YOUR AGENT support mandatory Money Protection for letting agents

YOUR AGENT support mandatory Money Protection for letting agents in the wake of the launch of a government consultation on the subject.

"CMP is an entirely sensible measure that protects both the landlord and tenant in the unlikely event that an agent goes into administration or misappropriates a client’s funds" says YOUR AGENT director Rob Lock.

"Calls have been made for the launch of this review for some time so we are very pleased that it has now been announced. It provides an extra, but essential, degree of security for professionals in the industry as letting agents currently hold approximately £2.7 billion in client funds. It’s really important for members, and the wider industry, to come together as one clear, loud voice to call for full, mandatory CMP through this consultation."

The government launched a six week consultation period - closing on October 3 - with an open letter from housing minister Gavin Barwell saying letting agents currently hold approximately £2.7 billion in client funds “but if a letting agent is not covered by client money protection, both the landlord and tenant could stand to lose their money.”

It goes on to say that currently between 60 and 80 per cent of letting agents voluntarily pay a membership fee of £300 to £500 to join a client money protection scheme and this forms part of a central pot of money that can then be used to pay successful claims by landlords and tenants.

YOUR AGENT are member of Client Money Protect (CMP) make sure your agent is protecting your money the way that we protect our clients money.

Average tenant expects to rent for ten more years

The average UK tenant expects to remain part of the Private Rented Sector for a further decade, according to a new study.

Research carried out by AXA says that fewer tenants say they are renting because they can't afford to buy a property. 

In 2013, 67% of tenants surveyed said they rent because they can't buy. This year, the figure has fallen to 44%.

This could partly be due to a shift in attitudes towards renting. 

A third of those surveyed said their primary reason for renting is 'the freedom and lifestyle benefits' it brings.

AXA says that Britain's tenants are also experiencing a surge in financial confidence. 
In 2013, just 13% of those surveyed said they were saving for a deposit. This figure has almost doubled to 25% in 2016.

Tenants are also becoming increasingly prone to frequent relocation – stating they expect to stay in each rental property for an average of two years. 

Some 61% of 1,000 tenants surveyed said they favour short-term contracts of six months to a year, while only 18% said they would benefit from five or ten year leases.

Within the next five years, two thirds of those surveyed said they plan to relocate to another part of the UK, while 10% said they plan to emigrate.

London, Bristol and Edinburgh top the list of ‘stepping stone towns’, where tenants tend to stay the shortest length of time. 

A third of the tenants taking part in the study said they feel 'stigmatised' for not owning a property and 64% said they worry about being forced out of their rental property at short notice.

Landlords are reminded of the need to register with Rent Smart Wales. Only 70 Days until Deadline.

Landlords are reminded of the need to register with Rent Smart Wales

The law in Wales now requires private landlords to register themselves and their properties with Rent Smart Wales. The Housing Act (Wales) 2014 requires landlords to register and self-managing landlords who let and manage properties and agents to also undertake training and apply for a licence. Rent Smart Wales aims to drive up standards in the private rented sector. A specialist team deals with queries and helps landlords and agents register and apply for a licence.

The next campaign phase will lead to the 23rd November deadline and will inform landlords of their legal requirement to comply and tenants of their right to have a properly registered and licensed landlord or agent.

Rent Smart Wales is a landmark scheme that will drive up standards in the private rented sector by requiring managing landlords and agents to undertake training to ensure they understand their responsibilities.

It will help prevent the involvement of rogue, and even criminal, landlords and agents in the management and letting of properties. The scheme will help to protect tenants and will support good landlords and agents by helping them keep abreast of their responsibilities and legal obligations, raising the reputation of the sector.

The deadline for registration is now less than 70 days away and those who have not yet complied with the law are encouraged to discharge their legal responsibilities to register as soon as possible because registration when completed online, is a simple 15 minute process, but a licensing application can take up to 8 weeks to process. 

Avoid the hassle. YOUR AGENT lettings were amongst the first ten agents to be awarded an Agents Licence across the whole of Wales. So why not let YOUR AGENT be your agent? 

BoE’s chief economist says property investment better than pension

The Bank of England’s chief economist has moved to suggest that investing in property is a better option for retirement than paying into a pension.

Speaking about preparation for retirement in the Sunday Times, Andy Haldane noted that, ‘it ought to be pension but it’s almost certainly property.’

Shortage

Mr Haldane owns two properties but pointed to the fact that there is a severe housing shortage across the country. In turn this is driving up prices and placing upward pressure on properties.

Haldane said, ‘as long as we continue not to build anything like as many houses in this country as we need to…we will see what we’ve had for the better part of a generation, which is house prices relentlessly heading north.’

Residential property investment returns-rental income and capital growth-are continually outperforming other mainstream investment types. These include commercial property, UK Government bonds and a more secure alternative to the volatile stock market.

Agreement

A number of property experts have moved to agree with Mr Haldane’s comments, including Graham Davidson, managing director of Sequre Property Investment.

Davidson observed, ‘poor returns, hefty fees and inconsistent annuity rates have caused the number of Britons taking out pensions to fall considerably. As Mr Haldane has pointed out, bricks and mortar continues to out-perform many other more volatile investments, providing stable returns with the added benefit of owning a tangible asset, unlike stocks and shares. This is particularly important for the older generation, many of whom will look to hand down their investment to family members.’

‘Our figures support Mr Haldane’s claim, with 46% of our investors citing investing for their pension pot as their primary motivation for choosing buy-to-let property and 95% of investors purchasing with their pension in mind.’

Court date set for potential judicial review of landlord tax relief

Landlords fighting to prevent punitive tax relief changes for buy-to-let landlords being introduced next year will get their day in court, after it was announced that they will have their hearing in early October.

The campaign group Axe the Tenant Tax, led by landlords Chris Cooper and Steve Bolton, have been seeking a judicial review over the government’s changes to tax relief ever since the government announced its contentious decision to remove finance costs for individual landlords.

The existing rules that permit landlords to offset all of their mortgage interest against tax will, from next year, be phased out, and by April 2020, once they have been withdrawn altogether, it is likely that higher-rate tax payers will only receive 50% of the relief that they currently get.

The curb on the amount of tax that landlords can claim back on their property investments, which was announced by now former chancellor George Osborne in the Budget last summer, could mean buying and renting out property is no longer viable for many buy-to-let landlords.

Attempts to reclassify mortgage interest as anything other than a normal business expense could have a disastrous impact on the buy-to-let sector, with higher expenses passed on to tenants.

According to Treasury forecasts, the tax relief changes will net it close to £1bn a year by 2021.

A hearing will take place at the Royal Courts of Justice on Thursday 6 October, later than expected.

In a statement the campaign group Axe the Tenant Tax said HM Revenue and Customs had requested more time so their lawyers would be available.

It said: “We have been told not to read anything negative into the delay to our court date - it is quite a normal occurrence and, if anything, the extra time allocated we hope will work in our favour.”

Campaigners against tax changes to have case heard next month

A legal campaign to overturn the UK Government’s decision to alter mortgage interest tax relief that residential landlords can claim will be heard next month.

At the end of September, there will be a hearing to determine whether of not there will be a judicial review of the move to reduce tax relief from 2017 to 2020.

Challenge

Both landlords and organisations have warned that the move could put off existing buy-to-let landlords coming into the sector. In addition, it could hit existing landlords, who could be left with little choice but to pass on this additional costs to their tenants, in the shape of higher rents.

Campaigners Steve Bolton and Chris Cooper said that they will meet with new housing minister Gavin Barwell on the 9^th September, when the issue will be discussed further.
In a statement, the two campaigners said, ‘we will obviously be raising our serious concerns about the impact, making him aware of our legal challenge and doing the best job we can to help him become a supporter of our cause within Government.


Costly

The Scottish Association of Landlords and the Residential Landlords Association have both warned that these tax changes will make it easier for rogue landlords to provide sub-standard houses to tenants, due to increased costs.

Recently, a recent YouGov survey for the Council of Mortgage lenders suggested that 34% of landlords plan to reduce their investment in the sector as a direct result of the changes.
John Blackwood, of the Scottish Association of Landlords, said, ‘we know from our regular branch meetings around Scotland that landlords are already seeing increased costs as a result of tax changes. As well as impacting on individual landlords, we are concerned this could make it harder to tackle the current housing crisis by making it more difficult to attract much needed investment.


‘With the uncertain investment environment that has been created by the Brexit vote, at least in the short term, the last thing anyone in the housing sector needs is tax rises which will only make things worse,’ he continued. ‘Furthermore, we are concerned that if costs increase, this could open the door for rogue landlords who don’t follow the rules on either tax or safety and quality standards at a time when real progress is being made at driving these unscrupulous players out of the market.

Restrictions

Lettings groups have also said that the changes are likely to deter landlords from making further investment, which in turn will restrict the supply of available properties.

One pundit said 'Gavin Barwell, the new Housing Minister, takes swift action to unpick the disastrous tax policies that were introduced by the previous Chancellor George Osborne. We believe that the government should be taking steps to incentivise private landlords to invest in Buy to Let properties, as this is what will bring rents down.


‘If the government wants to make housing more affordable the only way to do this is to increase the supply of properties on the market. It is completely counter intuitive to restrict supply with tax changes and then not expect rents to rise. Gavin Barwell has an opportunity reverse the situation and create an environment where there is an oversupply of rental properties. This can only be achieved by incentivising landlords and making the rental market more affordable for tenants,’ he concluded.

HMRC debating new tax regime for smaller BTL investors

HM Revenue & Customs has moved to launch a 12-week consultation on a scheme which it claims will improve the simplicity of tax demands levied on lesser-scale buy-to-let investors.

The new proposal, if agreed, will see buy-to-let landlords with an annual rental income of below £10,000 not required to keep their business records digitally. In addition, landlords falling into this category will not have to provide quarterly updates to HMRC.

However, they will still be obliged to utilise the so-called ‘optional cash basis.’

Alterations 

If the proposal receives approval, it is likely to be introduced in the Finance Bill 2017, for full implementation in 2018 or later.

Through its wide-ranging digitisation programme Making Tax Digital, HMRC had been banking on landlords to utilise specialist software in order to keep detailed business records. These would then be submitted quarterly.

The cash basis option will only be made available to simple property businesses. These include individual landlords and partnerships where partners are individuals.

This said, a statement from HMRC noted, ‘the option to use the cash basis will make budgeting for tax easier for landlords allowing them to better manage cashflows.’


Under the cash basis, buy-to-let landlords would only be permitted to declare their rental income for cash actually received. As part of the digital quarterly accounting scheme, they would be required to include the income that their tenants should have paid as income for the year-even if this rent had not been paid.