Why do the Government and Nottingham City Council have it in for Residential Landlords?

by Readers Question

18:41 PM, 6th December 2016
About 2 years ago

Why do the Government and Nottingham City Council have it in for Residential Landlords?

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Why do the Government and Nottingham City Council have it in for Residential Landlords?

In the U.K. We have a chronic shortage of Housing. Apparently we need 250,000 New Houses a Year but last year (and that was a good year) we built 141,000 new homes !!have it in for

The Government can’t afford to provide them and nor can Local Authorities so over the past 15 years or so the ” Private Sector ” has ” stepped up to the plate ” to an extent, whilst at the same time enabling Mr & Mrs Smith to take care of their long Term financial future as the Government can’t afford that either and Pension Funds have performed abysmally- indeed there are now 1.9 million Private Landlords in this Country .

It sounds a “match made in heaven ” or so you would think – the private sector helps solve the housing crisis and take care of their old age !

erfect! but No – The Government seem to think all these “money grabbing private investors ” are getting rich quick, and are pushing up house prices so they are trying to ” Tax them in to submission ” by applying a 3% Stamp Duty Surcharge on all purchasers (on average £5k in East Midlands ) and preventing Landlords offsetting interest charges against income for tax purposes -and it is working.

In Nottingham the very clever City Council have decided to jump on the ” bandwagon ” by first of all introducing the need to obtain an HMO license if your property is 3 Beds or more – cost a mere £910 for 5 years and now they are proposing that every let property should pay them £600 !!!

And then yesterday the Government announce it will be illegal for letting agents to charge “admin fees ” or ” referencing fees ” . The result will be that these costs will be passed on to the Landlord through higher Lettings and Management Fees .Letting and Managing Agents are not making big money and with more and more ” red tape ” these admin fees and referencing fees will have to be replaced somehow or firms will go to the wall or just shut down !

So Mr Private Landlord who was previously earning a Net Yield after All Costs of circa 3.50-4.0% will now as a result of increased acquisition costs, increased tax , increased letting and management fees and now Licensing fees be lucky to earn 2-3.0% for a significant amount of risk and hassle -there have been 145 changes to the relevant legislation in the past 5 years !!!

So where will they put their money -certainly not the bank @ 0.1% interest if they are lucky!! They will probably move from Residential property investments in to Commercial property Investments where they get longer leases -5 years as opposed to 6 months , stronger covenants , a rent cheque every quarter rather than chasing up the rents every month and net yield after all costs of 6-8% as opposed to 2-3% !!

So keep going Central Government , keep going Nottingham City Council because all you are doing is pushing out the Private Residential Landlord ,which in turn will reduce the number of homes to rent at a time when there is an acute shortage , lead to less house building as one of the key markets for developers shrinks , less Stamp Duty take for the Government and restrict supply resulting in rent rise across the board !

For those Investors that remain, their increased costs will also be passed on to tenants in the form of increased rents as well -a double whammy !!

None of this is rocket science -it is simple economics -restrict supply and the price goes up -unfortunately for the sake of a few ” popular headlines ” the Government and Local Authority are going to make that basic right of somewhere to live ,more difficult for those that they really should be helping!!

My suggestion -scrap STAMP Duty on Buy to Let’s altogether , allow interest to be off set as a cost , remove Local Authority licensing and and the ” rip off fees ” but maintain the right to carry out ” spot inspections ” and introduce a “Cap ” on admin fees and referencing fees -the result -more money in to the sector , more house building , more people taking care of their own pension , more supply of homes to rent ,more choice and stabilised RENTS .

David Hargreaves
Director
FHP Property Consultants and Fhp Living.



Comments

russell branch

9:21 AM, 7th December 2016
About 2 years ago

They hate the idea of the little man accruing capital. I always thought the Buy to Let arrangements in their original form were too good to be true. And as increasing numbers of "little people" built up capital the situation caught the eye of the State and corporations. Hence we are now seeing an attempt by the State and their corporate cronies to deprive us of our capital.

terry sullivan

11:09 AM, 7th December 2016
About 2 years ago

the present mob of tories in parliament are faux-tories. i left the party when boydave was appointed "leader"--actually it was sam who took over--boydave does not have the intellectual capacity and worse does not realize it! same with bliar milliband and clegg--all non-entities run by their grasping wives

most local govt is employing failures--this is their only way of feeling big

Rob Crawford

16:36 PM, 13th December 2016
About 2 years ago

Please can you advise as to what the £600 is for charged by Nottingham Council when a property is let? Is this an extension of their existing discretionary licensing?

Rob Crawford

17:33 PM, 13th December 2016
About 2 years ago

The Labour Party manifesto mandates that blanket licensing is introduced throughout England. As such Local Authorities that are administered under labour control will at some point attempt to do this.

It is important that landlords have a good relationship with their Local Authority PRSH teams so that any such plans can be realised as soon as possible, before any announcement. Ideally Local Landlords (via their landlord association) will meet with LA's on a regular basis where discussions will reveal such threats. Questions can then be asked in terms of what the LA seeks to achieve (their objectives) and whether these objectives could be achieved by other means. Licensing should be a last resort! Can the same be achieved by educating landlords or introducing a Special Interim Management Order, or utilising existing powers of enforcement. Any reason for blanket licensing must be justified. At least 20% of private residential homes in a given area must be rental properties. There must be clear indications (evidence), within these areas in respect of deprivation, poor conditions, crime/ASB, migration. The LA must be able to prove this! Otherwise, it is illegal! (See: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/418551/150327_Guidance_on_selective_licensing_applications_FINAL_updated_isbn.pdf )

Any proposed licensing fee must be justified and any monies collected must be used purely for the delivery of the licensing service, it cannot be used to fund other LA activities.

The European Services Directive 2009, Chapter 3, Section 1, Article 13(2) states:
“Authorisation procedures and formalities shall not be dissuasive and shall not unduly complicate or delay the provision of the service. They shall be easily accessible and any charges which the applicants may incur from their application shall be reasonable and proportionate to the cost of the authorisation procedures in question and shall not exceed the cost of the procedures.”

Once introduced, the "reasonable and proportionate to the cost of the authorisation procedures in question and shall not exceed the cost of the procedures" element of the above should be checked annually via a Freedom of Information Request. Difficult to do when a licence fee covers a five year period but I would suggest information on how many licences have been granted, the cost of the licences and what the money is being spent on is requested on an annual basis. Data collected may be used to identify incorrect spending or at the end of the five year term, a surplus of funds!

If you need to challenge your LA through the Courts, funding will be required. This is where landlord numbers really count! If landlords are unwilling to get involved you are unlikely to raise the necessary funds to proceed further. Unfortunately this is where most challenges collapse!
Rob Crawford recently posted...Employment Opportunity with Bristol City Council


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