News

New EPC Regulations April 2018

Minimum Standards for Energy Efficiency in the PRS

As from the 1st April 2018 there will be a requirement for any properties rented out in the private rented sector to normally have a minimum energy performance rating of E on an Energy Performance Certificate (EPC). The regulations will come into force for new lets and renewals of tenancies with effect from 1st April 2018 and for all existing tenancies on 1st April 2020. It will be unlawful to rent a property which breaches the requirement for a minimum E rating, unless there is an applicable exemption. A civil penalty of up to £4,000 will be imposed for breaches. This guidance summarizes the regulations.

For most landlords this will mean that they will no longer be able to rent out a property with a rating of F or G after April 1st 2018. As such landlords with properties in this EPC bracket should begin preparing now for April 1st. However, there are some nuances and exceptions, which landlords should be aware of.

Where at any time on or after 1st April 2018 a landlord lets a privately rented property which is F or G rated on a current legally required EPC then energy efficiency improvements must be carried out to bring the property up to at least an E rating before the property is rented out, unless the landlord qualifies for an exemption and the exemption is registered on the Public Exemptions Register.

There several ways in which you will be classed as letting a property for these purposes:

  • You grant a new assured tenancy, including a shorthold
  • You renew or extend an existing assured tenancy, including a shorthold, by agreement with the tenant. This can be done when you grant a fresh tenancy to the same tenant or simply agree with the tenant that the existing tenancy will be extended
  • A statutory periodic tenancy comes into existence following the ending of a fixed term assured tenancy (shorthold or non-shorthold). At that point the law imposes a new tenancy on the parties where the tenant stays after the fixed term has run out. This is treated as a new letting for these purposes
  • A new assured tenancy by succession comes into existence when a family member takes over a Rent Act protected tenancy
  • A new tenancy is granted to a Rent Act protected tenant of the same or a different property owned by the same landlord
  • An agricultural occupancy or similar tenancy is granted, renewed or extended

In all the above cases the requirement to carry out energy efficiency improvements for non-compliant properties will arise where the property has a valid current EPC (i.e. no more than 10 years old) and the property is legally required to have an EPC because:

  • The property which is being let or has in the past been let
  • The property has been sold
  • The property has been improved and building regulation requirements meant that an EPC is required

The requirement to have an EPC is not just looked at in respect of the property itself which is being let out. It also applies where there has been a requirement for the building, of which the property being let is part, to also have an EPC. This is particularly relevant to non-self-contained units such as bedsits.

It should be noted that if the letting is not legally an assured tenancy (shorthold or not) or one of the other tenancy types within the scope of the Regulations then the Minimum Energy Efficiency Standard does not apply. The sections on Assured Tenancies and the Exclusions below explain this issue in more detail.

The Examples below help explain some of these issues.

These rules regarding new tenancies are ongoing from 1st April 2018 onwards but, additionally, as from 1st April 2020 they will apply to continuing tenancies which are already in existence on that date. They will then apply on an ongoing basis to continuing tenancies which have a current EPC, if there is a legal requirement for the property to have an EPC.

Continuing tenancies

From 1st April 2020 the Minimum Energy Efficiency requirement will apply to continuing tenancies where there is a valid current EPC for the property, and an EPC is legally required to be in place. The property must therefore be brought up to the minimum E rating before 1st April 2020 to comply with the Regulations, unless an exemption is available and is claimed by being registered in the Public Exemptions Register. This applies to the following ongoing tenancies:

  • Assured tenancies, including a shorthold
  • Ongoing Rent Act protected tenancies. In practice, however, this means that it will only apply where the property which is let (or where it is part of a building) then the building (as a whole) has been legally required to have an EPC which is most likely to occur if it has been sold
  • Assured agricultural occupancy or similar tenancies relating to agricultural dwellings

 

Category : News

LEGIONNAIRES DISEASE

LegionnairesLegionnaires disease is a pneumonia like illness caused by the Legionella bacteria with infection being caused by inhalation of droplets of water carrying the bacteria.  It is non contagious.  There has been some recent confusion over the responsibilities placed upon residential landlords with some advisors suggesting landlords must seek a specific Legionella testing certificate.  This is not the case with the landlords requirement being unchanged from them simply having a duty of care to ensure their properties are free from health and safety hazards.  In most cases where domestic properties have small water systems with a high turnover the risk of Legionella is low however landlords are still required to carry out a risk assessment  followed by periodic subsequent reviews.  Provided the landlord has an adequate knowledge of the properties water system there is no reason why they cannot carry out the assessment themselves.  Full details of the requirements can be found at the HSE website – www.hse.gov.uk/legionnaires/what-you-must-do  If you would like further details on this topic or indeed assistance in arranging a risk assessments if needed then please feel free to give either Marie or Lee a call who will be more than happy to help

Category : News

Tax Changes

In 2015 former Chancellor George Osborne announced plans that would mean landlords will have to pay tax on turnover, rather than on the difference between rental income and mortgage interest. He reasoned that increasing taxation on the income from buy-to-let would discourage landlords from buying up more properties, thus enabling first time buyers to get a foot on the property ladder. The rationale also followed that shifting the tax burden to landlords would encourage institutional investors like build to rent, which could play a crucial role in solving the housing crisis, improving the quality of housing and financing more development.

So, what are the main changes that landlords need to be aware of and is there anything they can do to protect themselves?

Buy-to-let tax relief on mortgage interest payments

47% of landlords who took part in the aforementioned poll said that the reduction of buy-to-let tax relief on mortgage interest payments is their biggest concern. Up to now, people buying to let have been able to claim tax relief on their mortgage interest payments at their marginal rate of tax. So a basic rate taxpayer would get 20 per cent tax relief, but those at a higher rate would receive 40 per cent while top rate taxpayers could claim 45 per cent. Between 2017 and 2020 this system will be replaced and all landlords will pay tax on the full amount less tax relief fixed at 20 per cent.

The changes to tax relief will be phased in from April this year, so by 2020 landlords will be taxed on their income, which could push some into a higher rate tax bracket. Mortgaged landlords paying 40 or 45 percent tax and some basic-rate taxpayers too, will be paying much more in tax as the changes are rolled out. Eddie Hooker, CEO of Hamilton Fraser’s Total Landlord Insurance, estimates that about half a million landlords will be affected in this way.

What can you do to mitigate the damage?

Many landlords will remain unaffected by the changes, as evidenced by a poll of landlords conducted by the Council of Mortgage Lenders, which found that half owned their properties outright.

However, if you think you will be affected, we advise that you engage the services of a tax expert who is fully versed in property tax laws to help you plan your tax affairs. The short-term cost is likely to be offset by long-term gain.

Hiking your rents up to compensate is unlikely to work as most tenants are already paying as much as they can afford. Other things you could try include:

  1. Switching to shorter-term fixed rate deals to get lower rates of interest, although these mortgages carry more risk.
  2. Placing your property portfolio in a limited company structure. You would then pay corporation tax (which is lower) rather than income tax on your profits. Full mortgage interest relief is still available for property within a limited company structure. About 100,000 more landlords are going down this route now than they were a year ago. A drawback is that your mortgage options will narrow as fewer providers will lend to a company.
  3. If your spouse pays a lower rate of tax, you could transfer ownership of one or more properties to them (taking care this does not lift them into a higher tax band).

The treasury has inevitably come under pressure from landlords to make a U-turn on these changes, but it is estimated that the government will earn £665 million in the tax years 2020-21 from this, a significant economic gain, so the sooner you identify the impact on your personal tax liabilities, the better.

Rise in stamp duty April 2016

Reeling from Chancellor George Osborne’s announcement to cut mortgage interest tax relief in the July 2015 summer budget, the subsequent announcement of a stamp duty surcharge of three percentage points for landlords purchasing buy-to-let was both unexpected and unwelcome. There was an inevitable surge in completions before the surcharge came into force in April 2016.

Currently, there is no stamp duty to pay on £125,000. Buyers who are going to live in the property then pay:

  • 2 percent on the portion of sales price between £125,001 and £250,000
  • 5 per cent between £250,001 and £925,000
  • 10 per cent between £925,001 and £1.5m
  • 12 per cent on anything above £1.5m.

The rates for landlords (and anyone buying a second home) are now 3 per cent on the portion of the property up to £125,000, then 5 per cent, 8 per cent, 13 per cent and 15 per cent respectively for the price tiers.

This recent rise in stamp duty combined with the impending reduction in tax relief on mortgage interest payments means that many landlords are having to pay significantly more to acquire property whilst also experiencing a substantial loss of income on their rents.

Abolishment of wear and tear allowance

Wear and tear allowance was replaced by a new system from April 2016. The past wear and tear allowance allowed landlords to deduct broadly 10 per cent of their rental income in calculating taxable profit to allow for wear and tear. This allowance has now been replaced by a system allowing landlords of residential property to deduct only the actual costs incurred on replacing furnishings in the tax year i.e. the cost of replacing the furnishings but not the initial costs
.
It is more important than ever to make rigorous inventory controls and systems, to ensure claims will stand up to HMRC scrutiny. As the new system came into force in April 2016, it will affect the 2016/17 tax year, of which tax returns can be completed from 6th April 2017 up until the tax deadline of 31st January 2018.

Changes to capital gains tax

Buy-to-let landlords have also been denied a tax break on their property profits as Chancellor Osborne excluded them from a big capital gains cut. George Osborne announced in last year’s budget that he is significantly cutting the rate of tax paid on capital gains, but not for investors who are selling property. Although the basic rate of capital gains tax dropped to 10 per cent in 2016, landlords will continue to be stung with a hefty 28 per cent capital gains tax bill when they sell up if they are in the higher tax band, or 18 per cent if they are in the basic income band.

In addition, sellers currently have up to 21 months to pay this when they sell a property but from 1 April 2019 this will be reduced to within 30 days. The idea was to encourage landlords to free up their portfolios. But what is actually happening is that landlords are selling to other landlords.

Faced with all these tax liabilities, proper tax planning is going to be worth its weight in gold. If you are an existing landlord now would be a good time to revisit your tax affairs, check whether your circumstances have changed and give your portfolio a thorough MOT.

If you would like to chat through any of the issues raised in this article please feel free to contact Lee Bilbrough – lee@hayfieldrobinson.co.uk – who will be more than happy to help and/or point you in the right direction for more specific tax advice.

Category : News

Flooring in rental properties – Which to choose?

images flooringAs a landlord, keeping your property in good condition is one of your top priorities. You want to ensure that the walls are damp free, drainage and guttering is clear, smoke alarms, gas safety certificates and that any appliances are correctly installed and meet the required safety standards. But what of the floors in your property?

Many landlords make the mistake of installing cheap carpet but this can soon prove costly, with carpet having to be regularly replaced due to spillages and stains, keeping in odour and bacteria, and in some extreme cases, problems with mildew. Investing in a more durable, long-term solution such as engineered wood flooring or laminate could end up saving you money in the long run.Often overlooked by landlords and their tenants alike, taking care of the flooring in your property should be towards the top of your list when it comes to maintenance.

There are many advantages to installing an engineered wood floor or laminate in your property, with one of the main plus points being how easy they are to take care of. Cleaning these types of floors is a simple task, particularly with the latter, with a well wrung out mop and cleaning solution the ideal method. Ensuring you use the right cleaning solution, it will help bring the shine back to the floor and remove any soft stains.

If you’re going to install a wood floor in your property, then you will also have to consider which finish to apply to the wood. A lacquered or oiled finish will give an additional protective layer to the wood flooring, making it easier to care for, and more resistant to knocks and scratches. With an average lifespan of more than 50 years, wooden flooring is a great solution for many rooms.

Having said that, laminate flooring is another option which you may wish to consider, particularly for areas such as kitchens, bathrooms or utility rooms. Depending on your choice of style, laminate can look very similar to a real wood floor, but it typically comes cheaper than the real thing. Not only this, but laminate is incredibly easy to replace should any of it get damaged, and so it has a massive appeal to landlords who want to renovate on a budget.

Of course, there are many different flooring options to choose from, but we would recommend both engineered and laminate for rental properties due to their durability, and their ease of installation and upkeep.

 

Category : News

Longer tenancy terms – Good news for investors!

Longer tenancy terms – Good news for investors!good-news-300x184

The rental market has been changing drastically in the last few years, not least when it comes to the demographics who are renting rather than buying. Previously, students and younger people were traditionally the largest groups when it came to rental homes, but more landlords than ever are now letting to families and older people, and it is the first of these that is calling for change.

According to a new survey carried out by Citizens Advice, one of the most important things for families, regardless of where they live is stability. They want to know that they have the long-term ability to plan out their future. However, some are not able to do so because of the length of their rental terms.

It said that as many as 39 per cent of those who live in a private rented home with kids have a tenancy agreement that lasts six months or less. This is a problem for the 59 per cent who said it is hard to plan for the future when they know they could be asked to leave their home in a relatively short space of time.

Of those surveyed, 39 per cent of families who rent with children said they would like the rental agreement they have in place with their landlord or letting agent to be longer. This was higher than the general rental sector, where 34 per cent of tenants said the same.
With average tenancy length continues to increase and is now approaching nearly 3 years according to a recent survey by Allsops.   The increase in demand for longer terms is of course helpful to the investor landlord too. Settled tenants mean a more secure income stream and less of landlords most costly expense – Empty property.

If anyone has any questions about the implications of longer fixed terms please do not hesitate to contact us.

Category : News

Protecting Empty Properties During Winter

Christmas-house-and-snow_1366x768With the days getting shorter and considerably colder the first frosts of winter are upon us and it is important to ensure that empty properties are protected during the winter months.  I have therefore set out below a few thoughts and tips that may help avoid any potential problems.

 

 

1 –Insurance

Check to make sure that your home insurance policy is up to scratch and that you’re covered for winter-related damage.  If it comes to sorting out water damage to your Christmas presents or fixing a leaky roof, you’ll be glad you had the right cover in place – see attached flyer introducing G Moore & Co.

2 – Keep your pipes toasty

Burst pipes are common during winter due to rapid freezing and thawing, potentially causing massive damage.  The best way to stop this from happening is to keep your pipes warm with lagging, which will reduce the heat lost and insulate the pipes to stop them from freezing.

3 – Get your boilers looked at

A poorly maintained boiler wastes more energy and costs more, and it also runs the risk of leaking carbon monoxide. Consider getting your boiler serviced before winter.

4 – Insulation – more than just a woolly jumper

About a quarter of the heat in your house is lost through the roof, so having good loft and wall cavity insulation could keep the house warm with less energy used. These improvements needn’t cost the earth, as there are a number of government grants and schemes that subsidise insulation installation.

5 – Bleed the radiators

If your radiators are colder at the top than they are at the bottom, then your radiators have trapped air inside them that’s stopping the heat from circulating properly.  It’s time to grab a towel and your special key and bleed that radiator! Bleeding the radiators releases the air, allowing the radiator to run more efficiently.

6 – Switch energy suppliers

If your bills are still high despite these improvements, give your energy supplier a call and see if you can be put onto a more appropriate energy tariff.  If that’s not good enough you can look for a supplier that’ll offer you a bigger discount. There’s no disruption in service; all that happens is that your money goes to a different company when you pay your bill.

7 – Guttering

As summer draws to a close, the leaves will start falling, and gutters and drainpipes will start to get filled with loose foliage.  Once the blockage becomes too much, water will start to back up in the guttering and leak into the roof and down the walls of the house. Make sure your gutters are completely free from grime and dirt to minimise water blockage.

8 – Tree trimming

You know who’s to blame for your guttering getting clogged up with leaves?  It’s those trees, making a mess of your house and getting away with it.  Take a stand against them and get them trimmed away from the house.  This will reduce the amount of foliage that will drop into the guttering, and will also reduce the build-up of snow on the tree that could cause damage from broken branches.

9 – No entry for draughts

Those chilly winter breezes are wily things, and they’ll try everything they can to slip through the nooks and crannies of your home.  Check the edges of your doors and windows for draughts, and you can either seal these gaps with self-adhesive draught strips, or get one of those funny draught excluders shaped like a snake or a dog.

Category : News

Condensation Advice

CONDENSATION ADVICEcondensation

As winter comes, so does condensation and mould in many rental properties, The root cause in residential property can become a bone of contention between landlords and tenants. In the UK, condensation and mould are a common problem. Rental properties are particularly vulnerable.

The problem can vary in severity from a small patch of mould or discoloured wallpaper behind a cupboard in the corner of a room to serious amounts of mould growth across walls, inside wardrobes and on furnishings, carpets and in basements. Condensation in residential property is caused by warm, moist air generated in areas like kitchens and bathrooms penetrating colder parts of the building. When the air becomes cold, it is unable to hold the extra moisture produced by everyday activities, so some of this moisture appears as small droplets of water – most noticeable on windows or on places where there is little movement of air. If not properly dealt with, this extra ‘dampness’ can lead to mould growth on walls, furniture, window frames and even on clothes. Very often the main cause of mould growth is the lifestyle of the occupants – the Tenants. The average person will produce condensation through cooking, washing, internal drying, etc. Landlords and agents need to be aware of the potential problems which excessive condensation and mould growth can cause and should take steps to minimise the risks. Many properties, including new builds, will suffer from condensation during the winter months.  So it is vital that landlords keep the property properly maintained and advise tenants on how they can reduce the levels of condensation. This being said it is ultimately the responsibility of the tenant to ensure the property is well aired to avoid condensation occurring and causing damage.

ALL TENANTS SHOULD

Keep the property adequately heated and ventilated.

Dry all windows, windowsills, and any other surfaces that have become… wet. Ensure the cloth is rung out thoroughly , do not dry on the radiator!

Try to keep the interior temperature of the property at a reasonably constant level.

Always hang washing outside. If this is not possible, hang it in the bathroom with the door closed and window slightly open for ventilation.

Do not dry washing on radiators as this will add to moisture already in the air.

Ensure that all extractor fans are working and ensure that Tenants use them.

If a Tenant uses a tumble dryer, they should ensure it is well ventilated to the outside, or that it is the new condensing type.

Tenants should ventilate the kitchen when in use, either by opening a window slightly or using the extractor fan.

Both kitchens and bathrooms should be ventilated for at least twenty minutes after use.

If your property is prone to condensation then providing a Tenant with a de-humidifier for daily use can be very beneficial. These come in all shapes and sizes, cost very little to run and draw out the excess moisture from the air, helping to keep the condensation under control.

Category : News

Cherie Blair’s landlord tax challenge gets October court date

court-gavelCherie Blair will lead a team of lawyers and landlords to court this October as they continue a challenge to tax changes that will hit landlords next year.

The new rules, which will be phased in from April 2017, stop landlords from being able to deduct their mortgage interest costs from their rental income before calculating their tax bill – effectively leaving buy-to-let investors paying tax on turnover, instead of profit. Even with a 20 per cent tax allowance, landlords will be hit hard by the change, pushing some into higher tax brackets, leaving others making no profit and giving many no choice but to raise rents.

A campaign to overturn the law via a judicial review began last year, founded by landlords Chris Cooper and Steve Bolton. Now, the Axe the Tenant Tax campaign represents more than 150,000 landlords, who, in turn, provide housing for more than 1 million tenants.

Their challenge, which is led by a legal team from Cherie Blair’s firm Omnia Strategy LLP, now has a court date of 6th October. The permission hearing will see the group set out their argument for the judicial review, before a judge rules whether it can proceed.

The hearing will start no later than 11.30am and take around 90 minutes, longer than the norm for a judicial review hearing, which the campaign organisers say is a “positive development”. Indeed, the group recently met Housing Minister Gavin Barwell for a “productive” meeting in which they outlined their concerns about the new law’s potential impact upon tenants, as well as the property market.

So far, the Axe the Tenant Tax campaign has raised more than £100,000 to fund its challenge.

Watch this space for details of any developments and fingers crossed for a positive outcome!

 

Category : News

New Appointment Strengthens Lettings Team

3 Aug 2016 001

Marie Warrington has joined the Residential Lettings team at Hayfield Robinson as Senior Lettings Manager as part of their ongoing expansion. Marie brings a wealth of experience after being involved in residential lettings and management in the town for over 16 years. Our team are really looking forward to working with Marie and between us offering Landlords, old and new, a service that is second to none. Contact us for your free market appraisal and details of our services.

Category : News

Rental market tipped to stay strong, even in the face of Brexit

BrexitThe British rental market is so strong at the moment that even the vote to leave the EU referendum should have little to no effect on its overall health, letting agents nationwide believe.

According to a survey released by the Association of Residential Letting Agents (ARLA), the majority of those operating in the sector believe that the three main factors that contribute to sector health – supply, demand and pricing – will remain unaffected, allowing the market to continue its growth moving forward.

In the survey, some 65 per cent of respondents said that they feel the levels of supply across the nation will not be affected, with landlords still likely to invest despite the decision for the UK leave the EU. This compared to just 22 per cent of letting agents who said they believe the Brexit vote will mean fewer rental homes becoming available.

As well as this, demand should remain steady, the majority believe, with as many as 55 per cent saying there will be little to no negative impact of the Brexit vote on the number of tenants in the market. On the flipside, some 31 per cent believe that the UK becoming less of an attractive prospect for relocation would mean a fall in demand across the PRS.

And when it comes to what tenants are having to pay to live in rented homes, letting agents also believe there will be only negligible changes, with as few as 19 per cent predicting any significant upwards pressure on pricing for landlords in the wake of the Leave vote.
As outlined in the recent Brexit Report, the lettings market hosts a large number of non-UK born citizens and any change in migration policy is likely to have an impact down the line, especially in London. However, our monthly report clearly shows the sentiment amongst members is that the immediacy of this effect is likely to be minimal.

Category : News