Grampa

UPDATE; (From the Guild of Residential Landlords https://www.landlordsguild.com/ ) Making Tax Digital For Landlords April 6, 2023 is the date when anyone making more than £10,000 a year from property should be ready to start recording and filing online. For landlords, that £10,000 figure refers to rental income, not profit. It’s not just a case of switching over to a new online tax reporting system. You must be ready for the big day in April 2023 by signing up to software which aligns with HMRCs online process. Plenty of landlords favour spreadsheets and it’s fine to continue with these. You can also keep writing up your accounting ledgers too if you like. But, to comply with HMRC’s new rules, you must also keep digital records. The reason for this, says the government, is to prevent mistakes. They believe the digital records will cut out mistakes from HMRC and landlords. Once you’ve set up your chosen software you can update your income and expenses as you go– and on the move, if you have a mobile app. Not only that, but you can see instantly what your business is spending and bringing in. Regular reporting should stop landlords spending hours slaving over the dreaded annual self-assessment tax return every year because they tend to leave tax until the last minute. Updating your accounts as you go should mean you are less likely to miss out on expenses because you’ve lost receipts. You can also keep a better eye on cash flow and it is easier to share tax details with your accountant or letting agent since they’re all in the one place. You’ll send HMRC quarterly updates of your income and expenses via your software and HMRC digital tax account. It could be as simply as clicking a button. Essentially it allows your tax to be calculated as you go. At the end of the year, instead of sending in a self-assessment tax form, or getting your accountant to send in a limited company tax return, you sign a declaration that your quarterly returns are accurate. You’ll then have until January 31 the following year to pay your tax, as usual. Landlords and property companies will have up to a month after the end of every quarter to send in their MTD information. For failure to comply with MTD, which is mainly late-filing accounts and returns, taxpayers will be given penalty points. How many points depends on how late the filing is with the first penalty points marked up after the filing is 15 days late. Eventually, the points stack up for persistent late filers, just like points on a licence for drivers. Then, a financial penalty is imposed. After two years, the penalty points are reset to zero. Late payment penalties also click in after 15 days, double after 30 days and continue with charges mounting daily. Interest is charged on outstanding amounts from the due date. Six software providers have been approved by HMRC, with another three have packages in development aiming to go online before the launch date of MTD for landlords in 2023.

I have heard that landlords earning more than 10k pa rental income may soon have to submit some form of tax/income return to HMRC electronically on a quarterly basis in the same manner similar to a vat return. The very little I know about this at the moment would/could mean its has to be done in a certain format which could potentially mean obtaining specialised software. I heard about this in a very brief conversation with an accountant. I guess as an agent it is something our professional software may be adapted for that we could do for landlords, at a small charge 😁 Has anyone else heard about this?

Well there is talk of the government phasing out the charging of ground rents but i have no idea how far this has progressed or if there is a date for it. This could be part of their decision making in choosing to sell the freehold. The cost of the freehold does appear reasonable on the info provided in the post but do look in the legal costs as they can be hefty especially if their solicitor is linked to their company which costs you will likely have to pay plus yours. If you do go ahead with it, it will likely put value and desirability on the flats. It also means you can either manage the block yourself and control the costs and management and very likely make a good saving on the block insurance because most block companies get a referral fee in the region of 20% so there is no incentive to get the cheapest quote. If you don't want to manage the block yourselves after taking ownership of the freehold you can still shop around and instruct an block agent of your choice. This means you are the client and can therefore negotiate fees and choice of contractors etc and still leaves you in control. The downside is you could possibly get some owners who are difficult and wont agree to anything or want everything on the cheap. Or if you get one who doesn't pay their service charge you (the freehold Co) may have to take them to court for payment. But if you instruct a good block agent they should be able to deal with that for you.

Thinking about this a bit more and not professing to be any sort of expert but wouldn't any earnings/profit taken out of the Ltd Co be added to your tax return income and therefore taxed at the higher tax rate (if that's what you are already on). I understand a certain amount of dividends can taken tax free but isn't that being reduced? You could also have the extra overheads/time involved in running/administrating the Ltd Co. You wouldn't get the tax relief of the mortgage payments because that would still be in the personal name.

I like your thinking and am going to run that scenario via my accountant for his thoughts as I have some properties owned personally and some via a Ltd Co so would be a fairly easy set-up. However the tenancy agreement between the legal owner and the Ltd Co would have to be a "company let" not a normal Assured Shorthold Tenancy which the mortgage company (if any) may not allow and the small print in any insurance policy would also need to be checked.

Squatting in residential property has been made illegal for a few years now that's why squatters are taking over mainly commercial premises such as empty pubs and office buildings. However, the police are a law unto themselves and will still spout out its a civil matter and force the residential property owner to go through the courts when it suits them or its is going to cause them too much work. I could guarantee if I pitched up in a private carpark in my motorhome and wouldn't move I would be moved on by the police in no time but if I said I was from a certain travelling community I could stay until the owner had to go via the courts and incur the extra cost. And people wonder why the Police dont have the respect they used to have.

You also need to consider about informing your insurance company and lender because you will likely have restrictions on these type of lettings/lodgers and could find yourself not covered for insurance purposes or breaking the terms of your mortgage.

Can highly reccomend https://www.landlordsguild.com/

One way to formalise a periodic tenancy is to draw up a new tenancy agreement which would invalidate the earlier tenancy and make the fixed period of the new tenancy 1 month and therefore periodic from the 2nd month. What is the reason in wanting to do this?

There is still a value to the freeholder for lease extensions.

I agree, and this is my preferred strategy for my own personal properties and have very small turnover of tenants. I see the opposite with landlords who are more aggressive with their rent demands and turnover of tenants generally can be higher.

Yearly rent increases are so important even if they are relatively small. The tenants come to expect them and you don't find yourselves in a situation where you have to justify yourself to the tenant. Remember a high % of tenants conveniently forget if they haven't had an increase for the last 5 years and then feel aggrieved because you now have given them a increase. They are then likely to become slightly belligerent and put numerous requests for repairs and upgrades which may not be necessary. (not that I'm suggesting you dont do repairs etc as normal) Even if you do have a model tenant you can still show them favour by giving a reduced increase so the rent is under market value but they will then come to expect it each year and there is nothing to stop you explaining that the market rent should be £xxx so they know they are getting a good deal.

I would guess they have a back-up battery that has a shelf-life.

A data security crackdown has started on landlords who collect, store and use the personal information of tenants without registering with the data protection watchdog. Warning letters are heading the way to thousands of property letting businesses and landlords. The ICO letters encourage landlords holding, storing or processing tenant data to register with the watchdog. The letters urge every property rental business processing personal information to pay a data protection fee unless exempt. The UK has an estimated 2.5 million landlords renting out 4.5 million homes. However, few are aware that they must register with the Information Commissioner’s Office (ICO). If landlords do not register and pay the fee, they risk tenants complaining about the misuse of their data, resulting in an investigation and penalties from the ICO. Landlords need to register with ICO if they keep information about tenants like: Names Addresses Birth dates and national insurance numbers Passport, visa and driving licence details A landlord must show one of three interests to process data lawfully: Legitimate interest, like keeping records on a current tenant Contractual interest, which is passing on a tenant’s name and telephone number to a tradesman Legal interest, which is when a landlord must comply with a legal requirement, such as completing tenant information on filing a deposit for protection

Some tenants just are trying their luck in requesting a earlier date. If there is no risk to the property or other considerations that it is in your best benefit to release them early I would hold them to the correct notice period. After all, they will be very quick to remind you if you didnt give the correct notice period to them.

How clear is the notice period explained in the tenancy agreement? The clearer the better avoids confusion with the tenant. However, we still get the odd tenant trying to pull a fast one and give four weeks notice knowing full well they have missed the date by a couple of days. Your choice if you accept an alterative date subject to the clause in the AST.

The first question is why do they want them changed. If they are perfectly functional you have no obligation to do so. However, you might choose to do so if they are long standing good tenants but you have to be aware that could open a floodgate of requests and if you have to learn to say no at times. It is sometimes a balancing act in trying to keep good tenants but not being a pushover. . I find it helps to put yourself in the tenants shoes and ask yourself the question when you get these type of requests and would you want it done but never forgetting you are running a business.

There has been a new court case that may impact on Ltd Co landlords and Ltd Co agents who manage their properties. A tenant was taken to court for rent arrears via a section 8 and the agent was a Ltd Co which signed (an employee not a director) all the tenancy documentation and notices on the landlord's behalf which is fairly normal practice for agents to sign for a landlord. Well the tenant appealed on the basis of Section 44 Companies Act 2006 which states a document is only valid if stamped with the company’s seal or signed on behalf of the company by 2 authorised signatories (director or company secretary) or a director with a witness. Though the High Court ruled the section 8 was valid (section 21 are also valid) the deposit documentation ie: Prescribed Information which also has to be signed wasnt. Which as you may know means if the deposit and PI are not protected correctly it makes any S21 invalid and possibility any S8 for rent arrears because the tenant could counterclaim for upto x3 the value of the deposit which potential brings the arrears below 2 months owing and invaliding the Section 8, ground 8 (which is a mandatory ground for eviction) and leaving the landlord with grounds 10 & 11 which are discretionary at the whim of the judge. So if your agent is a Ltd Co it maybe worthwhile asking them the question who signs the documentation and if they are a authorised signatory to comply with Section 44 Companies Act 2006. https://www.bailii.org/ew/cases/EWHC/QB/2020/3538.html

Well a slight development and it looks like I have found a private buyer to take it off my hands including the current tenant. Fingers crossed.

* Dual rate electricity (economy 7). Only really suitable for storage heating and water heating and I already have GCH. However I think if you have a dual meter you might still get the allowance (points) even if it isnt connected to anything. I must look into this and if so it makes a nonsense of the whole certificate thing. * Wall thermostat/ timer controls. I cant remember if I have these or not, will have to check.(approx 1/2 points) * Thermostatic radiator valves. Got these all ready * LED bulbs. Can be done (approx 1/2 points) * Increased hot water tank insulation. No Tank * Draught proofing doors and windows if needed. Apparently triple glazing makes a impact on scoring but I have recently fitted double glazing. I have also been told by an EPC assessor that they are not required to test appliances and if a gas boiler was just fitted on the wall but not connected it will be accounted for so does that mean if I just plonk a unconnected dual meter next to the normal meter will I will get the duel meter allowance??? (Not a serious consideration but is a thought)

Led lightbulbs would make a difference but in my experience only gain you 1 or 2 extra points and only reason I hadn't already changed them was because they were spot lights built into the ceiling and I thought the DG would have been enough. I will have to look into that cap you mention Kanrent as I'm not familiar with it and that could be the "get out of jail free" card I need. Other than over-boarding the walls and ceiling with insulating board £££££. or heat pumps which isnt practical its a tough one unless I missing something very obvious.

Top 25 buy-to-let areas in the UK 2022 ranking Area Region Overall score 2021 ranking 1 Bristol South West 75 7 (+6) 2 Oxford South East 73 4 (-2) 3 Cambridge East 70 2 (-1) 4 Manchester North West 69 1 (-3) 5 Luton East 68 12 (+7) 6 London London 68 3 (-3) 7 Northampton East Midlands 67 6 (-1) 8 Brighton South East 66 5 (-3) 9 Reading South East 66 9 10 Norwich East 66 21 (+11) The remaining towns and cities in the top 25 best areas for buy-to-let are: Southend, East (overall score: 65) Coventry, West Midlands (overall score: 61) Edinburgh, Scotland (overall score: 58) Swindon, South West (overall score: 56) Leicester, East Midlands (overall score: 56) Peterborough, East (overall score: 56) Basildon, East (overall score: 56) Portsmouth, South East (overall score: 55) Southampton, South East (overall score: 55) Glasgow, Scotland (overall score: 55) Plymouth, South West (overall score: 54) Derby, East Midlands (overall score: 54) Chelmsford, East (overall score: 54) Birmingham, West Midlands (overall score: 53) Bournemouth, South West (overall score: 52)

Owners of second homes who abuse a tax loophole by claiming their often-empty properties are holiday lets will be forced to pay under new measures announced by the government today. The Department of Levelling Up, Housing and Communities says the changes will target people who take advantage of the system “to avoid paying their fair share” towards local services in popular destinations such as Cornwall, Devon, the Lake District, Suffolk, West Sussex and the Isles of Scilly. Currently, owners of second homes in England can avoid paying council tax and access small business rates relief by declaring an intention to let the property out to holidaymakers. However, concerns have been raised that many never actually let their homes and leave them empty and are therefore unfairly benefiting from the tax break. Following a consultation, the government says it will now bring changes to the tax system, which will mean second homeowners must pay council tax if they are not genuine holiday lets. From April 2023, second homeowners will have to prove holiday lets are being rented out for a minimum of 70 days a year to access small business rates relief, where they meet the criteria. Holiday let owners will have to provide evidence such as the website or brochure used to advertise the property, letting details and receipts. Properties will also have to be available to be rented out for 140 days a year to qualify for this relief. Housing Secretary Michael Gove says: “The government backs small businesses, including responsible short-term letting, which attracts tourists and brings significant investment to local communities. “However, we will not stand by and allow people in privileged positions to abuse the system by unfairly claiming tax relief and leaving local people counting the cost. “The action we are taking will create a fairer system, ensuring that second homeowners are contributing their share to the local services they benefit from.”

Trying to get ahead of the game before any new requirements come in and get the EPC'S on my personal rentals up to at least a C (69). I have a flat that with a rate of D 65 and therefore only needed 4 more points to get it up to a C (69). The original EPC which is 9 years old stated single glazed so as I've had the flat fully double glazed and a new boiler that should have smashed it well above a C 69. Well here's a lesson in reading your documentation fully because the new EPC came in at a lower 61 even with the new boiler and DG and the reason was because the original EPC stated the property as first floor incorrectly and not second (top) floor which is flat roof. I guess even if the error was spotted when I purchased the flat the implications wouldn't have been so apparent as they are now. I am not happy but just means I will try to off load it a bit quicker.

If you rented out a house you would have an inventory to document the condition prior to the tenancy starting which the tenant would agree and sign a copy and that would be use against the check out report. Why do you think it should be any difference to rent a room out