Here we are approaching the end of January 2017 already, and the start of Brexit, the triggering of article 50 and the long road out of the EU; ploughing our own furrow for better or for worse.
For those of you who have been sweating over your annual self-assessment tax return, payment is due within the next few days – you have until next Tuesday, the 31st of January; I will be paying today – the pain!
After this year landlords will no longer be able to claim the 10% wear and tear allowance; from next year only like-for-like replacements will be allowed. Also from the 2017/2018 tax year starting in April the mortgage interest relief allowance will start to be withdrawn at 25% per year, over a four year period.
With government plans now in train to introduce quarterly reporting “Making Tax Digital”, in future there is likely to be radical change in the way landlords’ tax accounting is handled. Under this ambitious but controversial scheme it is said that your digital tax accounts will be accessible to you, and presumably HMRC, at any time from a computer, smartphone or tablet, similar to an online bank account.
However, a Treasury Committee investigation and report has concluded that the planned 2018 start to this project is too ambitious: “there needs to be a delay of the start until at least 2019/20, possibly later,” says the report. Find out more about MTD here
It’s been a long time coming but the government’s White Paper on Housing, which is tipped to contain major reforms affecting the lettings and construction sectors in particular, now looks likely to be published early in February.
Changes in the Private Rented Sector (PRS) have been coming think and fast and the pace of change shows no signs of abating.
Extending Mandatory Licensing of Houses in Multiple Occupation (HMOs) is one example, where a consultation which ended in December means that some sort of legislation is imminent. Current mandatory licensing requires that properties with three or more floors and five or more unrelated tenants be licensed.
HMO Licensing ensures a property meets certain fire safety standards, minimum amenity standards i.e. number of bathrooms, cooking facilities etc., and property management requirements.
Consultation discussions have revolved around a proposal that mandatory licensing should apply to all relevant HMOs regardless of the number of floors or the number of occupiers? Also, minimum room sizes are being considered and 6.5 sq m, already the minimum size for an adult required under the Housing Act, has been suggested.
Yet another game changer came with the Chancellor’s announcement during the Autumn Statement that he would move to ban letting agent fees for tenants. It came as a shock to agents and landlords alike, especially as this follows so many other seemingly negative changes for landlords and letting agents over the last year. This is as yet another proposed change on which Government will need to consult to assess its impact, and all indications are that this consultation will start in March or April.
The Royal Institution of Chartered Surveyors (RICS) says there are two probable routes to implementation – full consultation and primary legislation, which would be unlikely to be completed within 2017 or what it describes as “curtailed consultation and secondary legislation under existing statute” such as Competition & Consumer Regulations, which might be more possible within 2017. But with all the other business the government has on its plate, are any of these deadlines realistic.
Ever optimistic as we landlords are, and in expectation that the government will listen and perhaps see sense when it comes to landlords and agents in the private rented sector, the Residential Landlords Association has issued what it calls its seven point wish list to Chancellor Phillip Hammond to consider ahead of his spring Budget, which is due on 8th March:
1. To follow the example of Ireland by scrapping planned changes to mortgage interest relief or, at the very least, applying it only to new borrowing for new purchases in the sector;
2. Waive the three per cent stamp duty additional homes surcharge where a landlord is investing in a new property or refurbishing an empty or converted property that is adding to the housing stock;
3. Remove the anomaly that means that VAT can be reclaimed on goods and services in connection with the construction of a new dwelling when it is intended for owner occupation, but not when it is constructed to let;
4. Encourage landlords to sell properties to sitting tenants by applying the new 20 per cent rate of Capital Gains Tax in such circumstances, supporting the government’s home ownership ambitions;
5. Encourage local authorities and public bodies to identify and sell small plots of publicly-owned land suitable for up to five units of accommodation;
6. Review the financial capabilities of landlords to meet the new energy efficiency requirements coming into force from 2018, making EPC-recommended improvements tax deductible;
7. Provide what it calls “modest funding” to improve access to the private rental sector for the homeless.
On a positive note, all the indications are that demand for rental property will go on rising for the foreseeable future.
The research, carried out by property investment consultancy Knight Knox, found that less than a quarter – 23% – of renters are currently saving for a deposit, with many people living in private rented accommodation having little hope of affording a deposit unless their circumstances dramatically changed.
According to Andy Phillips, commercial director at Knight Knox, the findings from the study, which polled 2,000 people currently renting property in the UK, suggest an acceptance among many of those currently residing in the private rented sector (PRS) that owning a home will remain unattainable.
Finally, our congratulations go to David Steele, winner of our Christmas Prize Draw. David is a buy-to-let investor landlord in the midlands, and the happy recipient of a £250 Amazon voucher – see below.
Tom Entwistle, Editor