Weekly landlord news digest: Issue 26

Landlords can find the latest property, tax and financial news all in one place with Hamilton Fraser Total Landlord Insurance’s weekly news digest.

This week, lawyers are still working to overturn Right to Rent rules as a court challenge approaches; landlords in Wales face waiting longer to start no fault evictions and we investigate why buy to let landlords could be a source of future funds, according to the HMRC.

 

Landlords get a Right to Rent voice in court

Lawyers from both sides are still working behind the scenes to sort out round two of the Right to Rent challenge in the Court of Appeal.

The Residential Landlords Association (RLA) has won permission from the court to speak on behalf of landlords in the hearing against the law.

The RLA backed the original legal challenge brought by the Joint Council for the Welfare of Immigrants (JCWI) which the Home Office lost in the High Court in March.

Then, a judge ruled Right to Rent breaches human rights laws by discriminating against those who can legally live in Britain.

After the case, Caroline Nokes, the Home Office Minister for Immigration confirmed an appeal against the High Court ruling and declared landlords and letting agents should still follow Right to Rent rules.

The government is expected to argue anyone carrying out Right to Rent checks must not discriminate against anyone seeking to rent a home and that the law is not discriminatory.

Under Right to Rent, landlords and letting agents must check anyone renting a home has permission to live in Britain by reviewing passports, visas and other documents.

Failure to do so can lead to fines of up to £3,000 a tenant.

“Right to Rent has been a failure. No one has been prosecuted under the scheme but it has created a great deal of anxiety for landlords who do not want to go to prison for getting it wrong. However, the RLA will ensure that the views of landlords are well represented as we send a message that they should not be used to cover for the failings in the UK border agencies.” An appeal date is awaited.”

– David Smith, RLA policy director

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Welsh Government proposes increasing the minimum notice period for no-fault evictions

Landlords may face changes to the way they can evict tenants by up to six months if a new Welsh Government proposal becomes law.

Welsh Housing Minister Julie James has announced a consultation about the measure, asking for views on increasing the notice a landlord must give when seeking to end a contract.

If approved, the change will amend Sections 173 and 174 of the Renting Homes (Wales) Act 2016 – the Welsh equivalent of Section 21 no-fault evictions in England.

The main proposals suggested by the government would affect both periodic and fixed-term contracts.

The government proposals include calls to:

  • Extend the minimum notice period from 2 months to 6 months
  • Increase the period at the beginning of a contract during which a landlord cannot give notice from 4 months to 6 months
  • Place a 6 month restriction on issuing a notice following the expiry of a previous notice
  • Remove a landlord’s ability to end a fixed term standard contract (under section 186)

Consider the use of break clauses in fixed term contractsThis act is not currently in force, but would introduce new  occupation contracts in Wales, which replace Assured Shorthold Tenancies (ASTs) and other tenancy agreements.

James wants to keep the ban for the first six months of a tenancy, but to increase the subsequent two month term to six months.

She hopes the law will come into force by the end of the current assembly session, which ends in 2021.

Read more, and give your views, via the Welsh Government’s open consultation. The consultation closes on 5 September 2019.

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Buy to let landlords could be a source of future funds according to the HMRC

A significant number of landlords have admitted that they have not paid tax on their rental income. Six years ago, the let property campaign was launched with the aim of urging landlords who had undeclared rental profits to come forward to settle their financial affairs. At the time, HM Revenue & Customs stated around 1.5 million landlords owing £500 million were expected to come forward.

The latest data obtained from HMRC by accountants UHY Hacker Young reveals around 51,200 landlords have confessed they owed £125 million between 2013 and the end of the last tax year.

However, 16,110 landlords declared they were avoiding tax of £42 million last year – a 145 per cent  increase from 6,600 the year before and double that amount of tax due.

Read more – Let Property Campaign: your guide to making a disclosure.

“Focus on buy-to-let landlords is clearly intensifying, as the buy-to-let market is becoming a key source of unpaid tax for HMRC, under-declaring rental income and failing to pay capital gains tax on the sale of buy-to-let properties has seen some landlords slapped with heavy penalties and even sentenced to prison.”

– Mark Giddens, a tax partner at UHY Hacker Young

Bedbug complaint costs couple nearly £16,800

A probe by housing officers following a complaint about bedbugs from a tenant triggered fines and costs of nearly £16,800 for a landlord couple.

Milton Keynes magistrates heard two neighbouring properties owned by Mr and Mrs Naeem in Aylesbury,

Buckinghamshire, were rented out as houses in multiple occupation and riddled with health and safety problems.

The couple admitted 17 offences, including breaking HMO licensing conditions in one property and renting the other property without a licence.