Rent in Advance

A number of landlords are charging money from tenants described as 'Rent in Advance' to avoid taking a deposit. The belief is that by doing this landlords and tenants avoid the tenancy deposit protection rules.

However, a court case Piggot v Slaven in Grimsby earlier this year ruled that 'Rent in Advance' was in fact just the same as a deposit. The Court ordered the landlord to pay 3 times the deposit to the tenant.

The warning to landlords is clear - don't try and get around the tenancy deposit rules by charging 'Rent in Advance', it could be very expensive.

The Taxman announces plans to target landlords

Consultation documents released by HMRC on 9th July confirm the Taxman's intention to target residential landlords in an attempt to triple the amount of extra tax raised from UK landlords.

The move could force letting agents and others to hand over names and addresses of landlords, past and present. Currently the Revenue can only demand data on landlords who use an agent to receive rent. According to the Revenue the new proposals would allow HMRC to make sure that people with income from letting property pay the right tax.

According to The Times newspaper "the Revenue sifts through classified advertisements and scours Land Registry data to find undeclared properties. It has also set up a whistleblower hotline and at one stage offered landlords an amnesty on penalties to encourage them to come forward. It has also targeted 80,000 landlords who wrongly claimed a refund for their mortgage payments".

The Times goes on to say "Tax evaders who have not come forward and are discovered could face penalties amounting to 100% of tax owed for up to six years, and could be prosecuted". Click here for The Times article.

The Revenue's Property Campaign has already netted more than £100 million. The Revenue believe that there is at least another £200 million to be had from landlords. However when we alerted landlords to the Property Campaign last year we were contacted by several landlords who told us that in their opinion the Revenue had bullied them into paying tax. The story seemed to be roughly the same in each case. The landlords were presented with a demand for a relatively small amount, in the region of £100. Because of the cost involved in fighting their case they had chosen to pay the Revenue's bill rather than fight.

One landlord told us it was a straight choice between spending over £1,000 to fight the demand or paying the £100 that his Accountant assured him was not due. He chose to pay the £100, but as you can imagine he was less than happy.

We are also aware that a large number of landlords do not complete their tax returns correctly, especially so-called 'reluctant landlords'. These are generally people who have been unable to sell their homes due to the current economic conditions and have chosen to rent their property for the time being. Our surveys indicate that many of these landlords not only fail to make correct tax returns, they are also less likely to have an EPC, to have gas safety certificates or indeed comply with other legislation.

It is correct that these landlords should be made to adhere to the same standards as 'professional' landlords. Our worry is that it always seems to be the 'professional' landlords who suffer. Just like the Government proposals to register all landlords (see previous posts in this Blog) it is likely that honest landlords will be targeted first and that many 'non-professional' landlords will slip through the net. Honest landlords end up paying more tax, directly or indirectly, they have to bear more costs to comply with legislation and therefore end up making a smaller return than these other landlords. Or, honest landlords are undercut by these other landlords who have smaller costs because they do not pay tax on their rental property or incur costs complying with legislation.

If the Revenue could guarantee that they will target and catch these 'other' landlords and at the same time force them to comply with the rest of the legislation that affects honest landlords we would support this initiative. Sad to say, we believe that this is unlikely to be the case. In our opinion is it is likely that it will be honest, professional landlords who will be targeted simply because it is too difficult to target landlords who are expert at 'staying below the radar'.

For more information about the HMRC proposals click here HMRC consultation document.

If you have any comments you would like to make you can make them on our forum The Landlords Club. You can also contact NetRent.co.uk by email at enquiries@netrent.co.uk or use this form Contact NetRent.co.uk.

We would welcome your comments.

Foxtons ruling means landlords can recover £millions

A landmark High Court ruling against London letting agents Foxtons could mean that landlords throughout the UK are able to recover £miilions in fees previously paid to agents.

Mr Justice Mann ruled that leasing agreements made by Foxtons unfairly overcharged commission to landlords. Foxtons was among many letting agents in London and the South East to run these agreements. As a result of the court ruling, landlords across the country can now issue proceedings to recover overpaid charges for the past 14 years on existing contracts.

For more information click here The Times article.

Warning over landlord licence scheme

Introducing a licence scheme for the private rented sector in England may not lead to significant improvements in conditions for tenants unless it gets good buy in from councils, landlords have warned.

British Property Federation director Ian Fletcher told the Chartered Institute of Housing annual conference that councils in Scotland and Northern Ireland, where such schemes already exist, “have made little use of them” to crack down on bad practice.

Under the proposals on which the government is currently consulting, all private landlords will have to apply for a licence which will be revoked if tenants are offered a poor service, for instance if maintenance or repairs are not undertaken.

Councils will police the system, which has been estimated to cost £2.5bn.

Mr Fletcher told the Local Government Chronicle: “The reason councils have not made the most of the schemes in Northern Ireland and Scotland is possibly down to resources but if it is going to work in England, councils need to be a bit proactive about it.

“The landlords we represent want a good system but they need to see that it is going to be useful and not something that they pay for and then bad landlords continue operating as they have done before.”

Landlords reminded to check gas appliances regularly following HSE prosecution

The Health and Safety Executive (HSE) is urging landlords and property agents to ensure that their gas appliances are serviced and maintained and that landlords’ gas safety checks are completed. It follows the prosecution of a Tamworth man, after four people were taken to hospital suffering suspected carbon monoxide poisoning at a rented property.

Paul Bird was fined £2,000 and ordered to pay £2,220 in costs at Burton on Trent Magistrates Court on 8 June, after pleading guilty to four charges under the Gas Safety (Installation and Use) Regulations 1998.

The incident occurred in a property on Prospect Street, Tamworth on 11 December last year. The four people who were taken to hospital with suspected carbon monoxide poisoning, were released the same day.

Mr Bird was the managing agent of the property. The court heard that following the incident, British Gas and HSE visited the house, to inspect the appliances. They identified that the back boiler, gas flue and gas fire were immediately dangerous.

It also emerged that a landlord’s gas safety check had not been completed at the property and there was no evidence that the gas appliances, which were almost 30 years old, had been serviced in recent years.

Speaking after the case, HSE investigating inspector Andrew Bowker said:
“Approximately 20 people are killed every year by carbon monoxide poisoning due to unsafe gas appliances and flues. Landlords and managing agents must ensure that their gas appliances are checked for safety on an annual basis and are suitably serviced and maintained. Mr Bird fell well below the required standard and it was fortunate those affected recovered quickly.

“HSE would also urge any private tenant in a property with a gas appliance installed, to ensure that their landlord has provided them with a current gas safety certificate.”

Presentation by Julie Rugg in Bristol

A special meeting has been arranged by Bristol City Council where Dr Julie Rugg will present the Government Plans for Further Regulation of the Private Rented Sector.

The meeting will be held on Wednesday 22 July at 7pm at the Council House, College Green, Bristol BS1 5TR.

The discussion notes taken from this meeting will then be incorporated into the joint response from the four West of England local authorities to the Government.

To reserve a seat at this unique meeting please contact Julie Norris on 0117 353 3867 or email her at Julie.Norris@bristol.gov.uk

Government Plan to Licence Landlords could cost £2.5 billion

We reported the Government response to The Rugg Report earlier in this Blog, we can now tell you the anticipated costs of licencing Landlords in England.

According to the Government's own Impact Assessment it could cost a staggering £2.5 billion.

Included within the Impact Assessment is a proposal to charge Landlords a Licence Fee of £500 PER PROPERTY. This is Option One under the plan. The Licence would last for 5 years and would cover every rented property in England.

Even under the Government's own preferred option, Option Two, Landlords would have to pay between £30-£50 every year.

The Impact Assessment goes on to explain how the schemes would work and sets out a timetable for the introduction of Licencing for Landlords.

The Government is currently carrying out a consultation exercise which will end on 7 August 2009. We strongly urge all Landlords and Letting Agents to visit the Communities and Local Government website and read both the Government Response to the Rugg Report and also the Impact Assessment.

We would also strongly urge every Landlord and Letting Agent to let the Government know what you think about their plans. You can write or email the consultation team at:

William Tandoh
Private Rented Sector Team
Department for Communities and Local Government
1/C4 Eland House
Bressenden Place
London
SW1E 5DU

PRSreview@communities.gsi.gov.uk

The Response and Impact Assessments can be found here Communities and Local Government Website.

Please remember - you only have until 7 August 2009 to let the Government know your views. Please act now.

You can share your views with other Landlords and Letting Agents by visiting our own forum The Landlords Club, the free forum for everyone involved in the Lettings Industry.

Landlords warned about Deposit scams

Landlords are being warned against bogus websites which appear to be one of the 3 official, Government approved tenant deposit schemes.

Unwitting landlords have been placing their deposits with these on-line companies only to find out that the deposits are not protected and the landlord could be liable for fines and penalties.

The 3 official websites are:

My Deposits

The Dispute Service

The Deposit Protection Service

If you take a deposit from a tenant and fail to lodge it with one of these 3 companies you will be liable to fines and penalties. For full details please see the Government's own website:

Direct.Gov.UK

Council of Mortgage Lenders publish new guidance on Buy-to-Let arrears

The Council of Mortgage Lenders (CML) have published new guidance to lenders to ensure that they act fairly when dealing with Buy-to-Let arrears.

The CML guidelines for Buy-to-Let mortgages come into effect in September but they claim that much of these guidelines are already being upheld.

The CML guidance includes the lenders options, implications for tenants and non Buy-to-Let tenants. For more information please click here CML Guidance on Buy-to-Let Arrears.

Landlords could be forced to pay tenants water bills

According to an article published by The Times newspaper residential landlords could be made liable for unpaid water bills left by departing tenants under a government review of water charges.

Ofwat have drawn up plans and submitted them to the Walker Review which is reviewing charging and metering for water and sewerage services on behalf of the Government.

The read the full Times article click here Landlords could pay tenants water bills.