Today in politics: short-term lets, Local Housing Allowance and agents

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We look at a Lords’ debate on short term lets and questions on the issue of getting the homeless into accommodation and urgent repairs.  Government ‘no plans’ to regulate short term lets Baroness Gardner of Parkes (Conservative) yesterday received a response to her oral question asking the Government what plans it has to discuss with local authorities […]

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Scotland’s worst landlord is jailed for two years after ignoring regulations and fines

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Repeat offender Mohammed Murtaza had been refused registration and fined 12,000 but continued to rent out multiple properties in Fife despite warnings.

A rogue landlord who previously made legal
history for being the first person to be banned from renting out homes in
Scotland has been jailed for failing to pay a £12,000 fine.

Mohammed Murtaza starts a two-year prison
sentence after receiving the fine in January 2019 for admitting illegally
renting out properties in Fife.

Two years before that he had been subject to
the first ever disqualification order granted by a Scottish court for breaching
anti-social behaviour legislation and by continuing as a landlord after his
registration was refused.

Murtaza was shocked by the sentence when he appeared
in the dock at Kirkcaldy Sheriff Court this week for a confiscation hearing, when
prosecutors aimed to seize earnings he is alleged to have made from his crimes.

Sheriff Jamie Gilchrist QC told Murtaza: “You
have made no effort to pay the fines. It must be said that the fines were set
at that level because of the repeated offending, not only on this complaint but
you have previous convictions for doing the same thing.”

A 12-month order had been made against Murtaza
in May 2017 after he had let properties in Valley Gardens, Dunnikier Road and
Kennedy Crescent, Kirkcaldy (pictured), despite being refused a listing on Fife
Council’s landlord register.

Murtaza had also been refused registration in
June 2015, after conviction for failing to comply with duties under anti-social
behaviour legislation and for breaching gas safety legislation.

The disqualification order made it a criminal
offence for him to rent out residential property in the region. However, Murtaza
went on to let out two properties in Kirkcaldy later in 2017.

When Sheriff Gilchrist fined Murtaza last year,
he said the unregistered landlord had £70,000 equity on his two properties and
was clearly able to pay a substantial penalty. He was given six months to pay
and banned from registering as a landlord for a further four years.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Scotland’s worst landlord is jailed for two years after ignoring regulations and fines | LandlordZONE.

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Multi-Sale SDLT?

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I’ve sent the recent article to my account as I have a building in 10 separate units let on ASTs as it reads as though this qualifies for the reduced SDLT – I even called the Inland Revenue who said ‘sounds as though it does’

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RLA and Appraisers UK develop HMO course for property surveyors

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Property surveyors will be able to broaden their knowledge of Houses in Multiple Occupation (HMOs) to conduct valuation surveys in such properties, in a new training course. The classroom course, developed by the Residential Landlords Association and Appraisers UK, will see delegates learn about the additional duties placed on HMO landlords when it comes to […]

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Can you split Property Portfolio in two parts to Incorporate?

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We currently have 20 properties, 10 of them in Surrey where we live and remaining 10 in Ashford Kent around 47 miles from our home.

As we understand incorporation relief is only available if we incorporate whole of portfolio.

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Beware the coming changes to Capital Gains Tax rules:

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CGT:

From 6 April this
year there are two phased in changes coming which will dramatically
affect the tax paid on residential property sales by UK residents,
individuals and trustees.

For personal
taxpayers capital gains are currently reported in the annual
self-assessment tax return and paid anywhere between 10 months and 22
months after the sale date of a property. The new rules after April
bring the reporting and payment to just 30 days, giving the
government a one-off bonus, an additional tax take of around one and
a quarter year’s revenue. This is calculated to be worth around
£5bn to £8bn.

Where CGT is due on
the disposal of UK residential property (holiday home, buy-to-let
etc) by a UK resident or trustees, a new online return will have to
be filed, together with payment on account of CGT within 30 days of
the date of completion of the sale. (Finance Act 2019 Schedule 2).

The new regime will
apply only to taxable gains accruing on disposals of UK residential
property made on or after 6 April 2020 (in the tax year 2020/21). It
will mean that where contracts are exchanged under an unconditional
contract in the tax year 2019/20 (6 April 2019 to 5 April 2020) but
completion takes place on or after 6 April 2020 the 30 days rule will
not apply. The gain should be reported in the 2019/20 self-assessment
return and paid in the usual way.

If, on the other
hand, contract exchange takes place on or after 6 April 2020, or
where the contract is conditional, and the condition is not satisfied
until after 6 April 2020, the 30 day rule will apply, an HMRC return
must be filed and payment made within the 30 days deadline.

The changes to the
CGT rules could to catch out unsuspecting owners of UK residential
properties where their sales are subject to the tax, for example
buy-to-lets and holiday homes, says accountants Kreston Reeves. Those
not aware of the changes will be exposed to interest and penalties,
says the accountants, who are business and financial advisers.

No return will be
due where the gain is not chargeable, for example, because it is
covered by Private Residence Relief – this applies to owner
occupiers as their main residence. The changes are in line with the
CGT rules which already exist for non-UK tax residents who dispose of
UK property.

The normal rates of
CGT applicable to UK residential property will apply – 18% for basic
rate taxpayers and 28% for higher and additional rate taxpayers.

Jo White, Tax
Director, Kreston Reeves says:

“Under the current
regime CGT is paid by individuals anywhere between 10 and 22 months
after the date of the disposal. From 6 April 2020, a payment on
account of any CGT due must be made within 30 days of the transaction
completing.

“Judging by the
conversations we are having, many are still unaware of the changes,
leaving them open to penalties and interest if they fail to meet
their tax reporting and payment obligations.”

Taxpayers who file
their return late may be subject to:

• Immediate late
  filing penalty of £100.
• Three months
  late – penalties of £10 per day for 90 days.
• Six months late
  – the greater of 5% of the tax due or £300.
• 12 months late
  – the greater of 5% of the tax due or £300.

HMRC could also
charge penalties and interest for underpaid CGT.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Beware the coming changes to Capital Gains Tax rules: | LandlordZONE.

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Exclusive: Rob Moore of Progressive Property reveals views on property academy regulation

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Following our recent article on property investment academies and the questionable activities of some operators, we asked the leading player in the market what should happen next.

Last month
LandlordZONE shone a light into the famously Wild West world of property
investment academies, many of which are hugely popular with novice investors.

As our
investigation showed, thousands of people have been attracted to this sector by
the promise of making both income and capital from property, often with small
amounts of – or zero – initial cash to invest themselves.

Their enthusiasm is
understandable; courses offer the training needed to operate rent-to-rent
schemes that enable ‘no cash down’ investment as well as the opportunity to
eventually become a more traditional buy-to-let investor.

Many property
academies are mini businesses by themselves, charging between £1,000 but up to
£15,000 for courses that offer mentoring and access to deals and mortgage
products.

The problem is that
it’s unregulated despite those within it handling tenant deposits,
down-payments on properties and signing leases that can last five years.

These academies
vary in what they offer but the best-known and biggest is Progressive Property.

It claims not to
employ the high-pressure sales tactics and provide the low-quality training
that its less scrupulous competition are well known for, and says that if the rest
of the property academy world adopted its approach, it would be a better place.

Progressive
Property has been around for nearly 15 years and is based in Peterborough, as
are many of the properties it manages or owns.

Its co-founder, Rob
Moore, is considered to be the ‘king’ of the property investment trainers. Does
he think the industry needs more regulation, a key message that emerged from our
article.

“I would be worried
if regulation gets a bit too heavy handed and you use a sledgehammer to crack a
nut,” he says.

“A good example is
the ‘sale and rent back’ or SRB sector that flowered briefly [during the
noughties until being shut down by the Financial Conduct Authority in 2012].

“Because of a few
people were slightly abused by SRB operators, it then became over regulated and
it ceased to be a commercial opportunity any longer and essentially [the FCA
activity] stopped the sector in its tracks.”

Moore says the property
academy sector should work together to stop a similar scenario developing.

“The one thing all
of us operating within this market have in common whether we are a landlord,
investor, educator or a commentator on a LandlordZONE forum or even a critic,
is that we all agree that property is a great asset class.

“We should be more
united in remembering that and we shouldn’t have this big divide and should instead
work together more to create voluntary regulation and a code of practice.

“I’m up for
anything that protects the new property investor, but I don’t want to see the regulation
to be so heavy that you can’t say or do anything.”

Moore claims that
whether you love or hate property academies, companies like his have provided
thousands of people with new careers and pensions, and that heavy-handed
regulation could end this overnight.

“Capitalism and the
free market is always a balance between innovation, creativity, competition and
regulation – too little regulation and you get the Wild West, too much and you
kill the market,” he says.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Exclusive: Rob Moore of Progressive Property reveals views on property academy regulation | LandlordZONE.

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Liverpool plans ‘alternative’ licensing scheme

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Liverpool City Council has confirmed it will NOT seek a Judicial Review on plans by the Secretary of State to block its plans to renew its controversial selective licensing scheme. However, the local authority is now planning an alternative. A city council cabinet report said officers from the authority are working with the Ministry for […]

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MEES Regulations: What you can do to prepare for the legislation deadline

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In 2018, the Government introduced new legislation to improve the energy-efficiency standards of properties in the UK’s private rented sector.

The Domestic Minimum Energy Efficiency Standard (MEES) now
states that all private rented properties must achieve a minimum Energy
Performance Certificate (EPC) grade of E, or higher. This means that landlords
who are currently renting out a property with an EPC rating of F or lower may
face a penalty charge of up £4000.

The legislation gives landlords until 1 April 2020 to either
improve the standard of any property they are currently renting out to a rating
of E or above – including existing tenancies – or to register
for an exemption, if applicable.

For landlords who are unsure how
they can improve their EPC rating, the looming deadline may seem daunting. Here,
we explain the details on the MEES compliance deadline and provide some tips to
help landlords check and improve their property’s EPC rating.

Hamilton Fraser’s guide, ‘New
energy performance certificate: Keeping your property green’, provides
further information about Energy Performance Certificates and how to find your
EPC.

What are the enforcements
and penalties?

The MEES Regulations are enforced by local authorities, who
have been granted a range of powers to ensure compliance. If a local authority
has reason to believe that a landlord has failed to fulfil their obligation to
comply with the MEES legislation by 1 April 2020, they can serve the landlord
with a compliance notice. If there is a confirmed breach of compliance, the
landlord could receive a financial penalty.

A compliance notice may request information about:

• The EPC that was valid during the time the
  property was let
• The tenancy agreement used for letting the
  property
• Information about energy efficiency improvements
  made to the property
• Any ‘Energy Advice Report’ that was carried out
  on the property
• Other relevant documents

If a local authority confirms that a landlord’s property is
in breach of the regulations, they can be served with a financial penalty up to
18 months after the breach. Local authorities have discretion in deciding the
level of the penalty, up to the maximum allowed by the regulations.

The financial penalties for breaches of regulations are:

• Up to £2,000 for renting out a non-compliant
  property for less than 3 months
• Up to £4,000 for renting out a non-compliant
  property for 3 months or more
• Up to £1,000 for providing false or misleading
  information on the PRS Exemptions Register
• Up to £2,000 for failure to comply with a
  compliance notice

The maximum amount that a landlord can be fined is £5,000
per property. More information about enforcements and penalties can be found here.

What are the
exemptions?

Landlords may be exempt from the MEES regulations under
certain circumstances. These exemptions are based on circumstances where either
the improvements costs are too high; it would be unreasonable to expect a landlord
to prepare their property by the specified deadline; the landlord has made
reasonable efforts to make all the necessary changes and the property still does
not achieve the minimum rating; or if the modifications required for the
improvements would be considered detrimental to the property.

Listed exemptions for the MEES regulations are:

• ‘High cost’ Exemption – where the cheapest
  recommended improvement would exceed a cost of £3,500
• ‘Seven year payback’ Exemption – where a
  recommended measure would fail to make savings on energy costs over a period of
  seven years
• ‘All Improvements Made’ Exemption – where all
  necessary improvements have been made and the property remains sub-standard
• ‘Wall Insulation’ Exemption – where wall
  insulation improvements are unsuitable for a property
• ‘Consent’ Exemption – where third party consent
  is required for improvements
• ‘Devaluation’ Exemption – where improvements
  would cause property devaluation
• ‘New Landlord’ Exemption – temporary exemption
  due to recently becoming a landlord

More information about the MEES regulation exemptions can be
found here.

How can you check and
improve your EPC rating?

If you can’t find your EPC document or you’re unsure whether
your property has one, you can check the online register of issued EPCs for England and Wales, Scotland and Northern Ireland.

You are unable to rent or sell your property without a valid
EPC certificate, so if you do not have one you’ll need to book an assessment.
An assessment can cost up to £120 depending on the type of building, but for
most buildings, the price should be lower than this. When you’re ready to have
the energy efficiency standard of your property assessed, you will need to find
an accredited energy
assessor in your area.

In order to prepare for your assessment, you should have the
relevant improvements made to your property to make sure that you achieve an
EPC rating of E or above. EPCs give advice on what you can do to improve the
energy efficiency of you property, so if you already have an EPC that is a good
place to start.

Here is a list of key improvements that can help to improve
your EPC rating:

• Replacing glass in windows and doors with double
  or triple-glazing
• Insulating the loft, walls and floors with
  high-quality insulation
• Replacing your old boiler with a newer, more
  efficient model
• Upgrading all light bulbs to LED light bulbs
• Installing low-flush toilets and water-saving
  showers
• Replacing your older appliances with newer
  models that come with ‘eco’
  or ‘energy saving’ modes

By taking steps to make these improvements, you will increase your chances of achieving the minimum EPC rating of E before the MEES regulation deadline on 1 April 2020. For more advice on complying with landlord-related legislative changes, visit Hamilton Fraser’s legislation guide.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – MEES Regulations: What you can do to prepare for the legislation deadline | LandlordZONE.

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Taxation hurts tenants by turning landlords to Airbnb

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Tenants, including many with children, are finding it harder to access long term homes to rent as Government policy is driving landlords to move into the holiday lettings market, says the leading landlords’ organisation.

The warning comes as figures published today show that Airbnb accommodation now accounts for one in every four property listings in some parts of the country.

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