HMRC Targets Buy to Let Landlords

HMRC have launched 12 task forces aimed at targeting landlords with 3 or more properties in 2011/12 and more in 2012/13. The buy-to-let taskforce will specifically target tax evasion among buy-to-let landlords who own or rent out more than three properties.

HMRC taskforces form part of the government’s aim to raise an additional £7bn a year by 2014/15 through tackling tax evasion, avoidance and fraud. Mike Wells director of risk and intelligence at HM Revenue and Customs (HMRC), is quite clear –“ if you deliberately seek to evade tax we can and will track you down and you’ll face not only a heavy fine, but possibly a criminal prosecution as well.”

The Task forces will gain information from Banks Mortgage applications Land registry Electoral rolls Council tax records Letting agents Rumour also has it the Deposit Scheme implemented in April 2006 was part of collecting data on landlords as the start of the big brother affect. It is thought the HMRC have identified 80,000 landlords who may have claimed too much tax relief or who have failed to declare all the rent received. Property investors who sold homes several years ago have also been pinpointed as well as overseas landlords.

Of course, if you keep accurate records and declare everything you have nothing to worry about. If you want to keep up to date with the latest information with the lettings industry then email Sharon@moveonrentals.com”> Sharon@moveonrentals.com to receive our monthly newsletter.

Tenancy Deposit Protection Court Ruling

A Dorset landlord is counting the costs of his futility and refusal to play by the rules.

The Landlord had originally protected a deposit given to him by a tenant through MyDeposits; however the Landlord did not renew his membership the following year and despite MyDeposits writing to him and advising of the consequences, the landlord neither renewed nor joined another scheme.

Failure to protect a deposit within 30 days of receiving it will result in a ‘Section 21 Notice to Quit’ not being recognised in a Court of Law and the tenant being entitled to up to three times the original amount paid as a deposit.

When the tenants vacated the property and requested their deposit back, the Landlord refused, leaving the tenant with no option other than to take the Landlord to court. Although the landlord cited dilapidations’ in the property, he was ill equipped with a hand written Inventory and photographs that were undated.

The court sided with the tenant and awarded £350 costs, the original deposit of £700 and three times the deposit of £2100, bringing the total to £3,150. The courts are coming down heavy on Landlords not protecting deposits. The ruling to protect deposits originally came in to force in April 2007, when all deposits had to be protected within 14 days, however since April 2012 an amendment in the Localism Bill changed this to 30 days with no exceptions.

The legislations are changing all the time and it is becoming more vital for a landlord to belong to a Landlord Scheme to keep up to date with news or a good reputable Letting Agent.

HMRC Deadlines on Rented Property

The HMRC have given a deadline to all property owners who received a rental income either here in the UK or abroad.

This applies to any property that is not a main residence, including holiday homes. They have pledged to crack down on any buy-to-let property owners who are trying to get away with capital gains tax avoidance.

Marian Wilson, head of HMRC campaigns, said:

“Some people will not understand that selling a second home, a holiday home or a property disposed of as a gift could attract Capital Gains Tax”.

HMRC can find out about sales of property from land registry records, advertising, changes in reporting of rental income, stamp duty land tax (SDLT) returns, capital gains tax (CGT) returns, bank transfers and other ways.

People have until August 9 2013 to tell HMRC about any unpaid capital gains tax on property sales and must pay any tax owed by September 6.

Until this date, fines will be smaller for those who haven’t paid their tax. It is hoped this will encourage more landlords to come clean. Marian Wilson advises: “It is better to come to us before we come to you.

After the opportunity closes on 6 September, HMRC will use information it holds about property sales in the UK and abroad to identify people who have not paid what they owe. Penalties or even criminal prosecution could follow.

People don’t need to be concerned about the sale of their main home, which is usually exempt from CGT. If you have any questions on this or other aspects on rental management then please contact:

Move On 01202 711169 or email info@moveonrentals.com.

Gas Flu Inspection Hatch in Rented Properties

As of 1st January 2013, all rented properties that have a gas central heating boiler flue that has either been fitted hidden in the ceiling space or fitted away from an external wall must now be fitted with an inspection hatch.

If your boiler is situated on an outside wall it is unlikely that you have this type of flue and if you can see the entire flue it will not affect you, your gas engineer will be able to tell you. All gas engineers must now be able to inspect the whole length of the flue, in line with industry guidance. If they are unable to fully inspect the flue it must be deemed at ‘At Risk’ (recommending to not use)and the engineer will ask for consent to turn it off.

You are within your rights to refuse permission for it to be turned off; however you will be asked to sign paperwork to confirm you accept responsibility for those defects identified in the system – which would be the possible leak of carbon monoxide escaping unnoticed from the concealed flue into the property. You may be able to go back to the builder if it is less than two years and look to the home warrantee if less than 10 years.

What it does mean is the gas engineer will not be able to provide a Gas Safety Certificate until an inspection hatch has been fitted and they have inspected the whole flue and as a landlord you must by law have a Gas Safety Certificate in place to rent a property out and this must be renewed every year.

If you have any questions on this or other aspects on rental management then please contact:

Move On 01202 711169 or email info@moveonrentals.com

Electrical Appliance Warning

Update on electrical appliances warning (further to my blog earlier this month April 2013)

A letter is now going around to key Letting Agents warning of the dangers of appliances in rented homes from Dorset Fire and Rescue Services who are reporting they have attended 7 dishwasher fires relating to the overheating component in certain dishwashers in the last 12 months!

Makes being warned about are Beko, Bosch, Seimens, Neff and Hotpoint.

Since 2010 there have been 269 reported fires originating from an appliance. Bosch have allegedly sent 800,000 letters and made 150,000 telephone calls, of the known 632,000 appliances there are still 479,000 unaccounted for. Bosch,Beko,Seimens,Hotpoint are among the brands issuing warnings.

Landlords and Letting Agents are being advised to look at the electrical products in their properties after a number of fires have been attributed to white goods. You can find out further information by going to the following sites; Electrical Safety Council (ESC): www.esc.org.uk/recall.

You will need to enter a model number, brand name or description of a particular item.

If the product has been recalled, the website will advise on your next steps. Recall UK is the primary product recall site that lists all UK product recalls, for all product types, announced in the last few weeks: www.recalluk.com

Buy to Let Landlords Purchase with Sitting Tenants

Buy to Let Landlords Purchase with Sitting Tenants

A recent survey has revealed that five million home owners are thinking about becoming landlords. Sharon Canning talks about her company “Landlord to Landlord Sales” that helps landlords buy rental properties without the hassle of finding tenants.

Superstrike Ltd Vs Rodrigues

Superstrike Ltd Vs Rodrigues

Latest court ruling put landlords into panic

On the 14^th June 2013 the Lord Justice Lloyd handled the appeal on the Superstrike v Rodriguez case. The outcome of this appeal has put the lettings world in turmoil for private landlords and letting agents, as well as all the Deposit Schemes who are still seeking legal advice. Online property forums are in full discussion as well as landlord governing bodies.

This particular case is because a tenant entered an Assured Shorthold Tenancy (AST) prior to April 2007, which meant the deposit did not have to be protected. The tenancy was for twelve months and expired in January 2008, it then proceeded into a statutory periodic tenancy (SPT). Now up to this point, this has been the procedure we have all been advised to do, the rules stated that only when you entered a new AST did you need to protect the deposit.

The case however, brings up rightly that when a tenancy is allowed to go into a SPT this is deemed as a new distinct tenancy and not a continuation and therefore the deposit should have been protected. And, because of this when the landlords took the tenants to court on a Section 21 notice, the court refused to recognise it.

The majority of landlords will have tenants in AST’s that started after April 2007, but if you have a tenant prior to this date and thought there was no need to protect, then my advice is to protect it now, as it would show your good intentions.

However, the dilemma now falls with periodic tenancies now being classed as new distinct tenancies and this is where problems may arise and why the deposit schemes are seeking legal advice because their own website clearly say you do not need to protect a deposit again if in a monthly rollover. And if each new month is a new distinct tenancy are we to renew monthly? What about guarantors who were on the original tenancy, do they not continue?

This is likely to go to the Supreme Court, so you can watch this space or put your tenants in a new tenancy and be covered.