LATEST: CGT can be reformed to help BOTH landlords and HMRC, say accountants

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Permanently reducing the Capital Gains Tax (CGT) rate for investment property and raising the general rate would keep both landlords and the taxman happy, according to a leading accountancy body.

The Association of Accounting Technicians (AAT) suggests effectively splitting the difference by only having two rates instead of the current four, so charging 14% for the basic rate and 24% for the higher rate, irrespective of what the asset is.

There are currently four different rates: 10% for basic rate taxpayers and 20% for higher rate taxpayers and two separate rates for residential property with 18% for basic rate taxpayers and 28% for higher rate taxpayers.

It follows warnings from property experts that the Government tax advisor’s idea to raise CGT rates up to the levels of income tax – currently 28% on residential property and 20% on other assets – so that higher rate taxpayers face a flat rate of 40 or 45%, could cause a mass exodus of landlords.

Phil Hall (pictured), head of public affairs & public policy, tells LandlordZONE: “This would be a simplification (two rates instead of four) and being lower for residential property investors than it is at present would also help to encourage more house sales.

The 4% increase for other assets would generate additional income for the revenue but would still be much lower than the big increases, to bring into line with income tax rates, that others have suggested.”

Landlord Pete Coleman who’s based in Scarborough, reckons it could be a good workable solution.

He tells LandlordZONE: “I’m a retired accountant and wish to be a retired landlord but still have two properties, both in Whitby, that I’ve had since the 1970s and won’t be selling while CGT is so high – and I’m worried it could go even higher.” 

Read more about the CGT proposals.

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COVID stories: My £35k battle to evict rent arrears tenant from apartment

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A desperate landlord stuck in an Airbnb for months while her tenant refuses to pay rent or move out has featured in a BBC investigation into the current and and harsh evictions regulations and their effect on landlords.

Lilyana Markova, who works in a cosmetic clinic and bought her property as a buy-to-let investment, tells LandlordZONE she now has losses totalling £35,000 in back rent, court fees and legal costs, and despairs of ever getting the flat back.

Despite finally securing a Section 21 order against her tenant, with help from Landlord Action – after years of part or non-payment – the court hearing was suspended on 5^th April and she’s now waiting for another date.

Lilyana’s problems were made worse when she was evicted from her central London rented flat in September as the landlord needed it back for a family member.

Tough times

She’s now struggling to pay her own bills, and while friends have been helping out, she isn’t sure how much longer it can go on.

“It’s been so tough for me,” Lilyana tells LandlordZONE. “This woman doesn’t respect me and owes me so much money yet I can’t do anything. It’s really frustrating.”

Lilyana rented out her two-bedroom flat to the woman and her three children near London city airport, using letting agent Re/Max in September 2017.

Rent payments were erratic or non-existent from the start but when she tried unsuccessfully to serve a Section 21 notice in 2018, the tenant countered with a compensation demand for problems caused by damp.

Lilyana paid up in the hope that she would leave the property but when she didn’t, Landlord Action stepped in late last year and kicked off the eviction process.

Her story was featured on BBC London News last night as part of an investigation into rent arrears and evictions broadcast just hours after the government revealed it latest evictions regulations.

She and Landlord Action founder Paul Shamplina (pictured) are both featured in the film. “Despite all this, Newham Council have just asked me why I don’t want her as a tenant anymore. It’s so unfair – I don’t understand how this can happen.”

Watch the BBC London news episode.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – COVID stories: My £35k battle to evict rent arrears tenant from apartment | LandlordZONE.

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Excellent tenant wants a 20% rent reduction?

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I have an excellent tenant who pays £1500 every month. With 2 months left on the contract, I asked for his intention on renewal. He said he would renew, but only at £1200 per month.

I said I would do some research and let him know.

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BREAKING: Home Office warned of impending failure of Right to Rent checks system

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Letting agents have written to the Home Office this morning to warn that its controversial Right to Rent scheme is likely to face ‘widespread failure in compliance’ once the Covid pandemic ends.

ARLA Propertymark, which represents some 8,000 estate agents around the UK, has taken issue with the government’s temporary ‘adjusted checks’ system for Right to Rent during Covid.

This has enabled agents and landlords to complete checks without having to meet tenants in person.

But this temporary measure is now eight months old and therefore ARLA says hundreds of thousands of tenancies have been secured using this system.

But the government’s Covid regulations stipulate that once the pandemic is over, these tenants will have to be re-checked for their Right to Rent within eights weeks.

“Recent sampling of our members has shown that almost all Right to Rent checks in that period have been carried out using the adjusted check method, in order to comply with public health guidance,” the letter days.

“Given the volume of checks that will now have built up, the majority of letting agents and landlords will undoubtedly fail to comply with the requirement to deliver retrospective checks.”

Digital storage

ARLA says tenants are unlikely to appreciate being checked twice and are less likely to co-operate second time around, and that the need to check twice will cause a huge bureaucratic and digital storage problem for landlords and agents.

This, the organisations claims, will be on top of the huge expansion of the Right to Rent scheme which from next month onwards will include EU citizens who have not yet applied for Settled Status.

“In this context, and with the time that has now lapsed since the introduction of adjusted checks, it is essential that the Home Office moves to accept adjusted Right to Rent checks on tenancies that started during the period under which the public health crisis requires minimal face to face dealings,” says Timothy Douglas, Policy & Campaigns Manager at Propertymark (pictured).

“I ask that you consider the benefits to tenants, landlords and letting agents of removing the need for retrospective, duplicate checks in order to ensure that landlords and letting agents can meet their legal requirements and support moves to the new points based immigration system through the first half of 2021.”

Read more news about the Right to Rent checks.
More advice on Right to Rent compliance.

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Social Housing reforms to speed up complaints procedure for residents

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Major reforms to support housing tenants in England and ensure social landlords raise standards where needed have been announced by the Housing Secretary Robert Jenrick.

The social housing white paper ‘The Charter for Social Housing Residents’, sets out reforms that will speed up the complaints procedure for residents by improving access to the Housing Ombudsman

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Substantial rent arrears cases are now exempt from eviction ban

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From today (17 November 2020), possession cases with severe rent arrears will be exempt from the ban on evictions, meaning bailiffs and High Court Enforcement Officers can move to enforce warrants and complete evictions. However, this will only apply to cases where the equivalent of nine months’ rent arrears had accrued prior to the 23rd March 2020

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BREAKING: Existing evictions to be given green light if more than nine months’ rent arrears

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The government has finally laid its updated lockdown regulations in front of parliament to clarify when landlords with existing possession orders can move to evict, revealing that one of the exemptions will be ‘substantial’ rent arrears, now to be classed as those over nine months.

As expected these regulations, which will come into force tomorrow and only relate to England, enable bailiffs to attend properties to execute a warrant of possession if it concerns trespassers, the death of a tenant, an unoccupied property and tenants involved in anti-social behaviour or, crucially, those who have built up substantial rent arrears.

It is this last point that many landlords and solicitors have been waiting for clarification on; how long can a tenant have not paid their rent before an existing possession order can proceed during the lockdown.

18 months’ wait

This may seem trivial when the lockdown is only a month long, but the way the law has been framed, landlords given the go-ahead to evict will now have been waiting at least 17/18 months before being able to deal with a tenant with substantial rent arrears.

This is because the eviction ban exemption only kicks in after nine or more months of unpaid rent, but any arrears accrued after March 23th are ignored – so another eight months on top of non-payment before an existing possession order can then proceed.

Today’s new regulations follow a sustained campaign by the industry to seek clarification, as well as efforts by leading PRS lawyer David Smith (pictured) who says his effort to point out that the the government ‘requesting’ bailiffs do not enforce legal evictions was in itself likely to be unlawful.

“This is a matter for Parliament and who gets evicted should not be at the whim of the Lord Chancellor,” he says.

Unfair

Ben Beadle, Chief Executive of the National Residential Landlords Association, says: “In trying to arrive at a compromise the Government has failed to help those in genuine need whilst rewarding those whose arrears have nothing to do with the pandemic, and in some cases are wilfully not paying their rent.

“This is doing nothing to help those tenants who are trying to do the right thing and seeking to pay off their debts.

“Instead of prolonging the problem with short-term fixes, the Government needs to urgently bring in a financial package to enable tenants to pay off rent arrears.”

Read the new regulation in full.

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Help for struggling tenants, Minister? Over to you, landlords!

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The government has indicated in a written parliamentary statement that it expects private landlords to shoulder the financial burden of helping students during the current lockdown in England.

Asked by Labour MP Zara Sultana if the government would offer students any financial support, Education minister Michelle Donelan (pictured) retorted that those in higher education can access hardship funds at their college or university but that otherwise students and landlords were on their own.

But these hardship funds are limited – for the 1.9 million students studying in England  there is a hardship fund of £135 per student or £256 million in total.

Donelan told Sultana that, if they are unable to access hardship funds, then students should agree a payment plan with their private landlord, and urged PBSA providers and universities to waive rents or release students from their contracts, as ‘many did during the Summer term lockdown’.

“We encourage landlords, letting agencies and tenants to adopt a pragmatic, common-sense approach to issues that may arise in the current circumstances,” said Donelan.

“In the first instance, a student should speak to their landlord if they think they will have difficulty meeting a rental payment. In this unique context, tenants and landlords are encouraged to work together to put in place a rent payment scheme.”

The Minister’s comments echoed those of NUS President Larissa Kennedy, who last week called on landlords to give student a rent holiday during the current lockdown if they are struggling to pay their rent or told to return home.

Back in April the NRLA wrote to the NUS during the first lockdown to point out that if landlords no longer felt student rentals were a secure form of income, the supply of properties would dwindle and rents would rise.

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Council told tenants to wait for court eviction?

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“You don’t have to leave the property when the notice period expires. You still have a legal right to occupy the property after this date and until your landlord obtains a possession order from the court. If you haven’t found alternative accommodation by the time your notice period expires

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Unfair Garage Rent Payment?

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I own a flat which has two leases. One for the flat itself, which is broadly fair and one for a garage, which is unfair and has to be taken on when the property is purchased and stays with the flat lease.

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