Letting agent closed their office?

admin    Uncategorized     agents

Hi – my letting and managing agent closed their local office and made the staff redundant, without informing me, or other landlords and tenants.

They tried to keep it secret, by re-routing phone calls and emails and saying the local manager was away

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30,000 strong list of Buy-to-Let and portfolio buyers is growing at a record rate

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This last year has been an incredible one for Landlord Sales Agency. From entering the market as the top landlord portfolio exit specialists to delivering on our promises to Property118 landlords to sell their entire portfolios, we’ve seen success stories time after time.

View Full Article: 30,000 strong list of Buy-to-Let and portfolio buyers is growing at a record rate

BREAKING: wrong time to raise taxes, but I’m going after buy-to-let landlords anyway…

admin    Uncategorized     agents

In an apparent re-run of Harold Wilson’s 1970s investment income tax surcharge, Labour plan to re-introduce such an additional layer of tax to what is termed “unearned income”.

The Wilson Labour government applied an investment income surcharge of 15% and kept the top rate on investment income at 90%. In 1974 the cut was partly reversed and the top rate on earned income was raised to 83%. With the investment income surcharge this raised the top rate on investment income to 98%, the highest permanent rate of tax ever applied in the UK.

In a speech in Lincoln on 18 February 1974, Dennis Healey, the then chancellor promised he would “squeeze property speculators until the pips squeak.” However, he later denied having used the phrase, whether as Shadow Chancellor of the Exchequer, from 1972 to 1974, or as Chancellor of the Exchequer, from 1974 to 1979, saying the Times newspaper may have misquoted him.

Proof of the pudding: it wasn’t long after (1976) Britain faced its worst ever financial crisis. The Labour government was forced to apply to the International Monetary Fund (IMF) to bail it out. An IMF loan was granted but the fund insisted on deep cuts in public expenditure, greatly affecting economic and social policy.

New tax on buy to let

Rachel Reeves yesterday said she would apply the extra layer of tax on buy-to-let and other investment income such as stocks and shares, but admitted ‘Now is the wrong time to raise taxes’

While criticising Boris Johnson for presiding over a “triple whammy” of tax rises, including an increase in National Insurance contributions, a freeze to income tax thresholds and higher council tax, she nevertheless proposed her own tax hike.

Speaking in Bury, Greater Manchester Ms Reeves was with Christian Wakeford the Tory MP who defected to Labour this week. Ms Reeves cited the increased pressure on families as energy prices increase and Britain heads for a cost of living crisis as the reason behind her bombshell revelation for landlords.

In another interview yesterday Ms Reeves said Labour would keep the NHS and social care dividend that the Tory Government plans, to be paid for by increasing National Insurance.

She said that to pay for the NHS dividend, instead Labour would increase taxes on buy-to-let properties and those who earn money from investments.

The tax will hit the elderly hardest

This new tax would have the effect of hitting elderly voters, those who, faced with zero returns on cash deposits, have have put their savings into property or the stock market.

A recent report from the University of York and the Nationwide Foundation found that a substantial number of “baby boomer” landlords were now “ageing out” of the rental market, and they are not being replaced at the same rate by younger landlords due to diminished returns and more stringent regulation.

This could mean that there are not enough rental homes to go around in future, especially for those tenants on lower incomes and who receive benefits. Another tax hike would simply accelerate this process further.

Ms Reeves went on:

“We’ve said that it’s not right that the only people who are being asked to contribute to the health and social care levy are those people who go out and work every day and the people who employ them. If you get your income from stocks and shares and dividends or a portfolio of buy-to-let properties, then you pay no additional tax whatsoever in this health and social care levy,” she stated.

However, according to research by the London School of Economics, buy-to-let landlords are most likely to be white collar professionals, 12 per cent of buy-to-let landlords are blue collar workers, while seven per cent are retired and use their property income as a pension. Young couples now make up 35 per cent of buy-to-let landlords in the UK.

The Laffer effect

History has shown that raising taxes too much discourages enterprise and puts a damper on economic growth. The Laffer effect takes its name from economist Arthur Laffer who developed the inverted “U” “Laffer Curve”, based on the economic principle that people will adjust their behaviour in the face of the incentives created by tax rates.

Higher taxes decrease the incentive to work and invest, compared to lower rates. If this effect is large enough, it means that at some point further increases in the rate will actually lead to a decrease in total tax revenue for the Treasury. For every type of tax there is a threshold rate above which the incentive to produce more diminishes, thereby reducing the amount of revenue the government receives.

Landlords already selling-up

With a desperate shortage of rental accommodation at reasonable prices, landlords are already selling up in large numbers as they feel the pain of existing taxes and government regulations. Another 15% of extra tax on top and the number of private rental homes for rent in Britain could drop dramatically.

According to the Nottingham Building Society almost a million landlords, more than a third of the total, will review their property portfolios this year, with the number planning to sell homes already outnumbering those planning to buy new ones. In some popular parts of the country a severe lack of rental homes has recently led to bidding wars.

Ms Reeves’ plan may well reduce the National Insurance the average worker pays, but if they don’t have a roof over their heads, they are likely to be far worse off.

Treasury sources told The Daily Telegraph that raising the required £12 billion for the national health and social care levy could only be achieved by increasing either NICs or income tax.

Ms Reeves replied to this by saying:

“Well, there’s lots of papers out there from different organisations that show you could do exactly that. We will set out our plans ahead of a general election, but it’s not right just to ask those people who go out to work for a living to pay higher taxes, especially at a time when the prices of everything are going up.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: wrong time to raise taxes, but I’m going after buy-to-let landlords anyway… | LandlordZONE.

View Full Article: BREAKING: wrong time to raise taxes, but I’m going after buy-to-let landlords anyway…

DWP promises waiting time cut in UC arrears repayments

admin    Uncategorized     agents

The DWP plans to speed up repayment of arrears for tenants on Universal Credit next month, according to safeagent.

Landlords can currently wait up to nine weeks for arrears to be paid, but the DWP has told the accreditation scheme and other stakeholders that it plans to change its processing method and cut the timescale to about seven days. However, the changes will only apply to new rent arrears applications – safeagent reports that Direct Rent payments as well as Rent Arrears payments will continue to be processed separately.

Big difference

Isobel Thomson, safeagent’s chief executive, says the change will make a big difference to landlords who would know that in the event a tenant on Universal Credit falls into arrears that these will be paid quicker. She adds: “We look forward to the detail of the change when it is launched and well done to DWP for their work on this for the benefit of tenants, landlords and agents.”

Bill Irvine, at UC Advice & Advocacy, says there is currently a lag in payments when a landlord is awarded an Alternative Payment Arrangement (APA) or Managed Payment, which is caused by DWP using two separate systems. “One deals with the Managed Payment (monthly housing cost) which is calculated and paid on a calendar monthly basis, whereas the arrears element is calculated monthly but paid on a four-weekly cycle, 12 times a year,” he tells LandlordZONE. “Where an APA is awarded late in the tenant’s benefit assessment period, it can cause the arrears payment to miss the payment cycle and means a further wait of four weeks before payment is received. I suspect that’s what DWP is referring to and, if true, would represent progress.”

Wrongly refused

However, Irvine says landlords are still wrongly being refused APAs without explanation, as well as having APAs cancelled without warning or justification. He adds that the DWP could do much to improve its service including by suspending, rather than cancelling, payment when concerns arise over the legitimacy of continuing payments.

LandlordZONE has contacted the DWP for comment.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – DWP promises waiting time cut in UC arrears repayments | LandlordZONE.

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Support grows for calls to include landlords in cladding fund

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More pressure is being put on the government to rethink its decision to exclude buy-to-let landlords from receiving cladding support.

Communities Secretary Michael Gove revealed that landlords would not be included in the cladding remediation fund initiative; instead, funding will be targeted initially at owner-occupiers and that ‘negotiations…will explore whether this support should extend to other leaseholders such as landlords’.

No logical basis

The National Residential Landlords Association has already called for him not to ignore landlords, which Propertymark has now echoed. Timothy Douglas, policy and campaigns manager, says there is no logical basis on which they should be excluded. “Buy-to-let landlords are no more to blame and deserve justice just as much as any other leaseholder to ensure they are not penalised for simply being landlords,” says Douglas. “It’s vital that private rented sector landlords are included in the support.”

Yesterday, Michael Gove met developers to discuss how to pay for works to rectify cladding and fire safety issues; they have told the government they must not be the only ones to pay the potential £4bn cost of fixing fire safety problems in tower blocks. A Department for Levelling Up Housing & Communities spokesperson says: “The roundtable was attended by senior executives from the country’s biggest developers, and these representatives agreed leaseholders should not pay. We continue to engage with them to ensure they deliver a fully funded action plan by early March.”

Unsafe buildings

Nearly five years after the Grenfell Tower fire, 40% of buildings in England with the same type of cladding have not been made safe, new government figures show. In all, 481 buildings have been identified with Grenfell-style ACM cladding and are unlikely to meet building regulations.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Support grows for calls to include landlords in cladding fund | LandlordZONE.

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NRLA urges help for tenants as Universal Credit cuts bite

admin    Uncategorized     agents

The National Residential Landlords Association (NRLA) has called for the Chancellor to end the housing benefit freeze and help the growing numbers of tenants who are struggling to pay rent.

A new YouGov poll of more than 1,000 private landlords across England and Wales found that of those who were either currently letting to a Universal Credit claimant, or who had done so last year, 9% had at least one tenant experiencing difficulties as a result of the £20 a week cut, following a temporary increase in response to the pandemic. 

Gap in support

The NRLA points to government figures showing how 1,431,040 households in the private rented sector were receiving Universal Credit last August, with housing cost support (Local Housing Allowance) included in the payment. Of these, 788,832 (55%) had a gap between the support they received and their rent payments. It warns that this will only get worse as a result of the government’s decision last year to freeze in cash terms housing cost support and predicts that as a result, the level of benefit support available will be able to cover the rent on ever fewer properties.

As many households face a cost-of-living crisis, the NRLA argues that a benefits system which properly supports tenants is of critical importance; it wants the government to reverse its damaging decision to freeze the Local Housing Allowance rate and ensure it properly reflects market rents.

Broken system

NRLA chief executive Ben Beadle says it’s a broken system in desperate need of reform. “With households facing a cost-of-living squeeze, it is vital that the benefits system gives the protection that tenants deserve,” says Beadle. “That is why the Chancellor needs to end the housing benefit freeze as a matter of urgency. Without this, many tenants and landlords face an uncertain future about how to keep tenancies going.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – NRLA urges help for tenants as Universal Credit cuts bite | LandlordZONE.

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87% of purchase price and 100% of development costs – HMO Case Study

admin    Uncategorized     agents

Luke Casey, one of Property118’s recommended finance broker team has recently structured a bespoke development loan to provide 87% of the purchase price on day one along with the entire build costs on a portfolio of 10 properties being converted into HMOs.

View Full Article: 87% of purchase price and 100% of development costs – HMO Case Study

HMO Tenant Clarification Scenario?

admin    Uncategorized     agents

I’m thinking about renting out my 2 double bedroom house in the future if we need to move for work. However, I’m trying to plan the economics of it for the different types of tenant make ups.

I am wondering about renting it out as a house share with: one couple and one single adult taking each of the bedrooms and then with shared Kitchen

View Full Article: HMO Tenant Clarification Scenario?

Universal Credit cuts hit landlords

admin    Uncategorized     agents

9% of private landlords renting to Universal Credit claimants have experienced at least one tenant having difficulties paying their rent post the Government cut to Universal Credit by £20 a week following a temporary increase in response to the pandemic.

View Full Article: Universal Credit cuts hit landlords

Legal case: rent repayment orders – honesty the best policy

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A Rent Repayment Order (RRO) is an order that allows a tenant or local authority to reclaim rent or housing benefit where a landlord rents out an unlicensed property such as a house in multiple occupation (HMO).

Rent Repayment Orders are obtained through a residential property tribunal (RPT). Whereas tenants can now apply for a RRO direct to the tribunal, local authorities can only apply for a RRO where tenants pay their rent with the assistance of housing benefit.

In order to avoid evicting all the tenants when a HMO landlord is successfully prosecuted by a local authority for operating without an HMO licence, potentially creating a chaotic situation, the RRO was introduced in the Housing Act 2004 Act. This allows a compromise situation: the Act specifies that tenants’ contracts in an unlicensed HMO must continue to operate, and tenants must continue to pay rent. However, they could then have the right to a rent repayment from their landlord.

In The Housing and Planning Act 2016, the RRO legislation was amended and expanded to include the following situations:

• Breaches of improvement orders and prohibition notices and of licensing requirements under the Housing Act 2004
• Violent entry under the Criminal Law Act 1977
• Unlawful eviction under the Protection from Eviction Act 1977
• Breach of Banning Orders (new in this Act)

The case

In the Leibel v Baird case (May 2021), an application for a RRO was made by one tenant in respect of an unlicensed HMO property, and she included in her application a Rule 13* costs application.

Ms Leibel was one of five tenants in the HMO property, on a tenancy agreement made with Mr Baird, the property owner. The property did not have an HMO license to operate and Ms Leibel realised this was illegal and applied to the Tribunal for an RRO in the sum of £5382. The landlord Mr Baird’s defence was based on his argument that the property did not need a licence as there were only four occupants.

Submitting evidence before the hearing, Mr Baird had sent in a copy of a tenancy agreement which was signed by only four tenants. In response to this Ms Leibel sought and was given permission to submit additional witness statements from two of the other tenants, stating that there were 5 tenants in the property. When the tenancy commenced all the tenants had signed the agreement together and Mr Baird took the document away.

Mr Baird at the hearing gave evidence, insisting that there were only four tenants and he was very unpleasant to Ms Leibel in cross examination. Mr Baird was then asked to produce at a further hearing the original copy of the tenancy agreement, along with his bank statements showing rent payments. He was reminded that he might seek legal assistance given his evidence was being challenged.

The crunch

On day two, around three weeks later, Mr Baird was represented by Mr Des Taylor of “Landlord Defence” who said he had sent in a copy of the tenancy agreement and the relevant bank statements. He said he hadn’t realised that the Tribunal needed the original copy of the agreement, but in fact Mr Baird had destroyed it, which he claimed he did routinely after scanning.

Mr Taylor went on to say that the bank statements showed payments from five people and that his client now realised that he was operating a property which should have been licensed as an HMO.

The Judge asked if Mr Baird now accepted that he had committed the offence alleged of running an HMO without a licence and that he was liable for a RRO? Mr Taylor said his client was no longer relying on the evidence he had originally filed and was withdrawing it, including all his statements and documents filed, save for the bank statements. He stated that his client now accepted that a RRO should be made out in the sum claimed of £5,382.

The Judge asked Mr Taylor to confirm that his client was admitting the criminal offence of operating without an HMO license and that the Tribunal should make out a rent repayment order in the sum of £5382. Mr Taylor confirmed.

Rule 13 costs

The Tribunal then turned to matter of the Rule 13 costs application, made on the basis that Mr Baird had acted unreasonably in defending or conducting the proceedings: lying about the number of tenants in the property, putting forward a false account, forging a tenancy agreement and aggressively cross examining the claimant.

Mr Taylor tried in vain and at length to defend some of Mr Baird’s actions but the Judge reminded Mr Taylor he had on behalf of his client already admitted the offence. Mr Taylor accepted this but questioned the amount of the legal costs (£22,000) being claimed. He suggested it was not reasonable to apply such high costs to the claim of £5832 and that the solicitor’s hourly rate was excessive.

The Tribunal made out the RRO in the sum of £5,832, plus a £300 application fee. In respect of the Rule 13 costs, the Tribunal found that Mr Baird had deliberately obfuscated matters and in signing the statement of truth he had deliberately misled the Tribunal – “It would now appear that there is nothing within Mr Baird’s statement which can be said to be true… and Mr Baird has treated the Tribunal with contempt.”

Costs were awarded on an indemnity basis, the Judge stating that the legal costs were reasonable and costs of £21,512 was ordered.

The Lessons:

By trying to hoodwink the Tribunal and defend the indefensible in this way Mr Baird’s conduct exacerbated matters and brought down the wrath of the Tribunal on his head.

The case shows not only the importance of being honest in these matters, but of following the rule of the law in the first place, and of keeping and producing accurate documentary evidence. Rule 13 costs on RROs are not commonly applied by claimants. This claimant it seems was very well advised.

*Rule 13 permits the Tribunal to make an order for costs if a claimant or defendant has acted unreasonably in bringing, defending or conducting proceedings. The rule was introduced under the new First Tier Tribunal (FTT),lifting the previously capped costs ceiling of £500.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Legal case: rent repayment orders – honesty the best policy | LandlordZONE.

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