Posts with tag: Buy-to-Let

A Landlord’s Guide to Tenancy Deposits

Published On: September 6, 2016 at 2:04 pm

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Tenancy Deposits Guide for Landlords

Buy-to-let landlords have a legal responsibility to protect any deposit that they receive from a private tenant.

In England and Wales, is an obligatory requirement for landlords to protect any deposit received for an assured shorthold tenancy (AST) that started on or after 6th April 2007 in a Tenancy Deposit Scheme.

A Tenancy Deposit Scheme is a Government approved, independent third party which is permitted to protect tenants’ deposits for the duration of the tenancy.

Landlords in England and Wales must register deposits in one of three Government approved schemes:

  • Tenancy Deposit Scheme (TDS)
  • MyDeposits
  • Deposit Protection Scheme (DPS)

Landlords have a duty to use a Tenancy Deposit Scheme even if deposits are paid by a third party-for example through a rental deposit scheme.

For renters not using an assured shorthold tenancy, landlords can accept items of value as a deposit as a replacement for monies. However, these items are not protected by a scheme.

Prescribed information

Under the Housing Act 2004, once a landlord or letting agent has protected a deposit under one of the three schemes, the tenant must be provided with information relating to this protection within 30 days. This is known as the prescribed information.

Information provided must include:

  • the address of the rented property
  • the amount of the deposit taken
  • what scheme the deposit has been protected under
  • the name and contact details of this scheme, plus its dispute resolution service
  • name and contact details of any third party involved with the deposit
  • what would constitute some or all of the deposit being held
  • how the tenant can apply for the deposit back
  • what to do in case of a deposit dispute

Failure to adhere to deposit protection obligations could see landlords fined up to three times the deposit amount. In addition, landlords would be unable to serve a section 21 notice to regain possession of their property.

A landlord's guide to Tenancy Deposits

A landlord’s guide to Tenancy Deposits

Disputes

Should a dispute arise at the conclusion of the tenancy agreement, the chosen Tenancy Protection Scheme offers a free dispute resolution service in order to solve the issue. This is not mandatory and both the landlord/agent and tenant must agree to use the service.

The scheme will then make an impartial decision, with the deposit being allocated accordingly.

Scotland and Northern Ireland

There are separate Tenancy Deposit Schemes for landlords in Scotland and Northern Ireland.

Scotland

Scottish landlords and letting agents are bound under the Tenancy Deposit (Scotland) Regulations 2011. Tenancy Deposit Schemes came into force in Scotland on the 2nd July 2012.

In Scotland, there are also three Government approved schemes, which are:

  • Letting Protection Service Scotland
  • Safedeposits Scotland
  • MyDeposits Scotland

Depending on when the landlord took a deposit, this will alter when they have to comply with legislation. The table below shows key dates for Scottish landlords and under what regulation number they must adhere:

Date deposit received Regulation Duty to comply
1 Deposit received prior to 7 March 2011 and tenancy renewed by express agreement or on tacit relocation on or after 2 October 2012 and before 2 April 2013

In any other case

 Regulation 47(a)

Regulation 47(b)

 Within 30 working days of renewal

By 15 May 2013
2 Deposit received on or after 7 March 2011 and before 2 July 2012 Regulation 48 By 13 November 2012
3 Deposit received on or after 2 July 2012 and before 2 October 2012 Regulation 4 By 13 November 2012
4 Deposit received on or after 2 October 2012 Regulation 3 Within 30 working days of the beginning of the tenancy

[1]

Under Regulation 42 of the Tenancy Deposit (Scotland) Regulations 2011, landlords must provide tenants with the prescribed information within the timescale indicated above.

Northern Ireland  

In Northern Ireland, landlords must protect deposits taken on or after 1st April 2013 in a Tenancy Deposit Scheme. Deposits taken before this date need not be protected.

There are two types of Tenancy Deposit Schemes available-Custodial and Insurance.

The three approved, registered schemes are:

  • Tenancy Deposit Scheme Northern Ireland
  • MyDeposits Northern Ireland
  • Letting Protection Service NI

All deposits must be protected within 14 days of receipt and prescribed information must be given to tenants within 28 days of this date.

Should landlords provide accommodation for university students, any deposits received on or after 1st April must be protected in an approved Tenancy Deposit Scheme. This is regardless of who actually pays the deposit.

Further information on Tenancy Deposits can be found at the Government website.

[1] http://www.gov.scot/Topics/Built-Environment/Housing/privaterent/landlords/tenancy-deposit-schemes#Tenancy

New-buy-to-let tax break proposed by MP

Published On: September 5, 2016 at 8:51 am

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Categories: Finance News

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A Conservative MP has called for a reduction in capital gains tax paid by buy-to-let landlords who sell their rental property to sitting tenants.

Kevin Hollinrake, founder of franchise agency Hunters, made his call through an amendment to the Finance Bill.

Tax alterations

In this year’s Budget, former Chancellor George Osborne announced that the 28% rate of capital gains tax would be slashed to 20% for most assets. However, he did not include residential property in this list.

Industry professionals have repeatedly complained about this exception, particularly as it comes on top of alterations to mortgage interest tax relief and Wear and Tear allowance.

Before the proposed amendment by Mr Hollinrake, the Residential Landlords Association called for an exception to encourage landlords ready to sell properties to do so.

Research from the Residential Landlords Association discovered that 77% of private landlords would think about selling their property to tenants, should tax liability be amended.

New-buy-to-let tax break proposed by MP

New-buy-to-let tax break proposed by MP

Future considerations

Policy director at the Residential Landlords Association, David Smith, said, ‘many landlords are now considering their future in the market following recent tax increases whilst others will be looking to sell as part of the natural churn of properties in the rental market.’[1]

‘This amendment would help achieve the Government’s aim of encouraging and supporting home ownership for aspiring first-time buyers whilst easing some of the excessive tax burdens recently placed on landlords,’ Smith added.[2]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/9/agency-chief-turned-mp-is-calling-for-new-buy-to-let-tax-break

 

Rental property supply at highest level so far in 2016

Published On: September 3, 2016 at 9:06 am

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Categories: Property News

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The total number of rental properties available through letting agents is at its highest level so far during 2016, according to a report from the Association of Residential Letting Agents.

In July, the number of  properties on letting agents’ books stood at 184, a rise of 5%. This has moved to reassure a number of worried would-be tenants who were fearful off a post-Brexit drop.

Year-on-year however, supply is actually down. In July 2015, the number of properties available through letting agents stood at 189-three percent higher than this year.

Rental reaction

During July, the majority of agents recorded little change to rental prices, supply of property and demand from tenants. 71% saw no alteration in rents, with 62% seeing no movement in supply. 61% said that they hadn’t seen any substantial change in demand.

44% of agents reported that there was a slight sense of uncertainty from landlords looking to let properties.

Rental property supply at highest level so far in 2016

Rental property supply at highest level so far in 2016

David Cox, managing director at the Association of Residential Letting Agents noted, ‘despite reports that the housing market is spiralling out of control post-Brexit, our results paint a very different picture and indicate that the future is bright for the rental market. Supply is up, as we’d expect at this time of year and the number of tenants experiencing rent hikes hasn’t changed in three months. While we obviously need new houses to balance the growing gap between supply and demand, what’s positive is that the situation isn’t worsening as a direct result of June’s Brexit result.’[1]

[1] http://www.propertyreporter.co.uk/landlords/rental-property-supply-at-highest-level-this-year.html

 

Tax changes will not be detrimental to landlords-NLA

Published On: September 1, 2016 at 11:11 am

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Categories: Landlord News

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The National Landlords Association has moved to issue a report in an attempt to calm fears relating to late tax additions to the Finance Bill at Committee Stage.

There is growing concern that these amendments regarding land and capital tax will have yet another negative impact on buy-to-let landlords.

Impact

Earlier this week, The Law Society suggested that profits generated from the sale of buy-to-let property could be subject to income tax instead of capital gains tax as a result of the changes.

However, the National Landlords Association believes that the planned alterations to the Bill will not have a detrimental effect. The Association points to the fact that these measures, ‘were part of the anti-avoidance measures promised in the Budget.’[1]

New clauses to be added to the Finance Bill will involve legislation announced in the 2016 Budget. This will include a specific alteration to income or corporation tax on profits generated from the disposal of land in the UK.

These clauses will make sure that offshore structures cannot be utilised to avoid UK tax on profits made from dealing in or developing land in Britain.

Tax changes will not be detrimental to landlords-NLA

Tax changes will not be detrimental to landlords-NLA

Ambiguous

Despite the rather ambiguous wording, the National Landlords Association said it is, ‘reassured by the then Chief Secretary to the Treasury’s explanation of the new clauses in July.’ This includes a comment which reads: ‘this measure is targeted at those who have a property building trade; it does not impact the tax profile for investors in UK property.’[1]

With the Report Stage for the Bill coming up next week, the National Landlords Association has confirmed with HMRC officials responsible that these changes are not intended to alter existing tax arrangements between buy-to-let landlords and HMRC.

The NLA said in a statement, ‘HMRC considers that generally property investors that buy properties to let out to generate property income and some years later sell the properties will be subject to capital gains on their disposals rather than being charged to income on the disposal.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/8/tax-amendments-will-not-adversely-affect-landlords

Concern growing over new buy-to-let tax changes

Published On: August 31, 2016 at 11:23 am

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Categories: Landlord News

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There are growing fears in the property industry that the Government could be about to introduce a new buy-to-let tax assault on landlords.

Over the long weekend, the Law Society accused the Government of avoiding any property consultation in the way it introduces proposals. This, it warns, could mean profits from the sale of buy-to-let property could be subjected to income tax rather than capital gains tax.

Concerns

In the words of the Law Society, the measures were, ‘slipped in at the committee stage of a Parliamentary Bill, by the Government. This was instead of the formal legislation subject to a mandatory consultation period.

The Residential Landlords Association has now expressed its concern, calling on the Government to clarify amendments made to the Finance Bill 2016.

Concern growing over new buy-to-let tax changes

Concern growing over new buy-to-let tax changes

Writing in a letter to Chancellor Phillip Hammond, the Residential Landlords Association said that the amendments have blurred the distinction between trading profits from the purchase and resale of property and investment in property to let.

A statement from the RLA said, ‘at a time when the Government are attacking residential landlords through changes to Mortgage Interest Relief and Stamp Duty Land Tax, we have significant concerns of the potential devastating impact on the sector of further tax changes.’[1]

What’s more, the Association has moved to ask its members and others wanting to slacken the burden on the private rental sector to contact their local MP.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/8/growing-industry-concern-over-new-buy-to-let-stealth-tax

 

 

BTL landlords in pole position to withstand market volatility

Published On: August 26, 2016 at 10:11 am

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A specialist lender saw a significant rise on the FTSE 250 yesterday, with buy-to-let mortgages and loans experiencing above-forecasted demands.

OneSavings Bank is seeing significant rewards after upping its focus on professional landlords since the Brexit vote. The lender believes buy-to-let investors are, ‘better positioned to withstand market volatility.’

Business

The bank is looking to gain further business moving forwards by lowering its standard variable rate by 0.25% from September, in line with the Bank of England’s recent cut.

Specialising in buy-to-let mortgages and loans to small businesses, OneSavings Bank saw its pre-tax profits rise by 36% to £64.6m in the first half of the year. This helped boost its share price by 16.9% by the close of trading yesterday.

BTL landlords in pole position to withstand market volatility

BTL landlords in pole position to withstand market volatility

Andy Golding, chief executive at OneSavings, believes it is way to early to predict the long-term implications of Brexit on the buy-to-let sector, the housing market and the economy as a whole.

He observed, it is too soon to predict the medium to long-term impact of Brexit on the UK economy, but we will continue to concentrate on what we have proven we do best-using our broker relationships, manual underwriting expertise and secured lending strategy to lend responsibly to customers in undeserved markets.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/8/buy-to-let-investors-are-better-positioned-to-withstand-market-volatility