As mentioned in my earlier post, there is now a new Landlord Law Blog, and therefore this is the last post here. The new blog can be found at www.landlordlawblog.co.uk. Please can you change any links you may have to this blog, and any RSS or other settings.
You can see what the new blog looks like from the picture, but please go and look for yourself.
www.landlordlawblog.co.uk
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
If you rent out furnished holiday accommodation, you should buy this book. At present there are tax advantages in renting out furnished accommodation, but on 10 April, this will all change. Carl Bayley has written this book to explain the changes that will take place, and give guidance on what should be done in the run up to 10 April 2010.
Landlords will (or should) already be aware of Carl Bayley as a tax author, as he has written a number of well received books in the past, such as How to Avoid Property Tax.
This book will only be relevant for a few months, so (if you own a holiday home you rent out) should be bought as soon as possible to maximise the value you can get from it. Areas covered are:
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
See also my new website The Lodger Landlord.
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The National Landlords Association (NLA) and spareroom.com are both calling for the rent a room tax scheme tax threshold to be increased. It has been £4,200 since 1997 and since then prices have risen considerably. To quote the NLA:
"The NLA supports the Raise the Roof campaign's call for the Rent-a-Room threshold to be increased to £9,000 pa. The scheme threshold has not changed since 1997, while the average single room rent has increased by more than 75%. This has resulted in the majority of landlords who let a room being required to complete a tax return removing much of the benefit of the scheme. At a time when household finances are becoming increasingly stretched, and there is an ever greater need for affordable housing, the Government should do all it can to incentivise potential landlords to let a room."The story has now been picked up by the Independent who have reported it here. You can read more about the campaign, and sign the petition here.
Several things I have been planning for a while will come to fruition shortly.
The Newsletter
The Landlord Law newsletter is an important part of my service. However, the newsletter mailer I have been using almost since we started in 2001, is now a bit old and clunky. I am therefore changing to using a professional company, Constant Contact. My web designer Gill and I have been working on the new template, which looks great!
However the new service requires the database to be re-created. The annual members list will be uploaded, so annual Landlord Law members don't need to do anything. However I do need all those on my free newsletter list to sign up again, which you can do here. The first of the new newsletters will be sent out later today (12 November) so if you want to receive it you should sign up now!
However all is not lost if you read this too late, as you will be able to read the most recent newsletter on the site (something else I have wanted to do for a while). I will be putting a link to todays newsletter on the site shortly.
A new blog
My web designer and I are also working on a new blog design, which should go live in a week or so. At that time the blog url will change (as we are coming off blogger) so watch this space, as you will need to amend any links you may have. However my feedburner feed url should not change.
If you receive the new newsletter today, let me know what you think.
[Later - the mailing went out all right, you can see the new newsletter here.]
Well done High Court Enforcement company Shergroup for setting up the Sherbet foundation charity, aimed at families affected by enforcement.
Shergroup along with other enforcement officers have a clear responsibility to enforce the orders and judgments of the courts. However as a result of this work they also felt that they also wanted to help those who were really in hardship and were being pursued by creditors who probably didn’t appreciate how tough it was for the family they were visiting. Through this unique charity, they are able to use the insights obtained by their visits to debtors, to recommend deserving cases to the Sherbet foundation.
You can read more about how the charity works here. If you want to make a donation, there is a giftaid form on the site.
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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I have been contacted by a landlord who has drawn my attention to a thread on the popular LandlordZone forum:
“Briefly, the rental property has been in the hands of the receivers since July 2008. The receivers accepted the tenancy and collect rent from the tenant (the tenancy is now periodic). The deposit was originally protected by the landlord, however, Mydeposits cancelled the landlord's membership (and therefore the protection) because the landlord was subject to a receivership order, which is contrary to the rules of the scheme.This does seem to be a difficult situation and one that may become more common with more landlords falling into receivership. What do you think?
The deposit has not been paid to the receivers (so it appears they are not liable). The landlord cannot protect the deposit as it's against mydeposits' rules (I guess it's possible the DPS would accept it). Tenant may not succeed in a claim for return of the deposit because the tenancy hasn't ended. So, how can the tenant take action under s.214(1) to ensure the deposit is protected when firstly, the landlord did comply and the cancellation was not his decision, and secondly, the deposit has not been 're-paid' so can there be any duty to comply a second time when the landlord has complied once.
It seems completely crazy to me that the scheme is permitted to cancel a protected deposit in these circumstances - the whole point of the schemes is to protect against landlords/agents' 'bad' behaviour. Landlords cannot unprotect a deposit during a tenancy without evidence of reprotection, so why are schemes allowed to do this?”
This book is written by the owners of the popular SpareRoom.co.uk flatsharing web-site. It is addressed to 'sharers,lodgers, and everyone renting out a room', and is very much a companion book to their web site service. As the authors have been working in the field for such a long time (their London flatsharing site, intolondon.com having launched in 1999), they clearly know what they are talking about.
If you are looking to flat share or rent a room, particularly if you are looking for a place in London, this is an excellent book. It provides all (or nearly all) the information you need to have, in an accessible manner. There are also insets giving the personal experience of landlords and tenants, as well as the authors.
Helpful chapters include:
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Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
There is new tenancy deposit case report in the November issue the Legal Action Magazine, Da Costa v. Pinter, which took place at Bromely County Court in April 2009.
Here the tenancy agreement provided for a monthly rent of £1,950 but also stated 'Payment required in advance of £4,200'. The agents invoice described £2,250 of this sum as a deposit, and at the end of the tenancy the tenants asked for it back. As it was not forthcoming they issued county court proceedings for its return and also claimed the fine of three times the deposit sum. The deposit was then protected, after the issue of proceedings.
The Judge (District Judge Burn) accepted that the sum paid was a deposit and awarded the claimants the deposit money and the fine of £6,750. However the interesting part of this case is the quote from the Judge:
"The purpose of the Act is to try to ensure that landlords secure tenancy deposits in a recognised deposit scheme at the start of the tenancy, so that the deposit can be returned to tenants quickly when the tenancy ends, and that disputes about the deposit can be resolved under the schemes' procedures without the need for court proceedings.
Landlords who describe a deposit as something else, who do not secure it promptly in a deposit scheme as required by the Act, then fail to return the deposit when the tenant leaves (especially if this is without good cause, thereby forcing the tenant to start court proceedings to recover the money) but who then at the last minute after the tenant issues proceedings, pay the deposit into a scheme, are clearly flouting the spirit of the legislation and, on my interpretation, the letter also.
If the s213 and s214 remedies are not applied in a case such as the instant one, the Act would be rendered virtually toothless when landlords flout its provisions."
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
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This post first appeared on Roberta’s excellent My Property Mentor Blog on 19 October 2009.
You may not be aware of this- I certainly was not-but HMRC are actively searching for landlords who are avoiding paying tax either by accident or by design.
HMRC is actively searching local newspapers for information on planning applications for flat conversions.
If the planning application was for a number of flats within one house they will try to find out if the landlord was filing a tax return. (Sneaky!) They are checking for a ‘UTR’- Unique Taxpayer’s Reference. This 10 digit number is ta way for them to start the chase up. It allows them to see if the taxpayer was declaring the letting income. If you are then you would be entered on the “Not Worth Further Pursuit” database.
However…..
If you are Self Assessment registered and not declaring the income, the fun begins. They will send a 116 form, requesting information from the District Valuer, this tells them how much the landlord paid for the property, date of purchase and from whom the landlord purchased it. ( eeek!)
The next step is for them to check Experian to seek any further linked addresses to your name. If so, they will send more 116s, and see if more properties were not declared. More often than not, this yields spectacular results for the HMRC.
So, what if they are unsuccessful? Well, they may ask the District Valuer for a ‘Covosearch’, a historical list of properties, bought by the landlord, or possibly members of the landlord’s family friends and associates. If by chance the family member is a minor, they will suspect the landlord of attempting to limit his tax liability, and that non-compliance was taking place. (You have been warned!)
Further Enquiries
Now, if they decide that you are part of non-compliance, your case would be then be subject to a full enquiry. On the other side of the coin, if you are not on Self Assessment, you would be referred to the ‘Hidden Economy Team’, where you would be requested to complete returns with the letting income included. OK, hands up those who knew just how much power the HMRC have to chase you? How many investors have been advised by greedy marketeers and brokers into setting up sizeable portfolios in their family members/ kids/ friends names to avoid the many forms of tax?
Other Ways They Can Chase You
Apart from the local newspaper, another source of locating non-compliant landlords is via a Gangmasters’ project of licensed labour providers, which may have offshoots of properties owned in which a vast amounts of tenants were placed in just one room. (When we had a large influx of EU members there were stories of Polish workers living cheek by jowl in this manner.) Usually a family member would be acting as the landlord, leaving the Gangmaster to exploit the workforce.
Yet another way of locating non-compliant landlords is to establish (via the London Information System (LIS) database) how much housing benefit was paid to a landlord by a local council for the tenants. Local councils are duty-bound to place this information on the LIS database for HMRC.
Last but not least, they can also find, via LIS, rental income submitted to HMRC from letting agents. (Ed: they may also be able to track you via the tenancy deposit schemes which pass information on to the government)
Get Your Tax Sorted-NOW!
This government is very strapped for cash and in my opinion we can expect more of this type of behavior. We know already that banks are employing forensic accountants more and more now too (see my recent blog here for more info). The situation is likely to get worse as the government search more actively for spare cash trapped in the system. The tax man is coming folks- you have been warned. Sort your stuff out sooner rather than later.
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If you need help, Roberta's service may be able to assist. You can email her via her main website http://mypropertymentor.co.uk.
Reading (rather late) the October issue of Property Investor News, I came across these interesting snippets of news:
Insurance
Apparently a survey by insurance firm Direct Line for Business has thrown up the fact that many landlords are cancelling their insurance policies 'to save money'. Presumably these are people who are signed up to their own insurance schemes (otherwise how would they know)? I could not find any mention of this on their web-site, however I did note that their landlord insurance does not cover lettings to students.
Maintenance insurance for agents
Another one on insurance. Apparently many letting agents are carrying out maintenance work on rented properties without being properly insured. Agents are warned to watch out for this and not do any maintenance work unless they are sure they are covered. Apparently many office policies for letting agents exclude cover for this, meaning that agents won't even be covered for changing a light bulb. You are warned!
Student stereotypes
Finally research by Rookwool shows that actually students are not as rowdy as everyone thinks, as there is only one complaint made for every 557 students. Many student are actually more concerned with studying hard and getting a good degree, "and arguably may have more to fear from the noise generated by the rest of the town".
Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.
Tenancy agreements and information on tenancy agreements is an important part of the Landlord Law service that I provide. Sometimes people find it difficult to locate all the tenancy agreement related resources on the site, so I have done this page of links to help them:
