LATEST: Housing ministry closes eviction ‘reactivation notice’ window as it clears backlog

admin    Uncategorized     agents

A key evictions window for landlords has been closed by the government as part of its plans to clear the possession hearings backlog.

Until before Friday 30^th April at 4pm landlords and their solicitors were able to apply to a county court to continue an eviction by submitting a ‘reactivation notice’.

This applied to landlords who had issued eviction notices prior to 3^rd August 2020 and who, in many cases, had been waiting since then with tenants who are in severe arrears.

But the Ministry of Housing, Communities and Local Government says that now that the deadline has passed landlords will have to apply to the court for a possession hearing and pay a fee. This will also put them at the back of the queue.

The deadline, which was previously extended from end of February, was designed to force landlords who have been wavering over whether to continue the evictions process against tenants. It was hoped landlords would come to a debt agreement with their tenants or hope they leave of their own accord before having to make a decision about continuing court action.

The updated MHCLG advice says: “You should consider whether making a possession claim is appropriate before confirming that you wish to proceed.

“For example, if you are making a claim on rent arrears grounds you may wish to negotiate a rent repayment plan with your tenant rather than proceed with the possession claim.”

Paul Shamplina of Landlord Action (pictured), says: “The re-starting of bailiff evictions on 1^st June cannot come soon enough for the 20,000 or so landlords waiting to regain possession of their properties, many of whom have been waiting a year or more to eject tenants who stopped paying their rent before Covid struck.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Housing ministry closes eviction ‘reactivation notice’ window as it clears backlog | LandlordZONE.

View Full Article: LATEST: Housing ministry closes eviction ‘reactivation notice’ window as it clears backlog

Interest Only vs Repayment on Buy To Let Mortgages

admin    Uncategorized     agents

So you are buying a buy to let property, but what mortgage should you get?

An interest only mortgage or a Repayment mortgage?

In today’s video, I’ll explain the difference between an interest only mortgage and a repayment mortgage and which one best suits your needs.

The post Interest Only vs Repayment on Buy To Let Mortgages appeared first on Property118.

View Full Article: Interest Only vs Repayment on Buy To Let Mortgages

Tax changes for Furnished Holiday Lets (FHLs) ‒ What you need to know

admin    Uncategorized     agents

Earlier in the year, HM Treasury published a number of reviews and proposals relating to tax policy, dubbed “Tax Day”, aimed at creating a more modern and open tax system in the UK.

One such review likely to concern landlords and property owners was around the tax and allowances of Furnished Holiday Lets (FHLs). These policy changes are a reaction to the increasing number of homeowners using sites like Airbnb to make additional income on their homes.

Owners of FHLs receive a number of tax reliefs and allowances, providing that they meet the criteria set by the government. For example, properties that qualify as a FHL are subject to business rates instead of council tax. Business rates are cheaper, as they are deemed to be commercial premises, and the majority of FHLs are also viable for small business rates relief. This means that you could end up paying no rates at all.

While this is great for FHL owners, it does, unfortunately, mean that many homeowners try to claim their property as a FHL, even if they don’t meet the criteria to benefit from the relief.

Up until now, FHL owners have not been required to prove that they meet these requirements. However, with the number of homeowners claiming FHL tax benefits increasing, HMRC will be asking owners to prove that their property qualifies as a FHL.

To qualify as a FHL, your property must be:

• Based in the UK or in the European Economic Area (EEA) – including Iceland, Liechtenstein and Norway. All FHL properties in the UK will be treated as one business and all FHL properties in the EEA will be treated as another.
• Furnished – your property must include sufficient furniture for normal occupation, such as beds, sofas and white goods.
• Commercially let, i.e. you must intend to make a profit from the rental. Letting a property out of season to cover costs still counts as a commercial let, even if you did not make a profit

As well as the property conditions, there are also three key occupancy conditions that must all be met in order to qualify as a FHL.

1. Availability ‒ Your property must be available as a FHL for at least 210 days in a year. You cannot count any days that you live in the property.
2. Letting ‒ You must let out the property as a FHL for at least 105 days in the year. You cannot count any days that friends or relatives stay in the property for free or for a reduced rate.
3. You also cannot count any lets of more than 31 continuous days. The exception to this would be if something unforeseen happens, such as the holidaymaker either falling ill or having an accident that delays their departure, or they have to extend their holiday due to a delayed flight.
4. Pattern of occupation

There is a bit more wiggle room on the 31 day limit. If the total FHL bookings exceeding 31 continuous days is less than 155 days during the year, your property still qualifies as a FHL.

If you don’t end up letting your property for at least 105 days, you have two options (known as elections) that can help you reach the occupancy threshold:

• Averaging election – if you have more than one property and, between them, they average out to over 105 days of commercial let. You get a bit of time to make your averaging election ‒ one year from the 31st of January following the tax year. It sounds complicated but, essentially, you can make an averaging election for your 2017/18 tax year up until January 31st 2020.
• Period of grace election – if you intended to let out your property as a FHL but did not reach 105 days occupancy, HMRC will accept proof that there had been a pattern of FHL activity by looking at previous years, for example.

Broadly speaking, if your property is furnished, vacant and advertised as a holiday let for seven months of the year and you let it out for at least three months, it should qualify as a FHL and be eligible for certain tax reductions and allowances.

While it’s currently unclear how HMRC will be checking that eligibility requirements have been met, it is important to check whether your property qualifies as a FHL and to collect any and all evidence to prove that this is the case. It seems likely that, with the introduction of MTD, you will be required to upload evidence to a digital platform in the near future.

What are the tax benefits of FHLs?

As well as paying business tax rates rather than council tax, FHL owners benefit from being able to:

• Claim capital allowances on your property, meaning you can furnish it and deduct the cost from your pre-tax profits.
• Classify income generated from a FHL property as “relevant earnings” for pension purposes.
• Split FHL profits equally between yourself and your spouse flexibly for tax purposes – unlike with long-term rental properties where profits are divided based on the official ownership split.
• Claim certain Capital Gains Tax reliefs when you sell the property, e.g. Business Asset Rollover Relief.

What FHL owners should do now

If you are thinking of buying a property or using a property as a FHL, you should make a clear distinction between your residential or commercial lettings and begin gathering evidence as you go.

As well as gathering evidence that your property qualifies as a FHL, you should keep good records relating to your FHL property and the income received. By using a platform like APARI that is tailored to the needs of landlords, you can keep up-to-date digital records of your income, expenses and relevant documents preparing you for both the coming evidence requirements as well as MTD.

For all the latest information, join the APARI Community here.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Tax changes for Furnished Holiday Lets (FHLs) ‒ What you need to know | LandlordZONE.

View Full Article: Tax changes for Furnished Holiday Lets (FHLs) ‒ What you need to know

EXCLUSIVE: Time for radical action to rid sector of rogue agents, says property chief

admin    Uncategorized     agents

The boss of a Midlands estate agency and property services firm has come up with a radical new idea to address council inaction over rogue landlords and poor housing standards.

He reckons a new landlord licensing scheme similar to Wales’ scheme but with fit and proper persons checks along with a three-year property MOT would rid the sector of most unsafe properties and generate millions in additional local authority revenue for social housing and vital repairs.

The agency MD, who wants to remain anonymous for fear of a potential backlash, says the check would cost £250 annually. He tells LandlordZONE: “Although a similar check is currently done to get an HMO licence, it only covers the building, not the person, and there’s nothing at all for standard residential properties.” 

His idea was sparked by two local cases, one where a landlord running an HMO was jailed for concealing cameras in his property and filming students but is now back running HMOs, while the other concerned a rented property where the ceilings were caving in for three years before the council took action.

Property MOT

“There should also be a property MOT check on everything including the electrics,” he says. “At the moment not all landlords get this done and there’s no one actually monitoring it – it’s just done on trust. This would cost £300 every three years per property and would cover a council inspection and admin to record electrical and gas safety certificates.”

He believes that if landlords were licenced and registered along with their properties, it would give local authorities the ability to enforce legislation, rather than hoping they might catch landlords out once tenants have moved in.

However, his local council has dismissed the idea and were more concerned in protecting private property rights. Unsurprisingly, local landlords weren’t keen either but he adds: “I think it has potential – I’m hoping someone else might take up the idea.”

Read more: Why selective licensing doesn’t work.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: Time for radical action to rid sector of rogue agents, says property chief | LandlordZONE.

View Full Article: EXCLUSIVE: Time for radical action to rid sector of rogue agents, says property chief

LATEST: Average house price rises £15k in a year to record high

admin    Uncategorized     agents

Average house prices have hit a new record high of £238,831, up £15,916 over the past 12 months, says Nationwide.

It reports that annual house price growth rebounded to 7.1% in April from 5.7% in March, with prices up 2.1% month-on-month – the biggest monthly rise since February 2004.

But its research found that although the stamp duty holiday reaccelerated prices, it isn’t the biggest motivator for house buyers; of those who were either moving home or considering a move this month, three quarters said this would have been the case even if the stamp duty holiday hadn’t been extended.

Nationwide believes housing market activity is likely to remain fairly buoyant over the next six months as a result of the stamp duty extension, along with low borrowing costs and a change in housing needs following the pandemic.

Chief economist Robert Gardner (pictured, below) says that with the stock of homes on the market relatively constrained, there is scope for annual house price growth to accelerate.

He adds: “If house prices remain flat in month-on-month terms over the next two months, the annual rate of growth will reach double digits in June.”

“If unemployment rises sharply towards the end of the year as most analysts expect, activity could slow, perhaps sharply,” says Gardner.

But at the end of April, 25% of homeowners surveyed by Nationwide said they were either in the process of moving or considering a move as a result of the pandemic, only slightly below the 28% recorded in September last year.

“Given that only around 5% of the housing stock typically changes hands in a given year, it only requires a relatively small proportion of people to follow through on this to have a material impact,” he adds.

Read more about house prices.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Average house price rises £15k in a year to record high | LandlordZONE.

View Full Article: LATEST: Average house price rises £15k in a year to record high

BREAKING: Evictions paperwork must now include ‘breathing space’ scheme details

admin    Uncategorized     agents

The government has dropped another of its regular end-of-the-week private rental sector legal bombshells following a sudden alteration to the legislation underpinning Section 8 eviction notices

Both Landlords, agents and their solicitors will from Tuesday May 4th onwards have to include details of the governments recently-introduced ‘breathing space’ debt scheme within paperwork when seeking to gain possession of a property, or risk the eviction being rejected.

Announced last summer, the Debt Respite Scheme (Breathing Space) gives someone in problem debt the right to legal protections from their creditors for up to 60 days.

These regulations come into force on Tuesday, which is why housing minister Christopher Pincher has now inserted an amendment into The Assured Tenancies and Agricultural Occupancies (Forms) (Moratorium Debt) (Consequential Amendment) (England) Regulations 2021.

“Anyone who serves a notice using the incorrect template runs the risk of having their case thrown out on a technicality,” says Tim Frome of Landlord Action.

“With six-month notice periods in place at the moment this could be a very expensive mistake.

“This further highlights why landlords should use a Solicitors Regulation Authority regulated and authorised law firm such as Landlord Action to serve possession notices.”

Mike Morgan, Legal Division Manager at HF Assist, adds: “We have taken a number of calls on our HF Assist phone lines about the requirements set out in the Debt Respite Scheme regulations.

“The basic position is that if a tenant has a qualifying debt, such as rent arrears, they can see an FCA or local authority authorised debt advisor and apply for a debt moratorium.

“This gives them an eight-week breathing space from being chased for the amount owed while they work with the debt adviser to restructure their finances to pay their debts. The tenant should still pay their rent during this period.”

Read a free guide to the Breathing Space regulations.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: Evictions paperwork must now include ‘breathing space’ scheme details | LandlordZONE.

View Full Article: BREAKING: Evictions paperwork must now include ‘breathing space’ scheme details

House prices up 7.1% on April last year

admin    Uncategorized     agents

The Nationwide House price index is showing annual price growth increased to 7.1% in April, up from 5.7% in March with a new record high average house price of £238,831, up £15,916 over the last year.

Prices jumped 2.1% month-on-month which is the largest monthly rise since February 2004 and annual growth will reach double digits in June if prices are flat over the next two months.

The post House prices up 7.1% on April last year appeared first on Property118.

View Full Article: House prices up 7.1% on April last year

The Landlord law Virtual Conference 2021

admin    Uncategorized     agents

It has been one hell of a year for Landlords!  A year full of change – which landlords have had to keep up with or face penalties.

Not only have there been the changes which we expected –

The post The Landlord law Virtual Conference 2021 appeared first on Property118.

View Full Article: The Landlord law Virtual Conference 2021

Council policing of unsafe rented properties slammed as ‘weak or non-existent’

admin    Uncategorized     agents

Councils fail to serve improvement notices in three-quarters of cases where they find a Category 1 hazard, finds new research from Generation Rent.

The housing pressure group made Freedom of Information requests to 110 councils in England about their enforcement activity in 2019-20.

Of those that responded, 76 recorded 11,570 Category 1 hazards in private rented homes but only served 2,814 improvement notices, representing 24%. There has been no change since 2018-19, although it was up from 20% in 2017-18.

Generation Rent says this inaction leaves renters vulnerable to retaliatory eviction and makes it harder for them to claim back rent if their landlord fails to fix dangerous disrepair.

Dangerous rented homes

It is calling on councils to commit to serving improvement notices every time they find a dangerous private rented home, which it believes will help to drive out criminal landlords and improve standards.

Private renters already have little confidence in their council taking appropriate action, it adds.

In a poll of 1,008 private renters conducted by Survation, 35% said they would contact the council if their landlord had failed to fix something – but 44% would look for somewhere else to live.

Generation Rent wants councils to improve the way they communicate with local renters and raise awareness of their rights as well as widescale licensing schemes.

Director Alicia Kennedy (pictured) says that tenants move out with no council support and, because so many people are desperate for a home, the landlord has no difficulty in finding a replacement.

She adds: “Budgets are tight, and there’s no question the government must provide more funding to drive out criminal landlords. But there are councils already doing the right thing across the country and these local elections are a chance to elect councillors who will champion renters’ interests and adopt good practices to keep their homes safe.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Council policing of unsafe rented properties slammed as ‘weak or non-existent’ | LandlordZONE.

View Full Article: Council policing of unsafe rented properties slammed as ‘weak or non-existent’

EXCLUSIVE: Which landlords and properties make the most money

admin    Uncategorized     agents

Research released exclusive to LandlordZONE reveals which properties make the most money and how the pandemic has hit buy-to-let investors’ finances.

Specialist broker Paragon says its research shows that HMOs produce the greatest yields (7%) followed by flats (6.1%) and bungalows (5.9%), showing that the greater the risk, the higher the return.

Its MD for mortgages, Richard Rowntree, says the results are from his company’s survey of over 800 landlords of all types, which asked them to share their experiences of the differences between single property and smaller scale landlords with those managing larger portfolios.

Also, the larger a landlord’s portfolio, the higher the yield – those with portfolios of 20 properties or more produce an average yield of 6.7% while a single property on average produces 4.2%.

Paragon also asked landlords how Covid has impacted their businesses. Just over a third said they had experienced problems in general following Covid including but not exclusively rent arrears.

Specifically, reduced income has been experienced the most by larger portfolio landlords (see below).

For example, while 36% of one-unit landlords reported significant (17%) or slight (19%) income reductions, 57% of those with 20+ properties reported an income reduction including 24% with ‘significant’ and 33% with ‘slight’.

Away from Covid, the report also reveals that terraced houses are the most popular buy-to-let property across all portfolio sizes, followed by flats, semis and HMOs.

“Although there are various reasons why people operate rental businesses, for many, the primary reason is as a source of income,” says a Paragon spokesperson tells LandlordZONE.

“This means that assessing profitability is one of the most important and obvious ways to gauge how successful a portfolio is.

“Our research shows that larger portfolios enable landlords to invest in a wider range of property types and target those that generate the best yields.”

Pic credit: Nenad Stojkovic | Flickr

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: Which landlords and properties make the most money | LandlordZONE.

View Full Article: EXCLUSIVE: Which landlords and properties make the most money