Can landlords charge for managing end of tenancy cleaning and repairs?

And to throw something else into the mix - we are landlords and letting agents. As we manage our own properties through our business partnership my wife and I thought that as we manage other properties we could charge for our own. A way to minimise the effects of Section 24 amongst many things. "Can't do that" said the accountant. "Charging for your own time"
So now we are limited and guess what- we can now as we are a separate entity. So from a tax point of view you can't charge for your own time as BTL is not classed as a business by HMRC.

I think it may be an unfair term to simply charge a % because that % may not actually reflect the true cost of the service you are providing (including your time), thus I suspect it would be better to charge a fee based on a reasonable hourly rate x the estimated time it takes to do the work. That way you can justify the charge. It also means that if it takes you 2 hours to arrange a cleaner (perhaps your usual cleaner was not available so you had to ring around to source a replacement), then another hour to get to the property to grant them access, etc. then you could charge for 3 hours work x your hourly rate (say £15 per hour) and thus charge the tenant £45 + the cleaning cost (say £100), so this would be a much truer assessment of the true cost of putting right the tenant's breach of tenancy (e.g. not leaving the property clean at the end of the tenancy).

I think the issue is whether a contractual term that a 10% admin fee will be added to the value of dilapidations is an unfair term.

It is not just whether a landlord can charge for his time in general, which is probably what the accountants mentioned in this thread fell back to, but really whether such a term is unfair.

On the face of it it is not obvious that it is unfair but an experienced lawyer will have a more informed opinion.

In practice there may not be any downside in adding it: At best you get something, at worse the court/adjudicator will not agree and will not award it.

Reply to the comment left by "Gary Nock" at "25/11/2016 - 18:12":

It is not because BTL is not "classed as a business by HMRC" (it IS classed as a business but not as a trade by HMRC), it is because your time is compensated by the profit of the business.

If you charged yourself, then all that would do is move the income from one section of your tax return to another and result in the same tax being paid (probably), but complicating the reporting and not being easily verifiable.
It would also, in my opinion, be you employing yourself, and so having to provide a pension, sick pay, national insurance, PAYE, etc, and so cost you more in terms of time and money.

Reply to the comment left by "Michael Barnes" at "26/11/2016 - 19:12":

Only a business if ALL of the following apply as per HMRC website:

Running a property business

You have to pay Class 2 National Insurance if your profits are over £5,965 a year and what you do counts as running a business, eg if all the following apply:

being a landlord is your main job

you rent out more than one property

you’re buying new properties to rent out

Reply to the comment left by "Romain Garcin" at "25/11/2016 - 21:56":

Hi Romain. In general this is my view too. If such a charge were challenged, I believe the response from deposit schemes and even court would be similar to that on this board - i.e. inconsistent. I was hoping to establish whether it is legally correct so that if challenged I could justify with precedent or legislation but it does seem a grey area!

Reply to the comment left by "Gary Nock" at "25/11/2016 - 16:30":

Hi Gary,

Regarding putting it into perspective, we are not talking about anything close to £12 in the particular case which prompted my question. If you are able to back up your claims you should not be afraid of winding up the adjudicator. Hence I am looking on here for legal precedent / justification for such charges. I'd want my property agent, if I used one, to know this - or at least be curious to know this.

Out of interest - did the judge say how he calculated the £12.50 letter cost to be unfair? I don't think that would universally be the finding for all letter charges.

Reply to the comment left by "Dr Monty Drawbridge " at "28/11/2016 - 10:41":

Monty you will not find legal precedent as such. You get guidelines. Such as this from the Mydeposits Guide:

"A landlord can also support their claim by producing invoices or receipts for work carried out by a professional cleaning contractor, as costs are usually balanced against market rates and geographical location. Where landlords charge an hourly rate to clean the property themselves, this can be more problematic for adjudicators because it is harder to justify the rate against the time spent cleaning "

So if they find it problematic to adjudicate on the landlord doing his own cleaning, then the landlord charging a fee to arrange the cleaning would be....problematic.

And the Judge in the case we are referring to just said "£12.50 for a letter chasing the rent - that is part and parcel of being a landlord so you can't charge for it"

At which point the solicitor acting for us looked at me and basically sent me the vibe to be quiet. After the case he said that had I objected to the letter charge being disbarred then the Judge would have took his red pen to other items.

So the definitive answer you are looking for Monty does not exist. It all depends on what is being claimed, who adjudicates on it and the attitude of the Judge or adjudicator to the relationship between a landlord and a tenant. If they are anti landlord - as some Judges are - then you will be on a hiding to nothing.

Being able to charge tenants for services provided around a tenancy may soon be a legacy item as the Chancellor announced that they were proposing to ban them in his autumn statement. I'm sure its been mentioned elsewhere already but if this legislation comes into law then the following will probably become against the law.
Agents are required to advertise their fees online and in their offices and we (as agents) clearly advertise online and in all our paperwork, including the AST, that there is a fixed fee due at the end of tenancy to cover all the recovery work of taking the property back which includes checking the property against the detailed and comprehensive inventory - paid for by the landlord - as well as processing and returning the deposit. The fee is not excessive @ £60 but is very rarely questioned by tenants and on the rare occasions a post tenancy has gone to dispute arbitration it has always been permitted by the adjudicator as a legitimate cost. For administrative ease this fee is deducted from the deposit before it is returned and tenants are made aware of this right from the beginning when the tenancy is discussed.

When I have helped friends self-market using the likes of Visum etc they have done the same thing - advertising their fees inc referencing and recovery and also creating a simple brochure with all the details on a Word doc and again no problem to date. Tenants and prospective tenants can clearly see any likely charges and make a valued judgement on whether to proceed. I believe that this complies with current consumer legislation and complies with ARLA guidance for agents and ergo should do so for landlords on their own