Category Archives: Government Regulations

Improving the home buying and selling process

Improving the home buying and selling process. Image of various estate agents' sold and to let signs

Dept of Communities and Local Government wants to improve the process of home buying and selling.

The Department of Communities and Local Government is looking at ways of improving the home buying and selling process in the UK. Except Scotland, where it’s different.

Well, I say Three Cheers for them for finally addressing this problem. For too long, sellers have been able to gazump and buyers to gazunder, just before Exchange of Contracts. This is incredibly stressful and costly for both the gazumpee and the gazunderee – words as ugly as the practice itself!

I believe that the solution to improving the home buying and selling process is relatively simple. At present, when contracts are exchanged, the purchaser is required to deposit up to 10% of the purchase price. Very very rarely do people withdraw after this.

The Mini Deposit – Improving the home buying and selling process

So, all we need is a Mini Exchange of Contracts when an offer in writing is made and formally accepted. This is the point at which an agent typically issues a Memorandum of Sale. At this point both buyer and seller should be required by law to deposit a relatively small sum of, let’s say £1000 in Escrow. If either party choses to withdraw, offer less or demand more then the other party could receive their £1000 as compensation.

Of course, there would be certain circumstances wherein a purchaser could legitimately withdraw without forfeiting the £1000 mini deposit. Such circumstances could include cases where legal searches uncovered poor title.  Or perhaps a road passing through or close to the property in question.  A surveyor’s report  might have uncovered serious subsidence or dry rot. Again, if the seller accepted these findings and agreed voluntarily to reduce their price then the sale could still proceed.

However, where a purchaser, without good reason decides to offer less than the agreed amount then the deposit could be forfeited.  The seller would be at liberty to receive the purchaser’s £1000 and abort the sale. Similarly if the seller suddenly changes their mind or wanted more then the purchaser could elect to receive the seller’s £1000 and abort the purchase.

Concentrating minds at the point of the Memorandum of Sale

Apart from the stress of someone suddenly withdrawing, there’s the considerable legal and surveying costs that accrue. Thus the £1000 would at least go towards defraying these costs, but more importantly would concentrate the minds of both seller and purchaser at the point when an offer is made and accepted.

And of course this change in property law would not only benefit owner occupier sales and purchases but investment ones involving landlords and buy-to-let as well.

So, I think that’s a good way of improving the home buying and selling process in the UK. What do YOU think?

 

Landlords and Letting – Affordable landlord insurance

 

 

Letting Agents – landlords should avoid them!

Landlords – how to save around £5500 letting your property

Letting agents charging outrageous fees to landlords

There has been a lot of discussion recently about how letting agents regularly rip off tenants – and they do. The government is belatedly introducing legislation to restrict their fees to tenants. But they also rip off landlords and whilst it’s difficult for tenants to avoid them, it’s much easier for landlords, as long as their property is local.

Given letting agents outrageous fees to landlords, it’s incredible they have the nerve to invent all the other charges they make to tenants – that’s why most tenants and landlords alike dislike them.

Letting Agents’ charges to landlords

Agents love to talk in terms of percentages because it enables them to disguise the iniquitous levels of charging they engage in. So let’s take a property that the rent is £1500 per calendar month. I have taken as an example the quoted fees of a well know high street agent, which do include landlord rent guarantee insurance.*

I am assuming the case of tenants who remain in the property for a total of two years…

These agents charge 7.5% plus VAT for Sole Letting Rights – this means that WHOEVER lets the property this agent gets their cash.

The real costs of using a letting agent

  1. Letting fee for let only will be £1500 x 12 x 7.5% = £1350.00 plus VAT for the FIRST year, paid in advance.
  2. Let’s say you are stupid enough to use their ‘Full Management Service’. This involves collecting the rent – it just goes into their account before eventually going into yours. They deal with everyday calls from the tenants and make 6 monthly inspections etc. Add an EXTRA 6% plus VAT. So that’s £1500 x 12 x 6% = £1080.00 per annum extra plus VAT.
  3. Providing you with an Inventory – between £140 – £200. So, let’s say £170 on average.
  4. If the same tenants simply decide to stay on in the premises which involves the agent in doing VIRTUALLY NOTHING they will charge the landlord another 7.5% plus VAT – Yes ANOTHER fee, amounting to £1350.00 plus VAT

Let’s add up all the bold figures because they are indeed bold. That’s £1350.00 x 2 + £1080 x 2 + £170.00 = £5030 plus VAT where applicable.

So, you let a flat or house for £1500 pcm and end up paying the letting agent £5030.00 plus VAT, which is £6036.00! 

Even if you only elect for the let only service, over two years it would cost you £2700.00 plus VAT which is a massive £3240.00. And all this is paid up front at the beginning of each year.

Letting agents fleecing the tenants as well

So the letting agents get all this money from the landlord then they proceed to rip off the tenants for even more money!

They have various ingenious made up charges, such as ‘Administration Fees’, ‘Checking In Fees’, ‘Checking Out Fees’.

Then there’s the scandalous ‘Holding Fees’ to retain a property while referencing is carried out. It is reasonable to withhold them in the event that the tenants change their minds. But they also withhold these fees in the event that the references come back as unsatisfactory. These fees can be as much as £700 – £800. They probably hope they’ll come back as unsatisfactory.

Some letting agents charge tenants for ‘drawing up the Assured Shorthold Tenancy’ document’. This takes about 15 minutes to revise a template on their system.

And then there is referencing. Charging for this is justified, but for tenants in full-time employment with proof of previous address etc it COSTS around £10.00 per tenants. Many agents charge around £60 – £70 per tenant.

If you’re a landlord and you can, just let it yourself

As a landlord you can list your property on the main portals like Rightmove, Zoopla, Primelocation etc, using companies that will charge you around £60.00. You then ensure that you THOROUGHLY reference any prospective tenants rather than saying to yourself ‘Oh they seem such a nice couple’.

Don’t forget Landlord Rent Guarantee Insurance

Then you buy Landlord Rent Guarantee and Legal Expenses Insurance* – we do it for about £105.00 per property per year.  This insurance pays your rent in the event that the tenants stop paying for any reason and the legal team then go to work to evict the tenants as soon as possible. Strict tenant referencing is a requirement of this insurance. Let’s assume you charge the tenants for referencing, which is reasonable then your total outlay over two years will be about £170.00.

So it’s your choice. Pay a letting agent £3240.00 or £6036.00 including VAT or spend £170.00 letting it yourself. Some agents will charge even more than the amounts quoted above and some will negotiate for less but as the Americans say, I think it’s a no-brainer.

 

LandlordsandLetting – Affordable landlord insurances

10 years of anti-landlord legislation from Tony Blair to Theresa May

10 years of anti-landlord legislation. Why?

What a difference a decade makes!

At the time of writing (2017) over 100 new pieces of landlord legislation have been introduced since 2007 to make life more difficult for the small private residential landlord, whilst favouring major corporate ones like insurance companies. Why have there been 10 years of anti-landlord legislation?

It used to be The Bankers (and rightly) but increasingly since 2007, private residential landlords have been the target for a relentless onslaught of legislation by central and local government. I think that no other group in society has been attacked so relentlessly and unjustly and there is a reason for this.

Tories join in the landlord bashing

Labour politicians have always hated private landlords and have passed legislation to control rents and other aspects of letting ever since the 1960s. It’s in their DNA. But in recent years, the so-called Conservative Party has enthusiastically joined in the game. They have proclaimed that evil greedy private landlords are preventing ‘young first-time buyers’ from getting on the proverbial property ladder by snapping up available property.

But I suspect that these crocodile tears for dispossessed first-time buyers are really there to hide their true aim. And that is to corporatise the private rented sector. For years, City institutions have looked on enviously at the returns private landlords were achieving and have been upset that such investors have shied away from their rip-off pension funds. Add to this the derisory interest rates of recent years and you can see why so many people have felt that investing in buy-to-let was their only viable option.

Now, whilst I totally support legislation that genuinely tackles rogue landlords, the problem is that much of the new legislation and regulations actually hit the decent law-abiding landlord. Rogue landlords don’t give a damn about HMO rules and registration etc. And if they want to get a tenant out they don’t bother with Repossession Orders etc they just go round there and intimidate them until they leave.

List of 10 Years of Anti-Landlord Legislation

Here is a list (not in chronological order) of only the most prominent anti-landlord legislation of the past 10 years.

  • In 2007 the government introduced the law requiring landlords to deal with security deposits in a prescribed manner. Generally I believe this was good thing but it does add to the bureaucracy involved in starting a tenancy. And if you don’t comply it can lead to the landlord having to compensate the tenant with up to three times the deposit amount and also forfeit the right to issue a Section 21 Notice.
  • Recently the government made it a legal responsibility for all landlords to issue tenants with their How To Rent booklet.
  • Landlords also now have to check on a prospective tenant’s RIGHT to rent. The landlord is supposed to act as an unpaid immigration official and check that the tenant has the right to live in the UK. Saves on immigration officers though I suppose.
  • Since October 2015 all landlords have a statutory obligation from day one to supply and install working smoke an carbon monoxide alarms on every floor that may be used wholly or partly for accommodation. They have to demonstrate how to use them and then get the tenant to sign to say that they have been shown how to use them!
  • Any property of 3 or more floors and/or housing five or more people not living as one household is classed as an HMO (House of Multiple Occupation). And every HMO (unless you’re a rogue landlord of course) requires guess what? A Licence from the local authority.
  • And talking of licences and ways local authorities can prey on landlords, many local authorities now require EVERY let property to be licensed and of course that costs more money. They don’t actually DO anything except take the money off the landlord and eventually email him or her a certificate – a nice little earner indeed.
  • By Law, all tenants have to be supplied with an Energy Performance Certificate (EPC). Who the hell reads those things anyway?
  • From April 1st 2016 Boy George introduced some draconian disincentives to landlords before he was finally sent packing by Mother Theresa. It is very complex but the first tax change was a gradual lessening of the allowable mortgage interest expenses on buy-to-let mortgages. This will eventually drive many landlords away from buy-to-let completely – depending on how heavily leveraged they are.
  • Osborne also introduce legislation that means that anyone buying a buy-to-let property has to pay 3% more Stamp Duty Land Tax (SDLT) than if they were buying for owner occupation. However, if you – or should I say, a large company, buys six properties or more simultaneously then the SDLT is significantly LESS than even an owner occupier would pay. It’s classed as a ‘commercial purchase’ for tax purposes. Guess who that benefits?
  • He also made changes to WHEN a landlord has to pay capital gains tax on a property he or she sells. Originally you had until the next tax year but now I think it has to be paid within three months of completion. You will need to check on the precise period as I am not sure.

Complexity of Anti-Landlord Legislation

You see, the main reason that these 10 years of anti-landlord legislation favours corporate landlords is the fact that it is so labrythine! It’s so complex that even small professional landlords find it hard to navigate. However, if you are The Prudential or similar then you just employ a specialist landlord and tenant lawyer full-time – easy!

So how long before landlords decide enough’s enough?

The only reason that so many small private landlords are continuing is that there nowhere else for them to invest. Stocks and shares are doing well at the moment but they are risky. Pension schemes are notorious for ripping-off people and who is going to invest their money in a so-called safe bank and get 1% interest if they’re lucky?

I predict though that if interest rates do eventually move upward by even a relatively small amount it will cause a massive earthquake in the UK property market because there are many older reluctant landlords who would much rather get at least a modest return on their savings than endure these increasing attacks from government.

More than ever Landlord Rent Guarantee Insurance matters

Given the mounting anti-landlord legislation it makes more sense than ever to have Landlord Rent Guarantee and Legal Expenses Insurance. It costs just over £100 for 12 months cover per property from LandlordsandLetting – this covers up to five named tenants in that property.

 

LandlordsandLetting

Affordable landlord insurances

Will you be forced to repay rent to your tenants?

view to let and for sale signs, typical of signs landlords would look for

Yet more anti-landlord legislation starts to become operative this April (2017). This one is unimaginatively called The Housing & Planning Act 2016.

How does it affect landlords? Will YOU be forced to repay rent to your tenants?

If you are found guilty by a tribunal of any of the following offences you can be ordered to pay back up to 12 months’ rent…

  • Failing to comply with an Improvement Notice under section 30 of The Housing Act 2004.
  • Failing to comply with a Prohibition Order under section 32 of The Housing Act 2004.
  • Any breach of a banning order made under section 21 of the Housing & Planning Act 2016 (this act)
  • If you use violence to gain entry to a property under section 6 of the Criminal Law Act 1977.
  • If you illegally evict or harass the occupiers of a property under section 1 of the Protection from Eviction Act 1977.

Making an example of transgressing landlords

The above applies whether you are receiving rent direct from a tenant or wholly or partly from the local authority. The act also states that tribunals need to take deterrence into account when fining landlords and urges making examples of transgressors to dissuade others.

Either your tenant(s) or the local authority can apply for Rent Repayment Orders.

These powers come into effect on 6th April 2017.

The main points of the new laws are…

• Civil penalties of up to £30,000 as an alternative to prosecution for certain specified offences.
• Extension of rent repayment orders of up to 12 MONTHS’ rent, to cover illegal eviction, a breach of a banning order and certain other specified offences (coming into force on 6 April 2017);
• There’ll be a database of rogue landlords and property agents who have been convicted of certain offences or received multiple civil penalties (scheduled to come into force on 1 October 2017);
• Banning orders for the most serious and prolific offenders (scheduled to come into force on 1 October 2017).

The full dreary details are here.

Landlords and Letting – Affordable Landlord Insurance

 

Can you afford NOT to have landlord rent guarantee insurance?

NightmareTenantsSlumLandlords

Image Copyright Channel 5 – link no longer working

As buy-to-let has increased massively across the UK, partly due to the lamentable return on other kinds of investments, so too have the horror stories of nightmare tenants. First they suddenly stop paying the rent and when the hapless landlord finally evicts them, he or she is faced with possibly several thousands of pounds repair bills.

As a landlord, even if you’ve been lucky enough to avoid these vile people you probably know of others who have fallen prey to nightmare tenants. Just take a look at ‘Nightmare Tenants, Slum Landlords’ on Channel 5 and you’ll see dreadful cases of how a small minority of tenants can make life an absolute hell for small-time landlords.

Landlord Rent Guarantee & Legal Expenses Insurance

Admittedly there are also rogue landlords out there who equally make life hell for their tenants but that’s not what this article is about. This article is in fact about the importance of taking out Landlord Rent Guarantee and Legal Expenses Insurance – rogue landlords don’t need this insurance as they use other rather more direct methods!

In fact, the problem IS rogue landlords because I believe that it’s because of them that the law is absolutely on the side of tenants when it comes to eviction.

Firstly you need to have approved grounds for evicting the tenants, usually non-payment of rent or anti-social behaviour in your property. Then, if they won’t go voluntarily, you need to serve a Section 21 Notice.

And a Section 21 will only be regarded as valid by a court so long as the landlord has properly protected the security deposit and complied with various other procedures that now cover the commencement of any tenancy.

A Section 21 cannot be served during the first four months of tenancy. Once a Section 21 is served the tenants must be given two months notice to quit. If they fail to leave then you need to seek a Possession Order – this can easily add another month and then if the tenants ignore the Order you’ll have to spend more money and time getting bailiffs to physically evict the tenants. And in this case you should always upgrade the Order to the High Court so as to make use of proper bailiffs.

It could easily cost you around £6000.00

So, all in all it could take at least four months to evict bad tenants and often longer! In all that time you will be losing rent and ranking up legal costs. On an average property this could easily amount to well over £6000.00!  And then you will probably have extra refurbishment and cleaning costs to deal with the mess that’s left.

We are agents for Landlord Rent Guarantee & Legal Expenses Insurance, but even if we weren’t, I’d still say that at only £99.95 per property for 12 months’ cover it’s incredible value.

To maintain this low cost, tenant referencing is a condition of this insurance and it’s important to follow the correct procedures relating to taking and protecting the security deposit. If you need more information about this insurance and/or referencing just email us at info@landlordsandletting.co.uk

However, even if the tenants seem nice, strict referencing should ALWAYS be carried out whether you are taking out rent guarantee insurance or not.

What does it cover?

The premium covers your rent up to a maximum of £3000.00 pcm, with a maximum payout of £25000.00 per claim and covers up to five named tenants in the same property. After the first month your rent will be paid per month and our legal team will get to work to evict the tenants as soon as possible and, if appropriate and possible, recover costs to cover damage not covered by the security deposit. You also have the option to have your rent paid without the one month ‘grace’ period – this costs a little more at £129.95 for 12 months.

So, can you really afford NOT to have this insurance?

 

Landlords and Letting  – Affordable landlord insurances

 

 

After Brexit, George gets his P45 – time to reverse anti-landlord taxes?

0sborne_P45

In April this year, a raft of anti-landlord measures came into force – courtesy of George Osborne. There was the increased Stamp Duty hike of 3% on buy-to-let properties and the beginning of the phasing out of interest on buy-to-let mortgages as allowable business expenses for landlords. The latter, I believe, is currently being challenged in the courts.

Now George is gone and Brexit’s here

I for one was pleased that Mr Osborne was given his P45 by Theresa May in the tumultuous weeks that followed our decision to leave the EU. I think he had it coming but maybe that’s just me being spiteful!

Personally, I am pretty sure that although Osborne’s tax changes were sold as help for first time buyers, they were really aimed at giving The City a piece of the buy-to-let pie. This is because some of the legislation specifically excluded large scale investors and of course large financial institutions are not as dependent on borrowed money as are small-time landlords.

Uncertainty is now adversely affecting the property market

The RICS and other institutions are now reporting a significant slowing of the property market following the decision to begin leaving the EU. How long this uncertainty will last is anyone’s guess but it’s a given fact that uncertainty almost always affects markets badly. And since the negotiations are going to be long and complex this uncertainty probably won’t be short-lived. Add to this the fact that, assuming we do get a significant reduction in immigration, demand for housing will slacken. I personally would welcome this, even though it might hurt my pocket, because the UK really is becoming uncomfortably overcrowded and the quality of life really is being affected.

It’s time to reverse Osborne’s tax changes

The phasing out of mortgage expenses as an allowable business expense was an outrage and, whilst I agree with the extra 3% on second or additional homes, it is wholly unjustified to penalise people who buy property to let in this way, and for many it is their main livelihood.

The fact is that Brexit has naturally caused great uncertainty and that uncertainty has caused a slowing in the property market, so I think it would not only be right to reverse Osborne’s outrageous tax changes but it would also be financially prudent.

Malcolm James Stretten

Landlords and Letting – affordable landlord insurances

 

What do YOU think?
[yop_poll id=”1″]

New Government Plans for Future Buy-To-Let Landlord Laws?

Now Theresa May’s government has its sights set on The Evil Landlord.

NOTE: None of these new regulations are expected to apply to limited companies holding more than 100 properties.

After Dave and George had exhausted benefits claimants and the disabled as their chosen targets for blame, they found Buy To Let Landlords, who are now fast becoming the nation’s favourite bêtes noir, after bankers, estate agents and journalists of course. Now Theresa May’s government is following in the footsteps of its predecessor.

Following the current torrent of anti-landlord legislation from our so-called Conservative government, these are some futuremeasures I can imagine being considered by The Treasury and the Ministry for Communities and Local Government, plus a new government quango being set up – see below.

2019. Psychological Assessments for Landlords
This will make it mandatory for all existing and prospective landlords to undergo Psychological Assessments for Landlords (PAL) to verify their fitness to be a landlord. These will take up to two hours, to be carried out by qualified Government Approved Psychologists. Cost estimated at around £490.00 plus VAT. Note that private landlords will not be able to claim back the cost of these PALs and furthermore they will not be an allowable business expense.

The tests themselves

The tests will include the famous word association test where subjects are asked to interpret what they see in random ink blot shapes. For example, they will be shown a photo of a student and if they say something like, ‘Cash cow to be exploited and degraded at every opportunity’ or something to that effect they will be marked down.

Where landlords fail the tests, in some cases they will be offered ECT (Electro Convulsive Therapy). This would be supervised by qualified psychiatrists and could last a fortnight and cost up to £7400.00. At the end of this they could then re-take the PAL – if they were still conscious that is.

Those that refuse the PAL will be required to sell their properties within 12 months or face an additional surcharge of 15% CGT, or a maximum of 6 months Community Service, whichever causes them the greater suffering.

2019. Mandatory CRB Checks for Residential Landlords

All existing and prospective (if there are any by then) landlords will be forced to undergo a full Criminal Records Bureau check.

Projected for 2020. New maximum age limit of 55 for all new landlords

No one over the age of 55 will be allowed to become a landlord and all those currently over that threshold age will be required to dispose of their existing properties within 12 months. Those not doing so will be subject to a 15% CGT levy or a maximum 6 months imprisonment.

Landlords who fail the PAL (see above) will also be required to walk around a designated local area for up to 4 hours over a period of one week, carrying sandwich style boards with big red lettering saying ‘I AM A LANDLORD AND I AM AN UNFIT PERSON’.

Authorised people, ie local government officers, MPs, members of Generation Rent and registered tenants will be allowed to pelt them with rotten eggs and tomatoes – no solids will be allowed. In some cases it will also be permissible to beat landlords with rolled up copies of The Guardian or New Statesman – but not both at once.

Rent Controls

Before any flat or house is let, a local authority officer will be required to inspect it and set a maximum rent for the next 12 months.

A Rent Assessment Visit (RAV) will take place within 2 months of application by the landlord, at a cost of £275.00 per property.

This, combined with all the other anti-landlord laws is expected to lead to a decrease in available rented accommodation and thus a consequent rise in demand over supply. So, anticipating this, where a landlord is advertising a property for what will be far below the market rent and receiving applications of more than 500 prospective tenants, then the landlord will be required to raffle the property or alternatively arrange a 100 metre sprint to see which of the prospective tenants shall be permitted to rent it.

Penalties for Landlords

Penalties for transgression of any of the above will range from an extra 15% CGT on the disposal of a buy-to-let property, to fines of up to £20,000 or 4 years’ imprisonment. Boroughs will also be allowed to set up Landlord Pillory Facilities where repeat offenders will be chained for up to 24 hours while rotting vegetables, soft fruit and insults will be hurled at them.

Bureau for the Administration of Landlord Legislation and Supervision (BALLS)

From 2020, the Government is proposing to set up a new quango called the Bureau for the Administration of Landlord Legislation and Supervision (BALLS), with an expected staff of 4000 people. BALLS will oversee all this new legislation and will consider future controls should they be deemed necessary.

I know it all sounds far-fetched but back in 2000 so would all the anti-landlord legislation that exists today.

Landlords and Letting – Affordable Landlord Insurance

 

Osborne bashes buy-to-let to boost his City pals

GeorgeOsborne

I trust that by now most small buy-to-let landlords will have woken up to the fact that Osborne and the so-called Conservative Party are out to get them.

Before the last election we all feared that Ed and his Band of Brothers would get in and introduce more anti-landlord legislation. We all hoped that shiny face Cameron & Co would ride to our rescue. But as the old saying goes, be careful what you wish for!

The Tories’ Anti-Landlord Legislation – Where we are now

These are the main anti-landlord changes that have been introduced by this ‘Conservative’ Government since they won the last general election, admittedly courtesy of the undemocratic first-past-the-post system…

  • A gradual reduction in the allowable financial costs of purchasing and owning, particularly mortgages, a buy-to-let property. By 2020 relief will only be available at the 20% rate, no matter what your total taxable income.
  • And in Osborne’s Autumn Statement from April 2016, he outrageously increased the Stamp Duty Land Tax (SDLT) by 3% specifically on buy-to-let properties and additional home purchases. So for example, the marginal SDLT on a property costing £400,000 will increase from 5% currently to 8% – on buy-to-let and additional property purchases only. The marginal rate above £250,000 for non buy to let purchasers will still amount to £7500, but for the Evil Buy To Let Investor it will be £12,000.
  • Landlords will have to pay any CGT due on selling an investment property within 30 days, as opposed to the current arrangement where it is in the January following the tax year of disposal.
  • And the tell-tale bit… Commercial Investors with more than 15 properties are expected to be exempt from Osborne’s changes.
  • Finally, although not directly instigated by central government, many local authorities (Labour and Conservative) have introduced compulsory registration schemes for private landlords. They pretend these schemes are designed to root out rogue landlords but in reality they are of course just more money making schemes because they charge landlords for registration.

‘I want to help more young couples buy their own home’

So kindly uncles George and Dave are really concerned about struggling first-time buyers are they? These are the same people who introduced draconian reductions in benefits for people on Disability Living Allowance, introduced a poorly conceived so-called ‘bedroom tax’ and wanted to strip away tax credits from people on very low incomes before any increase in the minimum wage kicked in. True, Osborne backed away from this in the Autumn Statement, but only because of huge opposition from both inside and outside the Conservative Party.

The fact is that PR politicians like Cameron love to use phrases like ‘more help for working families’, ‘getting more bobbies on the beat’ and ‘helping struggling first-time buyers’.

So what is REALLY going on?

It is my firm belief that the Conservatives are just trying to help their friends in The City and dressing it up as wanting to help first-time buyers, by hitting the Evil Buy To Let Investor, who has for years now become completely demonised.

The Tories and others claim glibly that buy to let investors are now the main cause of the unacceptable rise in the cost of owning your own home. No they are not. The causes are complex and based mainly on supply and demand. Not enough homes are being built to satisfy an out of control demand for all kinds of housing, caused mainly by uncontrolled immigration. But at the same time if we just build more homes without the related infrastructure then the country will literally grind to a halt and become a hideous place in which to live. Finally, the reason so many older people have been resorting to buying to let, is the ludicrously low rate of interest they can get by leaving their savings snoozing in the bank or trapped in a poor performing pension fund.

You see, for years now the big City institutions have been jealously looking at the level of returns private investors have been getting in the buy-to-let market. This has naturally choked off money that would otherwise have gone into their pension schemes and rip-off investment funds – where they earn high management fees.

On a personal note, I am not opposed to making life more expensive for people who wish to indulge themselves in second homes. But I am totally opposed to this continued demonisation and financial attacks on people who have bought property to let out as their business. Just increase interest rates and you’ll soon see people backing away from buy to let with all the stresses it can entail.

In short, The City wants a piece of the Buy-To-Let Pie, and Osborne plans to give it to them.

Sign The Petition

A petition has been set up to oppose the planned reduction in tax relief for buy-to-let landlords. I did not create this petition but I have signed it. This link takes you to it.

Vote!

Are the Conservatives attacking small landlords mainly to benefit The City?

YES
NO
Other
Please Specify:

online poll creator

Landlords and Letting – Landlord Insurances

Leasehold Property – The Landed Gentry’s Triumph

To the best of my knowledge the only country in the world that is cursed with the concept of Leasehold Property is Britain.  And historically that is largely down to the vested interests of our landed gentry.

It is essentially a carefully crafted fraud wherein leaseholders don’t actually BUY their property, they BORROW it from the Freeholder. They own the bricks and mortar, the fitted kitchen and bathroom etc – but they DON’T own the land.  Hence the weird concept of ‘ground rent’.

Are you a Landlord or a Tenant?

Vast areas of Central London, for example, are actually owned by people like The Duke of Westminster and many of the buildings are really only ‘borrowed’ by the leaseholders who inhabit them.  The landed gentry love the idea of leasehold tenure because it means they never ever entirely let the true ownership of their land slip into others’ hands.  In fact if you are say a buy-to-let landlord you will actually often have seen the Freeholder referred to as your landlord!

Which brings me to the whole very modern concept of flat ‘ownership’.  Many major house builders and developers have seen the benefit of ‘selling’ flats on ludicrously short 99 year leases.  In fact, many people who bought 99 year leases only back in the 1990’s are already finding that their leases are approaching the all-important threshold of 80 years remaining.  In fact, when the 70 year threshold is passed it becomes almost impossible to obtain a mortgage and thus the property’s value is badly affected.

We must thank Margaret Thatcher

Thanks to Margaret Thatcher, who was never a great friend of the parasitical landed gentry, the Leasehold Reform Act finally came into law in 1993, three years after she was forced out of office.  This act at least went some way to restoring some power to leaseholders.  It meant that from then on leaseholders could force their freeholder to sell them added years.  Above 80 years there is a fairly precise formula related to the value of the property with the extended lease, the ground rent and the number of years still remaining on the existing lease.  This formula is used to calculate how much premium a leaseholder must pay to extend.  And because it’s a formula, it means there are limits on how much the freeholder can actually demand.  But if your lease is under 80 years then it is more of an ‘open-market’ negotiation and likely to be much more expensive.  The act importantly also gave groups of leaseholders in blocks of flats the right to force their freeholder to sell them the freehold.  Ultimately disputes can be settled via the Leasehold Valuation Tribunal.

Is your lease approaching the 80 year threshold?

Many leaseholders are probably blissfully unaware that their lease may be approaching the 80 year point – and freeholders love it because at some point the leaseholder will want to extend their lease… Another problem with some leasehold property is that there are penal clauses in the leases and individuals and property companies study freeholds that are up for sale to find just such leases.

What I would like to see is it being made illegal from some future point to sell any property with less than a 999 year lease. But you can be sure that the landed gentry and other major land owners would fight such a proposal tooth and nail.

If you do need assistance and advice with legal aspects of your lease there is a pretty good government funded organisation called The Leasehold Advisory Service.

 Landlords and Letting

Yet another landlord Law on the horizon

It seems that Buy-to-Let Landlords are slowly joining bankers, estate agents and MPs as the latest pantomime villains. “Oh no they’re not!” you may say, but I would say “Oh yes they are!”

For the past few years there have been rumblings from the Labour Party about Rent Control and a number of lefty councils have for several years been operating a compulsory registration schemes for landlords. These are ostensibly designed to control ‘rogue landlords’ who let out sheds in their back gardens in places like Tower Hamlets, Newham etc, but in reality it’s yet another money-making scam to milk landlords, because of course there’s a handy Registration Fee.

Attacking the Evil Landlord over ‘Revenge Evictions’

There have been documented cases of rogue landlords evicting tenants after the tenants have complained about their accommodation, such as a boiler not working properly etc. LibDem MP Sarah Teather is introducing a Private Member’s Bill designed to put an end to this outrageous practice – and it is outrageous. The bill will have received its second reading by the end of November 2014 and the aim is that it should become law next year.

“Buy to Let Landlords are a disaster for Britain and the economy”

“Outlaw Revenge Evictions’ so says Shelter, the housing charity “…”It’s time to stop the light-touch approach to the private rented sector” – Tom Copley, New Statesman, “Buy to Let Landlords are a disaster for Britain and the economy” – Phillip Inman, The Guardian (who else!). And so the fashionable anti-landlord rhetoric mounts…

It seems that Ms Teather’s Bill will receive Government support, so there is a fair chance that it will make it on to the Statute Book by next year – no doubt it would have to be before the election, because after that the LibDems will no doubt all but disappear!

Sarah Teather’s Bill

Landlords can already suffer if it is found that they have not dealt with the security deposit in the prescribed manner and it usually mean that should they seek a Repossession Order that a judge will not grant it if he or she discovers that the deposit has not been ‘protected’. The idea of this bill is that landlords will suffer the same fate if it is found that they have evicted a tenant ‘without good reason’. Obviously it will be for a judge to decide whether or not a landlord had ‘good reason’ to evict a tenant.

The Road To Hell

Like all recent dewey-eyed government legislation it is very well-intentioned but let’s hope that it is not something that can be abused by bad tenants. Of course we must remember the old saying that ‘The Road to Hell is paved with good intentions’. The problem with the current bunch of boys and girls (most of whom have never done a proper job) is that they are obsessed with ‘rogue landlords’. They forget that there are many ‘rogue tenants’ too.

But, as I said, there is a fashionable tide running against buy to let landlords, who are increasingly being portrayed by those of a liberal tendency to be the root of all evil. I think all landlords should be aware of this tide because there will be more and more anti-landlord legislation on the way – particularly if that bunch of Labour losers get in again in May 2015!

UPDATE DECEMBER 2014

Looks like this legislation has been delayed by the actions of Conservative MPs at Westminster. But we’ll keep you posted.

 

Landlords and Letting