US eviction ban differs markedly from the UK version

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From today, Friday, September 4th until the 31^st of December, the US government has ordered an expanded “eviction moratorium” which has the aim of preventing tenants from being evicted due to financial hardship cause by the coronavirus pandemic.

The order has been introduced by the federal government as a number of US states have continued to evict tenants in arrears with rent payments. It is said that as many as 40 million people across America face eviction due to their inability to pay rent.

The 2008 foreclosure crisis in the US saw 10m families lose their homes, while now millions more face homelessness. Eviction in the US lands disproportionately across the demographic, falling overwhelmingly on Black women and people of colour, deepening racial tensions.

The legal protections afforded tenants under this eviction moratorium are qualified by both parties meeting certain specific requirements: Qualifying tenants must meet these five (summarised) stipulations to be eligible:

1. Tenants must use their “best efforts” to first obtain all available government assistance for rent or housing subject to the same or better protection at state or federal level.
2. They expect to make less than $99,000 in income as an individual or $198,000 for a married couple when filing a joint tax return in the 2020 calendar year.
3. They are unable to pay the full amount of rent due to loss of income, or because they were laid off or had to pay “extraordinary” medical expenses.
4. They are using their “best efforts” to continue making at least partial rent payments as close to the full amount as possible, taking into account other non discretionary expenses.
5. Eviction would “likely” make them either homeless or force them to move into a shared living situation, where they could get sick or spread the virus to others.

These requirements being subjective would if necessary be decided on by a housing court judge.

Those tenants in default of their rental agreement are required to sign a declaration outlining these five qualifications. They have to present this to their landlord, where upon the landlord would then not be legally allowed to evict the tenant, failing which the US federal government could impose criminal penalties on the landlord.

So, as long as renters are making partial payments to the best of their ability, US landlords can’t legally evict tenants before Dec. 31 for financial reasons. But landlords could still evict a tenant for other reasons such as physical damage to the property or criminal and anti-social behaviour.

Landlords violating the order would be subject to heavy fines and a one-year prison sentence, a penalty which would escalated much further should a forced eviction against these rules result in the death of a tenant.

If the landlord complies with the order they can still collect some rent as outlined under fourth provision for those tenants pledging to make best efforts to pay at least partially the amount of rent. Also, the order does not prevent landlords from charging fees or accruing interest, if those are included under the tenancy agreement.

The order is expected to face legal challenges from US landlords. Landlord associations have sued in multiple states to halt previous Coronavirus eviction moratoriums, claiming they are unconstitutional. If this happens again, the courts will have the final decision.

Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19

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Beta Users Wanted for new Landlord App – Alphaletz!

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Richard Jackson, a long-time landlord and client of Property118 Tax, has developed a new App specifically for residential landlords, and is looking for BETA users to try the app before launch. The App is called Alphabetz.

Landlords are having to become much more professional in their approach to running their property businesses.

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Right to Rent is burdening landlords and pushing genuine tenants into destitution

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Radical reform of immigration policies is needed to tackle the injustice of a ‘hostile environment’ that burdens landlords with unnecessary responsibilities, says a new report.

Research Access Denied: The Human Impact of the Hostile Environment believes this environment has forced many people into destitution, has helped to foster racism and discrimination, and badly affected those with the legal right to live and work in the UK.

It points to the Right to Rent scheme as one of the Government’s “systematic flaws” in its approach to immigration enforcement.

Authors at The Institute for Public Policy (IPPR) write: “Inherent in the design of the hostile environment is the targeting of individuals on the basis of their lack of documentation, the deterring of people from accessing public services, and the transfer of responsibilities away from immigration officials and towards untrained professionals such as landlords.”

Earlier this summer, MPs voted not to exempt landlords from doing Right to Rent checks on EU nationals as the Immigration and Social Security Co-ordination Bill passed its third reading in the Commons.

Supreme Court

The Joint Council for the Welfare of Immigrants plans to challenge a Court of Appeal ruling which found that the scheme was ‘proportionate’ in meeting its objectives by taking a further appeal to the Supreme Court.

The report says this has introduced new forms of discrimination into the private rental sector and adds that restrictions on access to benefits can force people without immigration status into destitution.

It says: “There is evidence of malnutrition, cramped and substandard accommodation, and mental ill-health among undocumented migrant families unable to access public funds.”

IPPR believes the current situation doesn’t appear to be working for anyone and points to its study of 133 people without immigration status that found that, in spite of the increasingly harsh conditions associated with the hostile environment, nearly 40% planned to stay permanently and less than 10% intended to leave within the year.

Read the full report.

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Flooded property – Should rent be paid?

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Can anyone give me some advice on whether my tenant should carry on paying their rent? My flat was flooded due to torrential rain last week and the management company have made a claim on the buildings insurance.

The loss adjuster came to look at the property yesterday (and the flat next door as this was also flooded).

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Belvoir Q2 2020 index studies lockdown rental trends and reveals robustness of sector during pandemic

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The Belvoir Q2 2020 rental index, which contains two months of data within the UK’s lockdown period, reveals that average rents for Belvoir offices in England, Scotland and Wales decreased in Q2 2020 by around 3.5% versus Q2 2019. When comparing Q2 2020 to the 2019 annual average this shows a smaller, almost insignificant fall of around -1%.

“Belvoir’s Q2 rental index, which is prepared for us by TV property expert Kate Faulkner, shows that on average rents fell during lockdown by very small numbers,” says Belvoir CEO Dorian Gonsalves.

“This is interesting, bearing in mind that two months of the Q2 data fell during the lockdown period. Unlike other indices, Belvoir looks at advertised rents provided by our offices that have been trading for more than eight years, which makes the data extremely robust. Clearly, due to the impact of lockdown, offices were advertising less properties compared to the same period last year, but the overall picture when compared to Q2 2109 shows that rents did not fall dramatically, and there was no evidence of landlords pushing prices up. These findings are remarkable, confirming how robust and sustainable the market is, both from a Belvoir franchisee’s perspective and that of a landlord and BTL investor.

“It is, however, important to note that there are always variations across the country, both in terms of rents and tenant demand for certain types of properties. For example, Nick Horan from Belvoir Dundee reported increased rents for houses due to high demand, and also for one and two bed flats. Over in Moray, Andrew Campbell reported that rents remained stable with demand increasing for flats and houses, but static for HMOs, and a general shortage of properties due to post lockdown demand, and people wishing to move. Over in Wales, Ben Davies from Belvoir Swansea confirmed an increase in rents and demand, with a shortage of one bed flats and an oversupply of two bed flats. In Northern Ireland rents and demand increased for all properties during Q2 2020 and Trevor Burns, owner of Belvoir Newtownards forecasts that unless supply increases there will be an increase in rents.

“In London the average rent recorded in Q2 2020 was £1,550 per month, which is on a similar level to rents reported for Q1, Q4 2019 and Q2 2019. According to Tom Wang of the Belvoir Westminster office, rents for flats decreased during Q2 2020, whilst house rents remained unchanged. Tenant demand was static for houses but increased for flats and HMOs. Rents are expected to remain static during Q3 2020, with demand increasing across the board.

“Tim Hughes from Belvoir Newbury reported a decrease in flat rents during Q2 2020, with an oversupply of two bed flats pushing prices down – especially following lockdown, although, house rents increased, and tenant demand fell. Over the next quarter, it is anticipated that flat rents and demand will decrease, with an increase in demand for houses, specifically properties with outdoor space. There was a similar picture over in Tadley, where Robert Forsyth confirmed that flat rents decreased during Q2 2020 due to a decrease in interest for properties with no outdoor space. Although tenant demand for houses increased, rents remained unchanged.

“The Belvoir Q2 rental index contains in-depth information on rents and tenant demand across the country, as well as predictions for the rest of the year, making it an extremely valuable resource for landlords and investors. Variations in rents and tenant demand for property types confirms the importance of landlords having accurate information and of course it is also advisable to talk to a reputable local agent with expert knowledge of their area.”

To view the Belvoir Q2 rental index in full visit: https://www.belvoir.co.uk/pages/rental-index

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LATEST research: How a CGT tax increase would hit landlords hard

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The changes to capital gains tax (CGT) predicted in July are becoming more likely to kick in this autumn as the Chancellor looks to fill the trillion-pound hold in the UK’s finances.

But new research shows how it would hit landlords hardest in those parts of the country that have seen the biggest historic property price rises.

London and the South East are also the areas where rental yields are lowest, and where landlords are likely to have focused on capital growth rather than annual income, according to new research from Hamptons International.

It says the average higher rate taxpayer landlord in London could see their bill rise by nearly £27,000 to almost £90,000 as a result of the proposed changes.

The Treasury proposes increasing the CGT rate from 28% to 40% for higher-rate taxpayers and from 18% to 20% for a basic taxpayer. 

For a higher rate taxpayer, the proposals would see the capital gains tax bill (excluding allowable expenses) go up from £15,880 to £22,680 – assuming the landlord can make use of their £12,300 CGT allowance. 

Landlords around the country would be affected differently; at least 89% of landlords in London pay capital gains when they sell their property, compared to 31% in the North East, where the average profit on the sale of an investment property is just £5,000, well within the allowance.

The estate agent’s research found that the average landlord who sold their buy-to-let property in England and Wales this year made a £69,000 gross gain, having owned it for almost ten years. 

In London, investors sold their buy-to-let for £236,000 more than they originally paid for it, having owned for 11.1 years. It also finds landlords see less capital growth than the average seller – £88,000 – usually because they buy homes that cost less than the local average and because they prioritise yield.

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Tenants on Benefits – The Conservatives are making you homeless!

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The biggest Housing Benefits Landlord in Nottingham here. So I know what is happening and I want to take you, but I can’t.

Another reason here why landlords won’t accept you.

The house that you want

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London landlords could face significant capital gains tax bills

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Despite the Chancellor Rishi Sunak’s reassurance to the recently-elected back-bench Tory MPs yesterday, that there will be no “horror show of tax rises with no end in sight”, as the government deals with the astronomical costs of coronavirus, it’s inevitable that taxes will rise.

Just where the hammer blows fall remains to be seen, but capital gains tax (CGT) would seem one obvious target, an easily calculated and collectable tax, and London landlords having the biggest gains will have the most to lose.

One estimate is that an average London landlord selling under the proposed new tax regime would have to pay around £90,000 in CGT, that’s if the rumoured proposals come to fruition.

It has been reported that CGT could be brought into line with income tax, which would mean that a higher rate taxpayer, a buy-to-let investor in the capital, according to Hamptons International estate agents estimates, would be paying an extra £26,840 in tax (excluding any deductions for improvements). This would bring the total bill to £89,480, that’s according to research from the firm – it equates to 42pc more than under the current regime, which would currently be a bill of £62,640.

The leaked information has indicated that the Chancellor was considering aligning the CGT rates to income tax, a simplifying change which would mean for a basic rate taxpayer rising from 18pc to 20pc, and for higher rate taxpayers a much more considerable increase from 28pc to 40pc.

Property investors who decide to sell, if these proposed changes are brought in, would be hit most if they have owned rental proprieties for a substantial period in those parts of the country that have seen the highest property price increases. This would inevitably be London and the South East, in the main, though there have been decent gains across the board if you take a 10 to 20 year period.

Agents are anticipating that if the changes were introduced in the Autumn Budget there could be a rush to sell-up before the introduction deadline. Already London has seen falls in rents as a result of the Coronavirus pandemic, and property prices too have fallen as a result of workers considering a move away from the capital, as firms become more relaxed about flexible work routines.

Other factors that, at least in the short term, are affecting the city are the rapid fall in the numbers of international student and the collapse in demand for short-term lettings from tourists. Many landlords who had discovered a lucrative market for short-term Airbnb type lets are now looking for long-term tenants again, increasing supply and therefore reducing prices.

Hampton’s research shows that London landlords have held their rental properties for an average of 11.1 years before selling this year, these being the longest holding periods of any other region across the country. These landlords made a capital gain over the full period of £236,000.

Capital gains tax is calculated by subtracting the buying price from the selling price, assuming the latter is higher, and then deducting buying costs and selling costs (legals and agents fees etc). The owner can also deduct any capital expenses paid out during the period of ownership, such as improvements and structural repairs and other costs which could not been claimed over the years as expenses. Finally, the owner/s can deduct from the gain their CTG allowances of (currently) £12,300. Spouses therefore can together claim up to £24,600 relief if the own the property jointly.

If the rumoured changes are implemented they will be just one more disincentive for landlords to offer much needed rental accommodation and will follow several years of punitive tax changes on landlords. The 3pc stamp duty surcharge on second homes and rentals, a phased-in reduction in mortgage interest tax relief and the removal of the wear and tear allowance have all amounted to a serious attack on the attractiveness of buy-to-lets as an investment for private landlords.

While in other parts of the country outside of the South-east where the gains have been less dramatic, the impact of the proposed changes would be much less, but it is likely that the impact of the changes on London landlords will only go to accelerate the exodus of landlords from the capital to other regions, where income yields are higher.

Capital Gains Tax

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Britain’s biggest landlord and its 55,000+ tenants to feature on TV tonight

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Southwark Council has given a TV crew access all areas for the new Channel 4 series, Council House Britain, airing tonight.

The six-part show promises to be a revealing look at the state of the country’s social housing market from the inside. Two years in the making, cameras follow housing officers, pest controllers and cleaners around the south London borough, the largest social housing landlord in the country, with 10,000 people on its waiting list.

As nearly 40% of Southwark’s population live in 55,000 properties managed by the council, there should be plenty of material, and the series is set to highlight a range of issues from hoarders and environmental health officers dealing with an empty flat with a fridge full of cockroaches, to families fighting eviction.

Show producers say that with behind-the-scenes access to both council workers and their tenants, the series is bursting with characters and their stories, and “provides a warm, uplifting and at times jaw-dropping glimpse into what it takes to find and keep a place to call home”.

Councillor Peter John, leader of Southwark Council, says he’s excited to share the documentary with the world.

“Council officers are often the unsung heroes of the public sector, but just as COVID-19 has revealed the important work our rubbish collectors and social care workers do, Council House Britain will show the country how passionate and committed our housing teams are,” says John.

“I’m grateful to Channel 4 for shining a light on the challenges councils and residents are facing after years of austerity and celebrating the many wonderful and unique people who call Southwark home.”

Southwark Council recently made headlines when it was the first council in the UK to set up its own tenant’ union.

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Belvoir rental index shows robustness of sector during pandemic

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The Belvoir Q2 2020 rental index, which contains two months of data within the UK’s lockdown period, reveals that average rents for Belvoir offices in England, Scotland and Wales decreased in Q2 2020 by around 3.5% versus Q2 2019. When comparing Q2 2020 to the 2019 annual average this shows a smaller

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