New Permitted Development rights do not create worse quality homes

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The Government have announced great news this week regarding new permitted development (PD) rights for repurposing defunct commercial buildings.

However, some leftie University Academics have put out a report (published in mainstream media) on how permitted development has resulted in worse quality housing.

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NRLA website goes live as NLA and RLA disappear

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The National Residential Landlords Association (NRLA) has been fully launched following several months of gestation, and its new website is now live.

This means that the National Landlords Association and Residential Landlords Association no longer exist and both their former websites now redirect visitors to the new NRLA site.

The merger was announced in August last year, and brought together both associations into the one organisations including all membership and activities.

“A message on the old websites now reads: “You should have received an email with your brand new membership number,” it says. “Your login details remain unchanged so you can easily log into your account using your existing email address and password.”

The NRLA how includes some 80,000 mainly smaller landlords who between them own 500,000 properties within the private rental market.

Friendly competition

“After more than 20 years of friendly competition the time is right to create a single organisation to represent and campaign for landlords,” a joint statement from NLA and RLA said.

“With so much of our work done in parallel there are major benefits to be gained for our landlord members.”

The NLA was founded in 1988 and the RLA in 1973 but in recent years had been pursuing almost identical roles.

After the changes were voted through by members, the chief executives of both organisations (Richard Lambert and Andrew Dixon) stepped aside and Ben Beadle was revealed as the new Chief Executive of the combined organisation.

Counsel coup

The NRLA has also announced that leading housing lawyer and former RLA policy director David Smith has been announced as legal counsel for the National Residential Landlords Association.

David is a partner at JMW Solicitors in London, specialising in landlord and tenant and property litigation in the residential sector.

He will use his specialist legal knowledge to help the NRLA scrutinise legislation and the ways in which it will impact the PRS and private landlords and will advise the association when it comes to raising legal challenges, on seeking amendments to legislation, and on its approach to the future of the PRS.

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LATEST: Rental properties housing ‘shielding’ tenants can now be visited for repairs and maintenance

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Updated government guidance has given the green light for landlords to resume maintenance and repairs at properties where tenants are shielding – or to use the technical term ‘clinically extremely vulnerable’ people.

Civil servants have updated the official Covid guidance for landlords and tenants, which now says that from 1 August 2020, “following the relaxation of the guidance for clinically extremely vulnerable groups, clinically vulnerable or shielding households, it is advised they may permit landlords and contractors to carry out routine repairs and inspections providing that the latest guidance on social distancing is followed.

“We have also updated our local authority guidance with advice clarifying that local authorities may now resume routine inspections in people’s homes dependent on their individual priorities and enforcement policies.”

More relaxed

This more relaxed approach also now applies to viewings, which the Ministry of Housing, Communities and Local Government says can be completed at properties where people are shielding, but that they should be as short as possible and respect social distancing rules and – ideally – those who are shielding remain outside the property.

But the guidance also remains constant in most other areas – including that landlords and letting agents should not conduct viewings in properties where tenants are symptomatic or self-isolating, and that viewings should be conducted ‘virtually’ first – assuming the property was photographed or a virtual tour created beforehand.

“Tenants’ safety should be the first priority of letting agents and landlords,” the guidance says.

Read the updated guidance in full.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Rental properties housing ‘shielding’ tenants can now be visited for repairs and maintenance | LandlordZONE.

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Landlord launches ‘five-star’ private rental market reviews website

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A landlord has launched a private rental market reviews platform that seeks to enable good tenants and landlords to promote themselves to each other, for free, and give each other star-based score.

Former RAF helicopter pilot turned Oldham landlord Jon Maumy says his Tenancy Trust platform does not – like other reviews sites – concentrate on tenants and their complaints.

He says the service prompts landlords to ask tenants to give them reviews and also tenants to ask landlords for feedback.

And Tenancy Trust allows both landlords and other service providers to promote their properties and services to tenants free of charge.
Maumy says he came up with the idea while researching the property market as part of a post-graduate business course at the University of Northampton.

“Property rentals are like a blind date where both parties have to make a rapid commitment,” he says.

“Landlords entrust their costly properties to tenants they have never met who in turn agree to hand over a significant part of their income.

Horror stories

“While there are horror stories on both sides, the majority of landlords and tenants are decent but they need a better way to show it.

“Tenancy Trust allows them to use reviews in a pro-active way to build trust. It also plays a useful role in the referencing process.”

Maumy claims his service also enables tenants build a track record to help secure the best properties just as they might use their CV to get the right jobs.

“This is particularly important now competition is getting tougher and people are renting for longer before they buy,” he says.

Visit Tenancy Trust.

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LATEST: Formal pre-action protocol on the back burner ‘for the time being’

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The government has confirmed to LandlordZONE that its much-discussed pre-action protocol for the evictions process has been shelved for the time being.

This follows last Friday’s announcement that it is instead introducing more basic pre-action rules for landlords that nevertheless must be met before a possession hearing can be continued or granted.

These come into force on 23^rd August, the same day the eviction ban ends, and will apply to both existing action and new ones requiring landlords to:

• Provide a ‘reactivation notice’ informing the court and tenant in writing without which the case will remain dormant.
• Consider that if the action is about the non-payment of rent, the claim must set out what knowledge if any the landlord has as to the effect of the Coronavirus pandemic on the tenant and their dependants
• Produce the full arrears history in advance rather than at the hearing – this is encouraged rather than required.

The rules also suspend the standard period between issue of a claim form and hearing which would usually be not more than eight weeks.

Protocols ‘lite’

These pre-action rules are in effect a ‘lite’ version of a protocol, although the Ministry of Housing, Communities and Local Government (MHCLG) says that: “We remain interested in exploring the introduction of a pre-action protocol for private tenants in the future.

“New court rules – in place until end March 2021 – will require landlords to set out information about a tenant’s circumstances, including the effect of the COVID-19 pandemic on a tenant’s vulnerability, when bringing a possession claim,” an MHCLG spokesperson says.

“Where this information is not provided, judges will have the ability to adjourn proceedings until such information is provided.

“This encourages landlords to have the right conversations with tenants before seeking repossession – helping to achieve the aims of a pre-action protocol. Through guidance, we are also encouraging landlords to agree to rent repayment plans or rent flexibilities where possible.”

Struggle

Paul Shamplina of Landlord Action says: “Using pre-action rules like this makes sense, but I really worry that landlords who have been waiting months from before Covid to evict tenants who haven’t been paying their rent, are going to struggle to re-engage and find out how Covid has affected their tenants.

“It is not practical and the chances of the tenant playing ball all pretty slim. So landlords are going to struggle to fulfil the pre-action rules and get their hearing.”

Read more about the eviction process rule changes.

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BREAKING: Wear a mask when in your letting agent’s branch, government urges landlords

admin    Uncategorized     agents

Landlords who visit their letting agent’s branch for a catch-up should wear a mask when inside the office, the government has urged.

From today onwards it is mandatory for everyone to wear masks in shops, enclosed shopping centres, supermarkets, train and bus stations as well as banks and building societies or risk a £100 fixed penalty fine if they refuse to do so after being asked.

The new regulations are not specific about estate agencies – somewhat strangely as many high streets contain dozens of them – but the guidance issued last night by the Ministry of Housing, Communities and Local government to the industry nevertheless strongly encourages landlords and tenants visiting branches to wear them.

“The face covering regulations do not explicitly refer to estate and letting agents but we would strongly encourage all members of the public who are visiting an agent’s office or viewing a property to wear a suitable face covering in order to prevent the spread of infection,” it says.

“We would also recommend that any agent who is interacting directly with the public also wears a face covering unless other protective measures are in place such as a screen.”

Health secretary Matt Hancock, who has set the new regulations to last for a year, says: “Everyone must play their part in fighting this virus by following this new guidance.

“I also want to thank the British public for all the sacrifices they are making to help keep this country safe.”

Read more about keeping safe during Covid.

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Worries mount among leaseholders over plans to give them responsibility for apartment block safety

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A poll of 1,000 leaseholders within apartment blocks across the UK has found that 70% are worried by the government’s decision to press more responsibilities on them following the Grenfell Tower disaster.

The extra duties for building management and safety follow the draft Building Safety Bill published earlier this week which will hand those who manage apartment blocks increased financial and legal obligations including the creation of an ‘accountable person’. The Bill is the government’s response to Grenfell Tower and the need for regulatory reform.

But if the government’s expected moves to reform the leasehold system following this week’s Law Commission reports – which freeholders argue will remove them from the equation if ground rents are abolished – will transfer these new responsibilities to leaseholders and commonholders.

The research, commissioned by the UK’s leading freeholders, reveals that if this were to happen, many leaseholders believe it would be ‘a disaster’.

Health and safety

Some 67% of respondents are worried about the extra admin and neglect of building maintenance. A further 65% foresaw personal health and safety as an issue, given many leaseholders’ “lack of awareness around certain issues and understanding of up-to-date legislation”.

Additionally, 63% fear conflict with other residents when it comes to decision making.

Richard Silva, Executive Director of residential freeholder Long Harbour, says: “The Government is right to be introducing these new reforms to building safety, but this new evidence clearly shows that leaseholders do not want to be landed with these responsibilities themselves.

“As professional freeholders, we are perfectly positioned and equipped to take on these legal and financial responsibilities, but this will be impossible if the Government drives freeholders out of the market by removing our financial incentive, in the form of a reasonable ground rent.”

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Disappointment as six-month notice period introduced in Wales

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Landlords in Wales will need to give tenants six-months’ notice when repossessing homes under new rules announced by the Welsh Government today in response to the Covid-19 crisis. Landlords have reacted with anger and disappointment to the plans, which will leave some without rent for over the year and are being implemented with immediate effect. […]

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Scrapping Section 21 to be delayed until Covid is over, minister confirms

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The government has indicated that that it will not be bringing the much debated Renters’ Reform Act forward as draft legislation until the Covid crisis is over, which LandlordZONE has been informed means at earliest next year.

Given the six to nine month lead times for legislation to make it through parliament, even with cross-party support, this means it will a year until Section 21 notice evictions are abolished.

The Renters’ Reform Act as proposed is the tool that the government intends to use to do away with Section 21 of the Housing Act 1988 ‘no fault’ evictions, which many landlords use to regain possession of a property when they wish to sell it or move in themselves.

Chris Pincher told parliament yesterday in reply to an urgent question from shadow housing secretary Thangam Debbonaire about giving tenants greater rights, that the draft legislation will see the light of day ‘in due course, when we have [a] stable terrain on which to do so’.

“That will improve tenants’ rights. We will also ensure that there is provision for a lifetime deposit scheme in that Bill,” he said.
The act has, by any measure, been severely disrupted by the Covid crisis,” he said.

The Renters’ Reform Act announced in the Queen’s Speech on 19^th December just after the general election following a consultation that ran from July to October 2019 which sought views on abolishing Section 21.

Originally announced in April last year, the proposed legislation was described by Ministers as an attempt to ‘modernise’ the rented sector, and has been heralded by government as a ‘fairer deal for both landlords and tenants’.

But so far the government has yet to even publish its analysis of the feedback, a sure sign that Ministers at MHCLG have neither the time nor inclination at the moment to tackle this thorny issue.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Scrapping Section 21 to be delayed until Covid is over, minister confirms | LandlordZONE.

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Chancellor Rishi Sunak has ordered a review of capital gains tax (CGT)

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Ostensibly the review is to look into whether the current tax on gains from asset sales – Capital Gains Tax (CGT) – is “fit for purpose” and to see if the current rules “distort behaviour.”

Whether this results in changes or not, the fear is that as revenue, and lots of it, will need to be raised post the massive Covid borrowing, so this could be the precursor to a “tax grab” on the wealthy?

Landlords and home owners would be an obvious and an easy target given the transparency of property asset translations. Tweaking the current regime of allowances, exemptions and reliefs is a simple paper exercise for the government.

Home owners are currently and always have been exempt from capital gains tax on their principle residence. Second homes, holiday lets and buy-to-lets are all subject to CGT when they are sold. But recent rule changes mean that the CGT is now payable 30 days after a sale rather than as previously, payment was delayed until after the tax reporting period end on the 31^st of January.

It’s always a stated aim of governments to simplify tax rules and collections, even though it never seems to happen; so it would make perfect sense that the Chancellor asks the Office of Tax Simplification, an independent arm of the Treasury, to identify opportunities to simplify CGT.

Capital gains on assets ranging from shares to second homes and buy-to-lets are traditionally taxed at lower levels than income tax, and therefore the very wealthy usually try to arrange their affairs so that they pay CGT in preference to income tax.

Having a lower rate for CGT would seem fair given that to make a gain with shares, property or from building a business entails taking a risk, whether it’s a business risk or as a pure investment. Income from employment and cash savings attracts a higher tax rate as there’s no risk – though good luck to anyone who can find an income from savings at present.

On the 11^th of March the Chancellor announced an increase in the capital gains tax (CGT) allowance, but a significantly reduced entrepreneurs’ relief in his spring Budget. The CGT allowance was increased to £12,300, but the time to pay CGT on property sales was cut to 30 days from the date of sale, as from 6 April 2020.

The most significant change was the lifetime limit on entrepreneurs’ relief in CGT, which costs the Treasury over £2bn. It was reduced from £10m to £1m. However, corporation tax remained unchanged at 19%, though it seems the planned 1% annual reduction has been dropped.

CGT is payable on the gains above the CGT allowance, so a couple selling a buy-to-let owned jointly would pay CGT only on any gain above their combined allowance of £24,600.

The actual gain is calculated by: Selling Price minus the Buying Price and buying / selling Transaction Costs, and including any Capital Costs expended on the property during the course of ownership.

The actual amount of tax paid will be determined by an individual or couple’s other income.

Rates for Capital Gains Tax

From 6 April 2017 onwards the following Capital Gains Tax rates apply:

• 10% and 20% tax rates for individuals (not including residential property and carried interest)
• 18% and 28% tax rates for individuals for residential property and carried interest – carried interest is a share of any profits that the general partners of private equity and hedge funds receive as compensation regardless of whether they contribute any initial funds.
• 20% for trustees or for personal representatives of someone who has died (not including residential property)
• 28% for trustees or for personal representatives of someone who has died for disposals of residential property
• 10% for gains qualifying for Entrepreneurs’ Relief
• 28% for Capital Gains Tax on property where the Annual Tax on Enveloped Dwellings is paid, AEA is not applicable
• 20% for companies (non-resident Capital Gains Tax on the disposal of a UK residential property)

Capital Gains Tax – A Brief History

Capital Gains Tax was introduced for the first time by the Labour government in 1965. The then Chancellor set CGT at 30pc to prevent individuals avoiding paying income tax by switching their income into capital. The CGT allowance was £9,500.

Under the Labour government of 1970s inflation reached 27pc, so in 1982 the Conservative Chancellor Geoffrey Howe, introduced indexation relief, an allowance for the effects of inflation on asset prices.

In 1988 income tax for high-rate taxpayers was reduced from 60pc to 40pc. Basic rate taxpayers had their rates reduced from 30pc to 25pc. CGT at this time became a dual rate tax following the income tax rates, above a new allowance of £5,000

By 1997 the CGT allowance had reached £6,500 and in 1998 Gordon Brown replaced indexation with taper relief. The meant that the length of time an asset was held was taken into account, with a lower the rate of tax for longer ownership.

By 2002 the allowance had reached £7,700 and 2008 saw Alistair Darling’s first budget scrap the dual rate of CGT and introducing a new lower, single rate of 18pc, but with no taper relief. By 2009 the allowance £10,100.

2011 saw rates at 18% and 28% for individuals for lower and higher rate tax payers, and 10% for gains qualifying for Entrepreneurs’ Relief.

2016 saw 10% and 20% tax rates for individuals, 18% and 28% tax rates for individuals for residential property and carried interest, still 10% for gains qualifying for Entrepreneurs’ Relief, and 20% for companies (non-resident Capital Gains Tax on the disposal of a UK residential property).

Properties owned before 1982 and Capital Gains Tax

If you dispose of a property by sale or transfer acquired before 1 April 1982 and disposed of after 5 April 1988 any gain is ‘rebased’ to 31 March 1982. What that means is that CGT is charged only on any gain attributable to the period since that date. You will need to get a professional valuation for the property to determine its market value then – as at 31 March 1982.

Capital Gains Tax rates and allowances

Capital Gains Tax – background History – House of Common Library

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