Neil Patterson

Registered with Property118.com
Monday 7th February 2011

Member of The Landlords Union

Insures properties through a broker recommended by Property118
Yes


Latest Comments

Total Number of Property118 Comments: 2737

Neil Patterson

14:21 PM, 17th January 2019
About 13 hours ago

Evicting an intermitant paying tenant now on SPT?

Hi Philip,

If the arrears are 2 months or more you can also consider a section 8 evictions. However, general consensus if it is outside the fixed term is that S 21 is easier.

Does the deposit cover the arrears?

Also consider professional assistance as it usaully ends up saving time and money if you see my notes at the bottom of the article.... Read More

Neil Patterson

15:26 PM, 16th January 2019
About A day ago

Is Class 4 NIC due on a UK property tax return?

From HMRC >> https://www.gov.uk/pay-class-2-national-insurance

Pay Class 2 National Insurance if you don't pay through Self Assessment

Overview: You make Class 2 National Insurance contributions if you’re self-employed to qualify for benefits like the State Pension. Most people pay the contributions as part of their Self Assessment tax bill. >> https://www.gov.uk/pay-self-assessment-tax-bill

If you don’t pay through Self Assessment

You don’t pay through Self Assessment if you’re any of the following:

an examiner, moderator, invigilator or person who set exam questions
running a businesses involving land or property
a minister of religion who doesn’t receive a salary or stipend
living abroad and paying voluntary Class 2 contributions
a person who makes investments - but not as a business and without getting a fee or commission
a non-UK resident who’s self-employed in the UK
working abroad

HM Revenue and Customs (HMRC) will send you a bill by the end of October - call the newly self-employed helpline if you don’t get one.

Make sure your payment reaches HMRC by the deadline. The time you need to allow depends on how you pay.... Read More

Neil Patterson

11:09 AM, 16th January 2019
About 2 days ago

Access after section 8/abandonment

Hi Graeme

This sounds like it could be a trap so be very careful. You have not got absolute proof the tenant has surrendered possession so unless you have this you can't just assume and enter.

Please see Tessa Shepperson's article "I think my tenant has left, can I change the locks?" >> https://www.property118.com/i-think-my-tenant-has-left-can-i-change-the-locks/

You need to be very, VERY careful about this. Once a property has been let to a tenant it is effectively his. He is entitled to live in it without interference from the landlord.

This is set out in a clause (rather quaintly called the ‘covenant of quiet enjoyment’) which is implied into all tenancy agreements, whether it is set out in the written terms and conditions or not. Mostly it is.

So the landlord has no right at all to go barging in, whether he thinks the tenant is there or not. After all a tenant does not HAVE to live in the property if he does not want to. Also, he could be on holiday, in hospital or in jail. None of which entitle the landlord to go in and repossess.

So the fact that the neighbours have not seen your tenant there for a while does not mean that you are legally entitled to just go in and change the locks. For example, if the tenant was merely on a long holiday and he came back to find that you had changed the locks he would be entitled to an injunction to get let back in again and financial compensation from you, particularly if you had re-let the property to someone else. Plus you would almost certainly be ordered to pay his legal costs as well. It could turn out to be a very expensive mistake.

If I also tell you that there are believed to be some tenants who deliberately pretend to have vacated, so that they can entice their landlords into repossessing to potentially sue them for damages, you will appreciate that there is a great need for caution in this situation.

However there are times when you can go in and change the locks. How can you tell when this is?

The doctrine of implied surrender

The legal justification for repossessing a property in the absence of the tenant is that you are accepting what we lawyers call an ‘implied surrender’. This is when the conduct of the tenant is inconsistent with an intention to continue with the tenancy. You can then accept this implied surrender offer by re-entering the property and changing the locks, and this then ends the tenancy.

The best and clearest example if this is if the tenant stops paying rent, moves out all his possessions, and leaves the keys behind. Giving up the keys is considered to be a symbol of giving up possession. So if you have a situation where they have been left behind you are generally safe to repossess – so long as the tenant has actually moved out, and has not just left them behind by mistake while popping out to the shops!

However, if the keys have not been left behind, particularly if some of the tenant’s possessions are still there, you should back out of the property (assuming you have entered with your keys and an independent witness, to check the situation) and obtain a court order for possession.

Obtaining a court order for possession is the ONLY 100% safe way to repossess a property with no risk of any claim for compensation for unlawful eviction. Anything else is a risk. You may consider that it is a risk worth taking, particularly if the tenant is in serious arrears of rent. However it IS a risk and any solicitor you consult will advise you to go to court.

What if you have no keys or way of checking? For example if the flat is on the sixth floor and you cannot peer through the windows? Then your only option is the court order for possession.

The abandonment notice myth

“But” you are probably saying, “Why don’t you just put an abandonment notice up on the door?” “Because” my answer would be “they are nonsense”.

When I first started working in property law, I had never heard of an abandonment notice. They are in none of the legal text books. They are a myth perpetrated by landlords and agents who don’t want to go to court. But they do not, and cannot have any legal efficacy.

Here’s why:

If the tenant has given up and gone, if there is a genuine situation of implied surrender, you do not need to put any notice on the door. You can just go in and change the locks, now, entirely legally.
If, on the other hand, it is not an implied surrender situation, if the tenant is say, merely staying longer than expected with her Great Aunt Mary (perhaps GA Mary has fallen sick, and she is staying to nurse her), then you have no right to go in and change the locks. Any attempt by you to do so will certainly be unlawful eviction which is both a criminal offence and (as we have seen above) a civil wrong entitling the tenant to bring a claim for compensation.

The problem is working out which of these situations apply. Things are not always clear cut.... Read More

Neil Patterson

10:48 AM, 16th January 2019
About 2 days ago

Brexit uncertainty good news for landlords??

There is a certain one dimensional logic not taking other factors into account.... Read More

Neil Patterson

11:33 AM, 15th January 2019
About 3 days ago

Is Class 4 NIC due on a UK property tax return?

Neil Barlow of Pacific Limited Chartered Accountants advised:-

The National Insurance rules changed following the National Insurance Contributions Act 2015 (NICA 2015).

Firstly, the position prior to 2015/16 was detailed in Paragraphs 43 to 46 and Paragraph 57 of the Ramsay appeal and reference to Rashid v Garcia (SpC 00348; 11 December 2002). The National Insurance legislation definition of a business has no relevance for s162 TCGA, as mentioned in my email of 1 June. In Rashid v Garcia, the courts concluded that the National Insurance legislation was aligned with the relevant legislation which defines a business as a trade, profession or vocation and although Mr Rashid had been paying Class 2 NIC, his property letting did not qualify as a trade, profession or vocation and therefore he was not entitled to claim state benefits. There is no statutory definition of “business” for the purposes of s162 TCGA and the term “business” is not aligned with the concept of trades or professions. Considering the Rashid v Garcia case further, if Class 2 NIC had been payable because the property letting constituted a trade, profession or vocation then presumably Class 4 NIC would also be an issue which could potentially be a huge liability which every landlord wishes to avoid.

Secondly, from 2015/16 if a landlord qualifies as a business under the NICA 2015 definition, then although the landlord can pay Class 2 NIC he is not obliged to pay Class 2. It is also interesting to see HMRC’s examples of what constitutes a business for Class 2 NIC purposes which are shown at the end of HMRC’s National Insurance Manual 23800 and seem to indicate that to be treated as a business the landlord must also be looking to increase the number of properties owned.

Therefore, we don’t believe Class 2 NIC has any bearing on whether s162 TCGA is claimable.

Mark Smith of Cotswold Barristers responded

I agree with the advice that Neil Barlow has given. There is a right but not a duty to pay Class 2, unless the landlord is also obliged to pay Class 4. Not paying does not affect the ability to assert you are a rental business, as the payment is optional. I do not consider paying or non-paying of Class 2 as decisive or even relevant to the question of being a property rental business.

In regards to the ICAEW blog I think there is a confusion between ‘eligible’ which means they can pay if they want to (to preserve the right to certain benefits) and ‘liable’ which means they MUST pay.

“The key word here is ‘business’. A person who is liable to income tax on the profits arising from the receipt of property rental income, will be a self-employed earner for NIC purposes if the activities carried out amount to running a business. This much has not changed. Those in business letting property before 6 April 2015 had a liability to Class 2. Now they can opt to pay voluntarily”

“In summary:

Letting property may amount to being in business, but if it does not, there is not (and never has been) a liability or entitlement to pay Class 2 NIC.
If letting property does amount to a business, but not a trade, it makes the landlord a self-employed earner eligible to pay Class 2 NIC (he or she would have been liable to pay Class 2 before 6 April 2015).
Where the letting business is also a trade because it includes more than property letting, the profits are liable to compulsory Class 2 and Class 4 if the trading profits exceed the relevant thresholds”

>> https://www.property118.com/landlords-class-2-national-insurance/

Short answer from what you have said above as long as it is only an investment activity and not a trade then you will not be required to pay class 4.... Read More