeting where councillors were told that 7,440 holiday lets in the county had benefited from small business rates relief and Covid grants amounting to just under £170 million, £104 million of which was paid to owners who live outside Cornwall. This she says must be galling to those would be local renters who are bing priced-out.

Apparently the chancellor has pledged to make it more difficult for holiday-let owners to claim business tax relief, but so far claims Lewis, nothing has been done. Why she asks? Is it because MPs own holiday homes she wonders?

“They and their tenants make use of the services it funds — from fire services to waste collection, and road maintenance to sports centres. The stamp duty holiday is over and furlough has finished. With stagflation looming and households facing spiralling bills, it is time to act and close this loophole,” says Carol Lewis.

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Record numbers of Landlords reporting rising levels of tenant demand

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A record level of nearly 7 out of 10 landlords reported rising tenant demand in the third quarter of the year.

A survey of over 600 landlords by BVA BDRC, carried out on behalf of Paragon Bank, showed

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BREAKING: Government’s latest ‘green homes deal’ revealed

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The government has launched its Heat and Buildings Strategy, heralding a cheap clean heating revolution and promising to make heat pumps no more expensive – or even cheaper – to buy and run than gas boilers.

Home owners will receive government grants of up to £5,000 from next April to buy the pumps to replace their old boilers over the next decade through a new £450 million three-year Boiler Upgrade Scheme.

The government and industry will work together to help meet the aim of heat pumps costing the same to buy and run as fossil fuel boilers by 2030.

Business and Energy Secretary Kwasi Kwarteng (main picture) says recent volatile global gas prices have highlighted the need to double down on efforts to reduce Britain’s reliance on fossil fuels and move away from gas boilers over the coming decade to protect consumers in long term.

Phil Hurley (pictured), chair of the Heat Pump Association, says the industry is now ready to retrain the UK’s army of installers with the capacity to train up to 40,000 per year, to ensure consumers can find suitably trained and skilled heat pump installers.

He adds: “Today’s announcement will give industry and installers a huge confidence boost that now is the time to scale-up and retrain in preparation for the mass roll out of heat pumps, as well as making heat pumps as affordable as boilers, so all consumers can soon access and enjoy the benefits of affordable, reliable low carbon heating that stands the test of time.”

However, Dave Sheridan, executive chairman at Homes England-backed modular house builder Ilke Homes, says the new strategy must be more ambitious in its goal to decarbonise the UK’s housing stock.

“To avoid huge retrofitting costs, policymakers must prioritise the delivery of zero-carbon new homes now by bringing forward the requirement to reach the Future Homes Standard ahead of 2025,” says Sheridan.

“The government’s target of installing 600,000 air source heat pumps in UK homes by 2028 is achievable as half of those should be in new homes. The sooner we move to these low-carbon technologies, the sooner we can bring down capital costs.”

Green Homes Grant

Kevin Wellman (pictured), CEO of the Chartered Institute of Plumbing and Heating Engineering, tells LandlordZONE that he would like to see a viable alternative introduced to the Green Homes Grant Scheme.

“It is important that any schemes are easy for landlords and qualified installers to access, as there is a real danger of a miss-match between supply and demand,” he says.

“In order to achieve the government’s aspirations for net zero, 100,000 installers need to be upskilled in low carbon technologies.”

Many landlords believe the targets are wishful thinking and that its aim to see all rented properties raised to an energy rating of band C or above by 2030 is a ‘pipedream’ unless upgrades are backed with financial and practical support.

Read the Commons guide to the Heat and Building Strategy document.

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£450m government grants for 90,000 Heat Pumps

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Landlords don’t hold your breath as the Government announces £3.9 billion for decarbonising heat and buildings. Of this only £450m is allocated for grants of £5,000 to replace old gas boilers with new heat pumps. This would equate to 90,000 installations over 3 years for England and Wales.

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Detached homes see largest percentage rent increases

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Rents on detached homes increased twice as fast as the average for all UK properties during Q3 2021, according to The Deposit Protection Service (The DPS).

The average rents for detached properties during Q3 2021 rose £38 (3.52%) from £1,079 to £1,117

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