Rupert Chapman

I disagree that S21 is not a big change.

I have long argued that right of tenure for tenants would be advantageous to both parties.

Germany is a good model here and demonstrates that tenants with greater security of tenure make improvements to the properties at their own cost.

But renting in Germany is a classless norm.

Tenants do not aspire to be owners at the first opportunity, as a rule.

So the wealth demographic of tenants is very different.

Currently Landlords generally do not issue S21 unless there is a problem tenant, normally anti social behaviour or rent arrears.

But there is an invisible trump card held by landlords called S21 that effectively manages tenant behaviour.

Feelings drive behaviour and the behaviour that S21 achieves is tenant compliance due to the fear of S21.

That will change.

Current “good tenants” will have the upper hand. They will have the confidence to do things that the landlord would not permit because the fear of S21 is removed.

Landlords will feel loss of control and loss of ownership of their assets.

Feelings drive behaviour and landlords will sell.

When a tenant does something that would cause the landlord to want to evict, the only recourse available to the landlord is to sell the property.

Selling will no longer be exceptional, it will become the rule.

2024 - Bad tenant = S21 and business as usual

2025 - Bad tenant = sell the property - no other option open to landlord.

The great sell off will continue long beyond the introduction of this RRB... Read More

Last year I brought a three bed semi from E to B. New water tank, rip out gas boiler, air source heat pump, solar, new radiators and insulation.

The works were prescribed by a grant funded installer under the ECO4 scheme.

ECo4 requires that tenants are on benefits. Therefore, we can make the assumption that those having these improvements do not have spare cash for higher energy bills.

That is exactly what transpired. The tenants complained to me that their bills had gone up significantly!!!

So how is Labour going to take people out of fuel poverty with this measure?

The fact is that electricity is more expensive than gas (which is not surprising as electricity is a result of processing gas at a power station)

So the current measures will not help tenants. If landlords have to fund the improvements, then the rents are also likely to increase.... Read More

I was buying HMOs in Nottingham in 2018. There were numerous on the market that has previously received enforcement notices from planning on use class within its article four area.

Without evidence of continuous HMO use since 2012 it was not possible to obtain certificates of lawful use. Therefore, these previous HMOs were destined to become family homes. This is a reduction in rental units of approximately 80% for the affected properties. Many of these had HMO licences which shows they were previously housing up to six households.

Arguably this enforcement was responsible for the reduction in HMO rooms. Nottingham City have a blanket refusal policy on C4 applications and the only new HMOs that have legitimately added to supply since 2012 have done so following a planning inspectorate appeal.

By restricting the supply of the lowest cost accommodation in the market, the rents for these were allowed to rise due to market forces.

If prices increase at the bottom end of a supply spectrum then there is a cascade effect to the top.

Additional costs including selective licensing will encourage suppliers to increase rents where it is possible, but it must first be made possible.

I believe this is a more likely reason for rent increases than selective licensing.

The above then assumes that rent increases are the primary driver for demand on temporary council accommodation.... Read More

Thanks Mark
If you post the question on the group linked below, I can tag specialist brokers that can help.
It may be better to get a loan in Portugal, subject to qualifying UK income. Ex pat mortgages are more expensive.
Depending on use it could be more tax efficient to own it in a personal business capacity.
For example, if you use for holiday letting you will be vat registered with opportunity of input tax expense claims.
Also this will spread your risk against potential future uk tax rule changes.
I am aware that some folk own property in Portugal via Gibraltar based ltd companies.
I dont know whether the tax efficiencies of such are currently available.
If you find out please let me know?

https://www.facebook.com/share/AXmXtX1KBT86UhzE/?mibextid=K35XfP... Read More

Very important question for all that are seduced by guaranteed rent offers. There is a growing trend of landlords signing their assets over to third party operators and I suspect this is set to continue.
The answer, partly lies in the document you signed before handing over the keys.
It is important that any contract stipulates the requirement for the third party operator to return the property with vacant possession.
However, it is also important to recognise the process involved in gaining vacant possession and note that timescales to achieve vacant possession can exceed the notice period.
If the contract is not possible to be performed, then it could be deemed unfair terms or frustrated.
A well worded contract would give the operator reasonable time to achieve vacant possession or have some provision in the event that the contract terminates without vacant possession, such as a lump some payment or an increased rent after a reasonable time (e.g.12 months)
One further problem is that the tenants may have been housed on a short term licensed arrangement but gained statutory AST status through the substance of the arrangements. In such instances, the tenancy compliance documentation is likely to be incomplete and eviction could be delayed further as a result.
In my groups, I caution those entering such arrangements to fully understand who the end occupier will be, whether circumstances outside your control will breach your mortgage or insurance terms and to recognise that a signed piece of paper is no more than a signed pice of paper. Enforcing the contents of the piece of paper is a different ballgame!... Read More

Assuming you are legally correct, you face a disadvantage in that you are committed to the tenancy for three years and cannot issue a possession notice within that period. I appreciate you are looking for long term income (who isnt?), but with a new tenant you have unknowns regarding anti social behaviour and rent payment reliability. Other legislative hurdles, unknown today may change your view on the investment. Most people want the ability to liquidate their investments at reasonable notice to accommodate unexpected personal life changes. Apart from anything else you will be reducing your pool of willing tenants with this arrangement. The one certainty in life is change. If the tenant loses their income stream, no contract is going to magic the rent into your bank account. I doubt a rent guarantee insurer will cover your contract and if so, it would be limited to 9 months of rent normally. Best to go with the normal. Tribunal judges are far more familiar with normal.... Read More

the story illustrates that many, probably most sa owners are on the wrong product but the upcoming licensing will mean that to continue, it is necessary to have a sa compliant mortgage... Read More

VAT is based upon the type of supply. Long term letting is exempt. Short term letting is a vatable supply. There are more detailed rules regarding this supply, for example letting for more than 30 nights becomes exempt. FHL is income tax, by scrapping FHL there is no automatic assumption the vat position will change. Long term investors with commercial elements to their portfolio are familiar with dealing with VAT on long term lettings. What will become a consideration is the incorporation of a serviced accommodation business. For vat reasons amongst others, it would be best to be kept in a different limited company than a long term let portfolio, but the opportunity to switch use and therefore move assets between companies will require specific structuring.... Read More

It is pretty clear in the gov website summary. FHL will be abolished and the treatment of the income will now be the same as long term lettings. FHL is income tax only. Corporation tax is unaffected. Of course more detail may be announced, but that is the position today.... Read More

I certainly have noted a shift in Michael Gove’s attitude to policy as more time passes since his dialogue with NRLA.

He is prioritising vote winning comments over sense.

We can expect some vote winning actions such as the scrapping of S21 during 2024.

But this is an issue where the cause can be either due to tenant behaviour or the building management. Often a combination of the two.

Sensible landlords who wish to manage risk will be putting into place actions to minimise the opportunities for damp and mould growth and these will provide a more robust defence to tenants and local authorities.

Actions include addressing the heating and insulation opportunities in vulnerable areas, installing the very effective PIV units, ensuring there is adequate ventilation (regularly cleaned trickle vents), support with dehumidifiers if necessary and educating tenants in measures to minimise the risk of damp and to treat mould when it is apparent.

HMO landlords that have converted houses to all en suites need to recognise that the houses now generate a huge amount more water internally and somehow that has to get out into the atmosphere.... Read More

The whole issue simplified:

Property investors can legally purchase property in personal name. Alternatively, they can legally purchase property via ownership of a limited company. They can legally transition between the two and there are transitional tax reliefs available and designed for the very purpose if they meet certain criteria.

In some, but not all circumstances, transitioning to a limited company reduces the overall tax bill. Limitation of liability, succession planning, professionalisation of the business and access to finance are four main reasons to transition to a limited company that have no bearing on tax.

Nobody is disputing the above.

So what is so morally repugnant about such a transition that serves to level the tax playing field amongst property investors?

P118 has been attacked for one reason alone. Because they facilitate the above for many landlords and advertise to landlords that such transitioning is possible and affordable.

There are those that are anti landlord and anti wealth that will look to gain recognition in society by leveraging such sentiments. Such folk often point to altruistic motivation to mask their true motivation which, without exception, is driven by objectives that are either financial, career or egotistic. Nearly all those that join in with written support can be linked to some form of gain from the reduction of the success of P118.... Read More

This protects the agent commission in the event of rent default by the tenant. The landlord would be liable to pay the agent commission.

It may also enable the landlord to get rent guarantee insurance.

However, the insurer would fund the rent to the landlord then claim the arrears from the landlord.

Bizarre indeed.... Read More