Tag Archives: Tax

Enforcement not legislation – PRS Hit Squads Latest Articles, UK Property Forum for Buy to Let Landlords

There is already more than enough funding and legislation to police the Private Rented Sector.

The last thing we need is more legislation, what everybody wants is enforcement and word on the street is that we could begin to see it before the end of 2013. Ben-Reeve-Lewis

PRS Hit Squads

The authorities all know who the real criminals are and the only reason the criminals are still in business is because those holding power don’t combine resources, in fact they rarely talk to each other. Until now they have all run scared of “data sharing protocols” but when that’s put to one side expect to see some very big cases of criminal landlords being taken to task.

I have heard that PRS Hit Squads will target known criminal landlords between now and Christmas and are supported “in principle” by the likes of Mark Prisk, Boris Johnson and others who openly admit to not being fans of the licensing model being operated in Newham. I’ve also heard that six figure funding for a trial has been agreed at ministerial level.

These “PRS Hit Squads” as I’ve labelled them will comprise of:-

  • Environmental heath
  • HMO licensing
  • Planning
  • Anti social behaviour teams
  • EDF revenue
  • Building contol
  • UKBA
  • Police

The plan is that they will share intelligence and converge on criminal landlords in a military style operation, focussing on the worst operators first of course. With their combined resources the criminals will not stand a chance. It will be like a man with a pea shooter trying to fend off the SAS 🙂

Beware the Spin Doctors!

My hope is that the PR outcome of the PRS Hit Squad successes will be positive and support the need for the model to be extended nationally. It is a very low cost model and the results should save the tax payer money as well as improving peoples lives (unless you are one of the targeted criminals of course!). The last thing the PRS needs is for the successes to be used as justification for more regulation. The spin doctors will see this as an opportunity to justify schemes such as Newham but this must not be allowed to happen.

Landlords can be victims too

Landlords are also the victims of criminals and I have seen some very sad examples of that. A recent case in the Fens involved a landlord who let his former home to a Gang-master. Unbeknown to him the unregulated Gang-master then allowed 20 immigrant farm workers to live in the property, all sleeping on mattresses on the floor. When the landlord found out he obviously wanted them out ASAP, as did the neighbours of pretty culdesac in which the landlords 4 bad detached property was located but the law stood in the way. Had the landlord been able to go to the authorities, secure in the knowledge they would fight for him, it would have been a Godsend to him. Instead, the authorities are threatening the landlord and not the Gangmaster! Clearly common sense isn’t that common.

Let’s hope the PRS Hit Squads are successful in taking down criminals and then lend a much needed helping hand to landlords who are also targeted by criminals. If common sense prevails we might just see more action and less talk. When all is said and done, more is said than done, but fingers crossed let’s hope that not the case here.

The Highland Fling

Earlier this year the Scottish Association of Landlords reported that landlord registration in Scotland has cost landlords £11.2 million in fees while the start-up Scottish Government grant for the scheme was £5.2 million. According to the results, since 2006 there have only been 40 rogue landlords identified as operating in Scotland, that’s the number of rejected applications. The cost equates to £400,000 per rogue identified!

Summary

The schemes in Newham and its copycats also show signs of being similar “White Elephants”, therefore I’m pinning my hopes on the PRS Hit Squads taking down as many criminals as possible, proving once and for all that it’s more enforcement not legislation we need. Enforcement not legislation - PRS Hit Squads


Mortgage Express Conspiracy Theory Latest Articles, UK Property Forum for Buy to Let Landlords

I would appreciate your thoughts on the following Mortgage Express conspiracy theory.

As we know, Mortgage Express is run by UK Asset Resolution who are tasked with recovering as much money as possible for the tax payer.

If UKAR were to increase tracker margins for Mortgage Express customers, to a point where most landlords were to default on their mortgages, UKAR would be in a position to appoint LPA receivers. This would not affect the number of properties in the PRS but it would mean that a centralised body, controlled by the Government, would control a huge section of the PRS. In turn, that would create jobs in the public sector, it would mean that Jo Public wouldn’t have to deal with rogue landlords and letting agents to anywhere near the same extent and it would also provide a better opportunity for recovery of tax payers funds.

Apart from landlords, can you imagine tax payers not supporting such a scenario?

As I see it, the clock is ticking and landlords only have so much time to diffuse this bomb. The success of a Class Action against West Bromwich Building Society or Bank of Ireland could prevent the above. If a test case isn’t won before the above scenario comes to pass then I’m afraid the PRS as we know it may be doomed.

Mortgage Express Conspiracy Theory

Thoughts?

EDITORS NOTE

Property118 is leading a Class Action group to fight back by taking a test case to Court if necessary to prove once and for all that amending the margin on a tracker rate mortgage is breach of contract. If you are worrying whether your mortgage lender will follow the lead of Bank of Ireland or West Brom please READ THIS and complete the form below to support this campaign.


Landlord’s Ripped Off by Council Tax Latest Articles, UK Property Forum for Buy to Let Landlords

Council tax legislation was written with a blinkered approach which only considered property sale and purchase. Consequently in order to avoid shared responsibility on completion day it is determined that an outgoing tax payer should not be liable for their last day which would fall to the ingoing one.

Unfortunately this does not work in the rental sector as AST agreements are never for the same day. So in all cases the last day’s council tax of any rental contract is charged to the landlord/ owner. This is nothing new but has only become an issue this year since most councils have taken up the option they were granted to dispense with any exemptions.
One days council tax may seem a trivial issue, but it is one days council tax for every landlord on every rental property on every tenancy change or termination. Landlord's Ripped Off by Council Tax

Plus what a waste of money for the council to be creating accounts, raising bills and chasing debts for just one day. Obviously if there is a void period between tenancies this will not be the case but landlords will still be ripped off for the extra day.

Regards

Mike


Deed of trust property company tax question Latest Articles, Tax & Accountancy, Tax and Accountancy, UK Property Forum for Buy to Let Landlords

I have a limited company registered in England.

I purchased a buy-to-let flat in England and it is registered in Land Registry in my personal name. It is my intention to renovate the flat and sell it with a tidy profit.

The lawyers drew up a Trust Deed at the time of purchase of the flat and I am the Trustee.

The deed records that I (as Trustee) acknowledge that I hold the property on trust for the Grantee (the Company) and that all income from the property shall belong to the Grantee.

Questions:

1. Should the flat be reflected as a Fixed asset in the financial statements of the Company?
2. When I sell the flat (at a profit), should the profit on sale be reflected as income in the financial statements of the Company?

I appreciate any help Deed trust property company tax question

Regards

Bruce


How to get 6 BTL mortgages with BM Solutions Buy to Let News, Latest Articles, Mortgage News, Property Investment News

So many buy to let borrowers get frustrated because BM Solutions will only allow them to have 3 buy to let mortgages. However, now they have removed their minimum income requirements, this criteria is very easy to overcome for many borrowers.

The answer is to own the properties in your individual names. That way a couple can have three mortgages with BM Solutions each. Hey presto, that’s six mortgages with BM Solutions.

The are also many other advantages of owning the properties in individual as opposed to joint names. For details of this see my Landlord Tax Strategy.

If you would like to discuss further borrowing strategies why not have a chat with my business Partner, Neil Patterson. His contact details are npatterson@property118.com or you can call him on 01603 489 118BM solutions logo


Council tax liability for absconding tenant Latest Articles, UK Property Forum for Buy to Let Landlords

My local council where I rent out my properties has since April been charging council tax for empty properties as soon as their empty. I have a case where in April [we think] a tenant who was on a periodic TA left. We were not sure that he left and only realised when no rent was forthcoming that he may have gone..Very carefully after nearly 4 weeks of attempting to contact him we took a chance and took possession [END OF June].We waited a few more weeks keeping all his possessions [mainly rubbish and some clothes] in the house. After that we stored his stuff redecorated the house and put it back on the market. A tenant finally moved in last week.

My question is who is responsible for the Council Tax? Will they chase me?or because there was no formal ending of the contract is the tenant liable?I have many cases like this in the past. Council tax liability for absconding tenant

Thanks

PJ


United Nations call for Bedroom Tax to be Axed Landlord News, Latest Articles

The United Nations special investigator on housing Raquel Rolnik has said that the Bedroom Tax could constitute a violation of the human right to adequate housing.

Rolnik, a former urban planning minister in Brazil, has has told the government it should abolish the bedroom tax, after investigating how the policy was affecting vulnerable citizens during a visit to the UK, and said Britain’s good record on housing was being eroded by a failure to provide sufficient quantities of affordable social housing, and more recently by the impact of welfare reform.

Rolnik said she was disturbed by the extent of unhappiness caused by the bedroom tax and struck by how heavily this policy was affecting “the most vulnerable, the most fragile, the people who are on the fringes of coping with everyday life”. “I was very shocked to hear how people really feel abused in their human rights by this decision and why – being so vulnerable – they should pay for the cost of the economic downturn, which was brought about by the financial crisis. People in testimonies were crying, saying ‘I have nowhere to go’, ‘I will commit suicide’.”

Rolnik reported that council officials, were struggling to cope with the repercussions of the Bedroom Tax’s introduction, because there is a shortage of single-bedroom properties for tenants move down to. She said “It’s so clear that the government didn’t really assess the impact on lives when it took this decision. The mechanism that they have in place to mitigate it, the discretionary payment that they provide the councils with, it doesn’t solve anything, it’s for just a couple of months, and the councils cannot count on that on a permanent basis, they don’t know if it’s going to be available next year, so it’s useless.”
Rolnik confirmed that the bedroom tax could be a violation of the human right to adequate housing. If for example the extra payments forced tenants to cut down on their spending on food or heating their home. She said her conclusions should carry weight in British courts, where a number of legal challenges to the bedroom tax are under way. “It depends on how much the judiciary here takes into account the international legislation. In principle they should because the UK has signed and ratified the International Covenant on Economic, Social and Cultural Rights.”

A Department for Work and Pensions (DWP) spokesman said: “It is surprising to see these conclusions being drawn from anecdotal evidence and conversations after a handful of meetings – instead of actual hard research and data. Britain has a very strong housing safety net and even after our necessary reforms we continue to pay over 80% of most claimants’ rent if they are affected by the ending of the spare room subsidy.”United Nations calls for bedroom tax to be axed


Tax issues with charging below market rent to help a relative? Latest Articles, Tax & Accountancy, Tax and Accountancy, Tax News, UK Property Forum for Buy to Let Landlords

Can anyone think of any potential tax or legal implications with letting out a property at below market rent to help a close relative? Tax issues with charging below market rent to help a relative?

I would of course put it all on a formal basis having no desire for a family relationship to sour due to financial reasons!

A close relative has recently returned after 7 years abroad. They have no credit rating, having left the UK as a young adult and lived in a country with a “closed” currency. In order to help until they have built up a credit rating, I am in a position to purchase a property on a BTL mortgage, and let it to them at a rent equal only to the mortgage payments. They would then be able to save for a deposit with the saving. I have no wish to make a profit from this relative, only to help until they have the 3 years credit rating the bank is asking for. There would be a time limit on the arrangement, which they know, being keen themselves to climb the property ladder.

Are there any legal or tax pitfalls awaiting us?


Mortgage Express or Mortgage Distress? Advice, Buy to Let News, Cautionary Tales, Financial Advice, Landlords Stories, Latest Articles, Mortgage News, Property Investment News, Property Investment Strategies, UK Property Forum for Buy to Let Landlords

The Mortgage Express exit strategy has been a hot potato since at least 2011 when they first met a group of 70 landlords at an event organised under the Property Tribes banner. Mortgage Express or Mortgage Distress

They have been slated by landlords for imposing terms and conditions which were buried in small print and which are no longer adopted by the mainstream buy to let lenders.

The bottom line for MX though is that their loan book is now the property of the UK tax payers and the organisation is pretty much run by Civil Servants, accountants, debt collectors/councillors and insolvency practitioners.

The Government have imposed tough targets and deadlines on the new MX team to reduce the loan book and therefore, it was inevitable that strong arm tactics, which many would describe as bullying, would be used.

Naturally they have gone for the easy targets and started by selling the concept of making over-payments to people who were too naive to work out that repaying a loan which typically costs 2.25% rarely makes sense. It’s possible to get a better return on that with a cash ISA or a deposit account in a bank or building society!  MX appear to have had scant regard to advising their clients to pay off more expensive credit first and they were never going to suggest investing any surplus into anything but reducing a debt with them were they?

The strong arm tactics have extended to imposing their “Right to Consolidate” which their contracts say allows them to use 100% of any sale proceeds to repay debts owed to them. It has even been implied on many occasions that if a borrower redeems one mortgage with Mortgage Express they can call in the rest! I’ve not seen these terms challenged in Court yet but I have come across borrowers who had stood up to Mortgage Express and there are quite a few examples on internet forums of MX having backed off. Bullies don’t like people who fight back.

Mortgage Express Reviews

General sentiment of landlords is that Mortgage Express borrowers should avoid reviews like the plague. The conspiracy theorists, of which I am one, are that MX have a very simple agenda and it’s not based on helping borrowers despite how they pitch it. It would appear the entire purpose of the meeting is for MX to persuade you to pay off or reduce your debt and/or to look for you to trip yourself up by admitting to breaching mortgage conditions which you were not necessarily aware of. Examples include:-

  • living in a property financed as a BTL
  • Letting a property which was financed as a private residence
  • letting to tenants which are now claiming benefits
  • where a property is an HMO

Would you know whether your tenants were claiming benefits though? What if they started claiming benefits after the tenancy started? What if the property became an HMO due to your local authority imposing selective or additional licencing?

Is it fair that MX could find one little problem, call in that loan and then call all the others in based on their right to consolidate conditions?

My Preferred Mortgage Express Exit Strategy

It has been mooted on several forums that MX have a target to collect a percentage of their loan book. I’m not aware whether the percentage target has ever been published but I’ve heard figures as low as 25% banded about. I suspect it’s much higher than that, otherwise, why would they carry the heavy administrative costs of their current activities as opposed to simply selling their loan book for 25% of it’s value? Perhaps they could and it’s a simple case of government ineptitude and politics preventing this from occurring? More likely, in my opinion, is that the government want to be seen to try to recover as much as possible of the tax payers bail out money.

If we knew what the desired recovery percentage was we could make suggestions. Let’s suppose the figure is 60%. Most buy to let landlords would happily refinance if their loans were discounted by far less than that. I’d certainly consider moving for a 25% to 30% write off of debt. Not every borrower would want or be in a position to go for such a deal but if only half did so, the remaining book, which I suspect would include a lot of toxic dent and low value assets due to negative equity, could still be shifted. They may only get 40 pence in the pound for these assets as a block sale but those extra 10% to 15% figures they would get from borrowers taking up their offers directly could well make up the balance.

Why don’t Mortgage Express just exit now?

I suspect it’s only a matter of time before Mortgage Express start offering golden goodbye deals to borrowers, it’s just a case of satisfying the tax payer that they’ve tried everything else first. Mortgage Express were given 7 years to exit and it is because we are into the final states of that period we are seeing them apply increasing pressure. Those of us who can survive the next few years will, I suspect, come out of this with a great deal but in the meantime we should expect the unexpected as well as underhand tactics.

What would you do if you were Mortgage Express?

What do you think Mortgage Express borrowers should and should not do to protect their interests?

Don’t be bullied by Mortgage Express

Before you agree to do anything with Mortgage Express talk to your fellow landlords. Go along to Landlords Association meetings or post comments/questions below or on Property Tribes. If Mortgage Express do bully you, fight back. If you don’t want to meet them don’t meet them. If they get aggressive with you just bear in mind that there are thousands of other Mortgage Express borrowers who are likely to have had similar experiences. Focus on the ideas that are legal and make the most sense. There are reported to be in the region of 50,000 Mortgage Express buy to let borrowers.

Via this link we have an excellent story as it unfolds of a landlord who was being forced to sell his home by Mortgage Express. It’s a very long discussion thread which was contributed to by several landlords and property professionals. To cut a long story short the landlord got his MP on side and Mortgage Express backed off.

Mortgage Express problems - You are NOT alone

 


Popular questions from tenants to landlords GOOD Landlords Campaign Sponsors, Latest Articles, The GOOD Landlords Campaign, UK Property Forum for Buy to Let Landlords

It’s not just landlords and letting agents using our property forum these days. Recently we have had several Readers Questions posed by tenants who have been badly treated by their landlords. Popular questions from tenants to landlords

If there’s one thing good landlords despise almost as much as bad tenants it is bad landlords who ruin the reputation of our industry. Naivety, criminal acts and rogue behaviour tends to result in increased calls for regulation and gives authorities excuses to create more stealth taxes on good landlords in the form of licensing and other legislation, which of course criminals and other bad landlords simply continue to ignore! As you might suspect therefore, good landlords have been very keen to help tenants experiencing difficulties with rogues by telling them how they can protect their interests and claim compensation.

As it is the mission of The GOOD Landlords Campaign to facilitate the sharing of best practice amongst landlords and letting agents we feel it is important for all landlords to learn from these discussions. Forewarned is forearmed and an opportunity for you to know what you should be doing and to get it right.  The consequences of getting things wrong are very clearly laid out by some incredibly experienced landlords and property professionals in these discussions.

Some of the most popular discussions recently are as follows:-

Retaliatory eviction

Retaliatory eviction – possibility of civil litigation?

Read this discussion

 My landlord thinks I’m a lodger – please help me

My landlord thinks I’m a lodger – please help me

Read this discussion

 Ex-girlfriend-refusing-to-move-out

Ex-girlfriend refusing to move out

Read this discussion

 I have been asked for a 12 months rent in advance

I have been asked for a 12 months rent in advance

Read this discussion

 

 


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