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Landlords Could Be Taxed Out Of The Market

Landlords Could Be Taxed Out Of The Market

Conservatives Set About Raising Increased
Tax Revenue From Landlords

Before the general election the Conservatives were the only political party to not openly target landlords and property investors with manifesto rhetoric, making them the property professional’s choice for power.

Even before the budget statement was delivered by Mr Osborne, there was plenty of press coverage about the generous tax treatment enjoyed by private rental sector (PRS) landlords and buy to let property investors.

So it was of little surprise that the Chancellor chose to turn to the private rental sector in order to raise some additional revenue for the government.

Conservatives Vowed To Leave PRS Landlords AloneSpotlight predicted that this would happen after the Conservatives were elected, and this year’s summer budget could be just the tip of the iceberg.

George Osborne before the  summer 2015 budget announcement George Osborne’s post election Budget announcement, made earlier in July, contained two  important changes to buy-to-let taxation that will impact on portfolio landlords and higher rate  tax payers.

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Politicians Want PRS Control

Politicians Want PRS Control

Labour Announces Further PRS Controls

The Labour party leader, Ed Miliband, has announced his party’s plans to reform the private rented sector (PRS), with longer term tenancies and rent cap proposals, should they win the May general election.

Labour have been at the forefront of the PRS reform movement for some time, campaigning for longer term tenancies for tenants in the private sector and now the political party leaders want to introduce even more legislation that would effectively cap rental prices so they cannot be increased by more than the rate of inflation (CPI) during the proposed secure three-year tenancies.

The PRS control proposals were supposed to win the hearts and minds of the 9.1 Million households currently living in private rented sector properties, however even tenant campaign groups can see that these new proposals have more holes in them than an old Swiss cheese.

The introduction of new legislation that Labour are proposing would require landlords and letting agents to disclose the rental prices charged to any previous rented property occupants, allowing tenants to have the upper hand in negotiating the best possible rental price with landlords, before the start of a new tenancy.

Do TESCO provide customers with information concerning the actual purchase price that they pay for items before they sell them on at a huge profit, do they reveal operational profit margins – No they don’t!
Prices fluctuate as do operational costs, why should landlords be singled out for special measures when other business sectors are left alone?

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PRS Landlords Victory On Selective Licensing By Local Authorities

PRS Landlords Victory On Selective Licensing By Local Authorities

PRS Landlords Victory On Selective Licensing By Local Authorities

Housing Minister, Brandon Lewis

Housing Minister, Brandon Lewis

Government Housing Minister, Brandon Lewis MP (pictured right), has announced that the selective licensing of private rental sector (PRS) landlords by Local Authorities will require Government approval from 1st April 2015, if they plan to license a large geographical area within borough or city boundaries.

Local authorities have had the power to licence landlords across an entire borough since 2010, in an attempt to combat community issues, such as anti social behaviour in troublesome areas. This blanket approach has seen a sharp increase in the number of selective licensing schemes being introduced by local authorities across the UK, much to the chagrin of landlords.

The changes to local authority selective licensing powers mean that councils will now need Government approval before they are allowed to implement a selective licensing scheme that covers a large geographical area of their council borough or covers an area that contains a proportion of private rented properties, expected to be around 20% of the local private rental market.

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Government End Outdated Law To Allow Short Term Letting In London

Government End Outdated Law To Allow Short Term Letting In London

New Measures Allow Londoners To Conduct Short Term Letting
Of Homes For Extra Cash

The UK Government have announced that they are set to introduce new measures that will bring to an end outdated rules from the 1970’s that prevented home owners in London from renting out their properties on a short-term basis to visitors.

Communities and Local Government (CLG), Secretary Eric Pickles said that there were almost 5 million overseas visitors to the capital between July and September 2013, and thousands of properties were advertised as being available as holiday lets on travel accommodation websites such as Airbnb.

However, under laws dating back to the 1970’s, Londoners who want to rent out their properties for less than 3 months, technically still have to apply for planning permission from the council, which does not apply anywhere else in the UK.

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Jeremy Corbyn, the Labour MP for Islington North has said that he plans to introduce a Private Member’s Bill in order to help regulate the Private Rented Sector (PRS), which he called an ‘utter disaster’.

Speaking in an adjournment debate in the Commons, the labour MP said in his own constituency, 30% of residents live in private rented accommodation and his proposed Bill would also introduce rent controls.

Mr Corbyn stated: “I wish to draw to the House’s attention the huge problems facing people living in the private rented sector in this country. This has to be seen in the context of the overall problems of housing supply and need in Britain. In 2010, 102,000 new properties were provided in this country, but every year approximately 230,000 new households are created. There are 2.8 Million people on the waiting list for council housing in the whole country and 3 Million people living in the private rented sector. I want to talk about the private rented sector because it has been the fastest-growing sector. Even if all the council housing I would like built, was built quickly, an enormous number of people would still be living in the private rented sector. Private rents have risen at double the rate of wages over the past ten years, while people living in the private rented sector are ten times more likely to move than owner occupiers. Furthermore, rents are rising fast despite the low level of wage rises at the moment and the relatively low levels of inflation. In other words, it costs more to live in private rented accommodation.”

He went on: “The terms of tenancies and conditions for people living in private rented accommodation tell a very sorry story indeed. We have a system of Assured Shorthold Tenancies (ASTs) – which give tenants a guaranteed tenancy of only six months and, after that, a two-month notice period – along with very high rents. In my constituency it is quite normal to find people living in private rented accommodation who are paying over half their take-home pay, if they are in work, on their rent. We also have a housing benefit system that militates strongly against people in the private rented sector. The Government have introduced the rent cap, which has limited the levels of housing benefit being paid. I am now facing the trauma – and it is a trauma – of seeing large numbers of tenants in my constituency who were or are in receipt of housing benefit being forced to move out, because their housing benefit has been cut and their rents have gone up, and because they cannot afford to meet the difference from other benefits, if they are on them, or their wages. There is, in effect, a social cleansing of inner London going on because of the imposition of the housing benefit cap. I stress the point that a large number of people in receipt of housing benefit are working – albeit on low wages, but they are in work. The current situation is an utter disaster, but it does not have to be like this, and I hope that things can change. Germany, for example, has 60% of its housing provided by the private rented sector. Germany has permanent tenancies and rent controls provided, and a tax regime that encourages good rather than bad management. Germany has a much more stable community and society as a result. I hope to introduce a Private Member’s Bill to bring about regulation, rent controls, decency and, above all, security in good-quality homes for those living in private rented accommodation. This is a serious issue that must be faced for a large number of people in this country.”

 

Hi All
My property management agents were in the process of interviewing a pair of prospective tenants for one of my properties. The applicants were a homeless married couple who had been forced to relocate to the area due to losing their jobs and wanted to move to an area with better employment opportunities.

The application was going great until it came to checking the couple’s housing benefit entitlement….

According to the local authority (I wont name and shame them here for legal reasons) the married couple were only entitled to the shared room rate because they were married and under 35. The management company attempted to argue over such blatant discrimination by the local authority but the facts seemed to fall on deaf ears.

Single claimants under 35 would be entitled to receive the shared room rate in full as individuals, but because the applicants were married they only counted as a single applicant!

It has taken 4 months of hard work, stress and a great deal of legal wrangling to sort out, including requests for Discretionary Payments, consultations with LHA professionals and arguements with various Government departments.

Following tips and advice gleaned from “The Essential Landlords LHA Handbook” I have now been able to get the full 2 bed LHA rate paid directly to me and the local authority have been forced to make a grovelling apology to the tenants!

It just goes to show that when armed with the right information and legal standpoints there are always options open to landlords, and it pays to invest in the knowledge of experts!

I would like to publicly thank the LHA Expert for his brilliant LHA book and tons of helpful advice!

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UK PRS Landlords still avoiding housing benefit tenants

1/3 of Private Rental Sector Landlords Avoiding Tenants Claiming Benefits

A new Government report has revealed a growing concern about UK landlords, as an increasing percentage are now refusing to accept applications from tenants claiming housing benefits.

The situation regarding LHA tenants is set to get much worse, following the recent statements made by UK Prime Minister David Cameron and his party’s vision for further welfare reform. Read full story

The Government commissioned report was compiled by the Centre for Regional Economic and Social Research at Sheffield Hallam University revealed that over one third of the 1867 landlords who agreed to take part, are already actively refraining from accepting LHA tenants or are considering avoiding benefit tenants in the future.

This change in UK landlord’s perspectives has developed since the government capped housing benefit payments in April 2011, meaning that many LHA claimants are no longer able to claim the entire rental amount from the local authority.

33% of the UK landlords surveyed admitted having severe reservations concerning the reliability of payments from LHA tenants, and as a result they were either planning to or considering no longer accepting benefit claimants as tenants.

29% of landlords had already gone through the process of tenant eviction with LHA tenants or had refused to renew the tenancies of benefit claimants when they came to an end.

36% also admitted that they were experiencing increased rental arrears from LHA tenants because of the changes to benefit payment levels made last year.

Landlords can safely and legally recover rent arrears/debts from all types of tenants, including absconded tenants by using Legal 4 Landlords professional services

Welfare Reform Minister, Lord Freud, didn’t see the results of the Government commissioned report as worrying, stating that: “The research gives us an early insight into what is really happening, and it shows that the many scare stories about the effects of housing benefit reform are simply not materialising.”

If that were true, why are an increasing number of UK landlords wrongly avoiding accepting LHA tenants?
Don’t miss out on the opportunity to get regualr direct payments from any Local authority – Get “The Landlords Essential LHA Handbook” by John Paul – The LHA Expert

Help the RLA

Join The Residential Landlords Association

Details of the Government’s new procedures for the payment of universal credit have been released – and they confirm that the landlord’s right to insist on direct rent payments if a tenant is in arrears will be scrapped.

Instead, payments will be made directly to tenants and it will be up to them to pay their rents or not. The proposals will mean the end of direct payment to landlords for rent as we have known it, and the new procedures will apply across the board to local authority tenants, housing association tenants and tenants in the private rented sector.

The RLA has serious concerns about the proposals:

1. No back stop provision under which a landlord can demand payment direct.
2. Lack of clarity/much greater individual discretion in operating these rules because “guidance” replaces regulations.
3. No means of redress for landlords if things go wrong/no rights of appeal.
4. No proposal that the guidance should reflect the landlords interests to make sure that rent is paid and that a roof is kept over the head of the claimant.
5. The whole concept of trying to improve tenant’s responsibility at the cost of much greater risk to landlords with strong likelihood of significantly higher arrears.
6. Much less likelihood of landlords being willing to take on benefit claimants. This could even translate into less likelihood of a willingness to take on claimants who are in work especially part time work because the same rules will apply to them.
7. No provision for first payment of benefit direct to the landlord.
8. We have argued with DWP that there should be a right for landlords to be paid direct payments once there are six weeks arrears and also that the whole system of vulnerability should be assessed according to the tenant’s interest of keeping a roof over their head and the landlord’s interest to receive the money, as well as the public interest of making sure that the benefit is used for its intended purpose.

Richard Jones, the RLA’s policy director, said, “We strongly believe that the Government’s whole approach is flawed and although the objective of helping tenants manage their financial affairs is in isolation a laudable one, the Government has wholly failed to appreciate the consequences of this. There will be a much higher level of arrears, an unwillingness of landlords to house benefit claimants (at a time when there is huge pressure on social housing), increased unwillingness by banks to lend for this kind of property (or increased interest rate to reflect the risk), much higher levels of evictions and much greater homelessness.”

The RLA has produced a briefing note for landlords, and this can be downloaded by clicking here.

What can I do?

Further details will follow about how you can assist the RLA in opposing these proposals.#

Join the Residential Landlords Association

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In an interview with the Mail on Sunday, Prime Minister David Cameron suggested cutting housing benefit for people under the age of 25 in an attempt to claw back Millions of pounds worth of Government money

Housing benefit is paid to adults on a low income, to help them pay their rent, either to the local council, a private landlord or to a hostel.

It is currently paid to around 380,000 under-25s and scrapping their entitlement would save the government around £2 Billion (GBP) a year.

The Prime Minister suggested that the current housing benefit system is sending out “strange signals” that people are “better off not working, or working less”. It encourages people not to work and have children, but we should help people to work and have children”.

The proposed reforms to the welfare system could be presented as an effort to reduce a feeling of antipathy towards people on benefits that may exist among the general public.

Mr Cameron said that current benefits system has “led to huge resentment amongst those who pay into the system, because they feel that what they are having to work hard for, others are getting without having to put in the effort.”

He also commented that cutting housing benefit for younger people would “stop the state dragging young people into dependency”.

Downing Street said that Mr Cameron wanted to encourage a debate about welfare.

The Prime Minister is also considering proposals to set benefits at a regional level, rather than a national level, in order to reflect wide regional variations in pay.

Political analysts have suggested that Mr Cameron’s comments are part of an effort to reconnect with Conservative backbenchers who believe the party’s values are being watered down under the coalition.

Housing charity Shelter has warned that cutting housing benefit for young people could lead to an increase in homelessness.

The charity’s chief executive Campbell Robb said: “To take away housing benefit from hundreds of thousands of young people – particularly in the current economic environment where young people in particular are finding it very difficult to find jobs – would have a devastating impact on many people’s lives. I think we would see many more people ending up homeless as a result of this kind of very significant change.”

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UK Prime Minister David Cameron has a new vision of the welfare state. He wants state benefits to be a safety net – and nothing more!,

The Prime Minister outlined future radical changes which on top of existing plans, could save the UK an extra £10 Billion (GBP) by 2016.

Government ministers expect this “next wave” of benefit cuts to include the axing of all housing benefit currently paid to around 380,000 people aged under 25.

Such a move would force many young adults to move back in with their parents rather than living independently.

Another controversial reform which could come in further down the line is setting benefit payments regionally – which would mean less money going to claimants who live in less-expensive parts of the country.

Some Tory MPs say the current system is unfair – with differing “incentives” on people to seek work depending on where they live. Liberal Democrats, however, would be likely to oppose any such changes.

The Prime Minister said his overall aim in reforming welfare was to stop people “languishing on the dole and dependency”.

Here are some of the welfare reforms Mr Cameron is considering

• Stopping most under-25s claiming housing benefit. Cameron said the government was spending almost £2bn a year on housing benefit for this group, and that 210,000 people aged 16 to 24 were social housing tenants. Many of them could live with their parents, he suggested.

• Scrapping the non-dependent deduction. Cameron said people could lose up to £74 a week in housing benefit if they have an adult child living with them. That “doesn’t seem right”, he said.

• Cutting benefits for the under-21s. Cameron said that in Holland the benefit system does not normally help the under-21s. When it does, benefits are set at a low level, and parents are expected to top them up.

• Ending subsidised social housing for the wealthy. Cameron said that between 12,000 and 34,000 families on more than £60,000 a year, and between 1,000 and 6,000 families on more than £100,000 a year, were living in council homes. “When you have people on £70,000 a year living for £90 or so a week in London’s most expensive postcodes you have to ask whether this is the best use of public resources,” he said.

• Uprating benefits in line with wage inflation instead of price inflation when price inflation is much higher. Cameron said in September benefits went up by 5.2% (inflation) even though workers were getting much lower pay rises. “Given that so many working people are struggling to make ends meet we have to ask whether this is the right approach,” Cameron said.

• Cutting benefits for the long-term unemployed. Cameron said that when the Americans decided to time-limit benefits in the 1990s, case-loads fell by more than 50%. “Instead of US-style time-limits – which remove entitlements altogether – we could perhaps revise the levels of benefits people receive if they are out of work for literally years on end,” he said.

• Cutting housing benefit further.
The government has already introduced a benefit cap to stop a relatively small number of families claiming exorbitant sums in housing benefit. But Cameron said this would still allow people to receive up to £20,000 a year in housing benefit. “Surely we should ask if it’s fair that the maximum amount that you can get on housing benefit is set at a level that only the top five per cent of earners would otherwise be able to afford,” he said.

• Stopping people from claiming child-related benefits if they have more than a certain number of children. Cameron did not say how many children, but he quoted the number of people on income support with three or more children (150,000) and four or more children (57,000), implying benefits could be capped at two children.

• Requiring people on out-of-work benefits to gain basic literacy and numeracy skills.

• Requiring people on out-of-work benefits to prepare a CV.

• Requiring able people on out-of-work benefits to do full-time community work after a certain period. In Australia this was standard after just six months, Cameron said.

• Requiring people on sickness benefits to improve their health. “Today if someone is signed off work with a bad back there’s no requirement to take steps to get well to keep on receiving that benefit – even if they could be getting free physiotherapy to get back to health and start working again,” Cameron said.

• Requiring more single parents to work – or at least to prepare for work. Cameron said the government was already forcing single parents to look for work when their youngest child reaches five, not seven as before. But, with free nursery care available from the age of three, there was a case for changing the rules again, he said. “Even if there’s no scope for actually working, there should at least be for preparing to work: getting down to the job centre; writing a CV; learning new skills.”

• Imposing tougher restrictions on people claiming benefits if they have never worked than if they have paid tax and national insurance for years before submitting a claim.

• Stopping teenagers from claiming benefits as soon as they leave school. Cameron said he wanted to ask “if it’s right that people continue to have the option of leaving school and going straight onto benefits, without ever having contributed to the system in any way.”

• Stopping paying winter fuel payments and other non-contributory benefits to people who live abroad.

• Stopping paying some benefits in cash and paying them instead in benefits in kind, like free school meals.

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