Regulation & Law
News articles looking at national legislation and local regulation and the application of law to the residential property industry.
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HMRC Stamp Duty take on investment property soars
The tax take on investment property soars again – is it fair? HMRC’s quarterly stamp duty statistics for Q4 2016 have been published, recording £2,379 million from residential property, delivering a super-sized Christmas bonus to the tax man – 20 per cent more than in the same quarter of 2015. This adds to the HMRC pot, giving a year-to-date estimated total of Stamp Duty receipts 17 per cent higher than the same period in 2015. Is the tax take fair? Nick Leeming, Jackson-Stops & Staff Chairman, says the Government is doing extremely well out of property investors, “So far £1,190 million worth of stamp duty receipts are estimated to be attributable to the additional 3 per cent element payable on second homes, a significant windfall for Treasury coffers. Between Q2 and Q3 the number of second homes liable for the 3 per cent surcharge nearly doubled. “This increase is understandable as many buy-to-let investors would likely have rushed to make purchases before April 1st, but the number of liable second home transactions is up again in Q4 to 62,800. “The data suggests that buy-to-let investors are not being deterred by the new tax which is supposed to be dampening demand from this group…
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Government to bring in ‘self-assessment’ for business rates
The 400-year old £26 billion business rates system is about to be turned on its head for the UK two million business premises owners, according to property consultancy Colliers. It says that following consultations on how to improve the creaking and out-dated system, the government favours a self-assessment system akin to the ‘tax return’ one used for income tax. Business rates for the UK’s 15,000 or more estate agency branches are based on rental valuations calculated every five years and, many agent owners often complain, are wildly inaccurate. In response to this the government launched a ‘Business rates: delivering more frequent revaluations’consultation in March last year. If Colliers’ prediction is true, a self-assessment style system will turn a 400-year-old tax regime on its head, although Colliers notes that it will place ‘the burden of red tape on to the ratepayer to make a correct assessment or face significant penalties’. “The official line is that the Government is looking at all the options,” says John Webber, Head of Rating, Colliers International (pictured). “However, my sources have confirmed that the ‘Big Four’ accountancy firms have been consulted on how to make self-assessment work and what lessons could be learned from personal taxation.…
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Stamp Duty surcharge hitting landlords hard, says Countrywide
The government’s assault on the buy-to-let market is having the desired effect on landlords, latest research from Countrywide reveals. It has revealed that since the additional three percent Stamp Duty was introduced in April last year 56 per cent of all purchases the company handled where a landlord and first time buyer competed for a property, the first time buyer won. Johnny Morris, research director at Countrywide (pictured, lefgt), said: “Given their inability to spread the higher rate over a longer period, these micro developers have been the buyers hit hardest by the higher rates. Across the country as a whole, their numbers are running at around half the levels they were.” Countrywide undertook the research between April and December last year and says some 9,000 fewer people buying their first home lost out to landlords than during the same period last year. The shift in activity within the market is down to fewer landlords being prepared to commit to a purchase once a bidding war over a property starts as a raft of measures, including extra Stamp Duty, have dampened landlord enthusiasm for purchasing more properties. This includes a severe reduction in the amount of mortgage interest relief they…
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‘Tenant fees ban will drive more landlords to self manage’
The tenant fees ban proposed by the government during Philip Hammond’s Autumn Statement recently will persuade more landlords to self-manage their properties, which in turn will place tenants in the hands of a largely unregulated part of the industry. This was one of the main conclusions of this week’s meeting of minds at the latest NALS Fair Fees forum, which met in central London last Friday at an undisclosed venue, and whose work NALS says it is ‘pretty pleased with’. It is preparing a comprehensive response to the looming government consultation on fees and the forum discussed a specially-commissioned report into the work of agents in securing tenants for a property, how the fees ban is working in Scotland for tenants, agents and landlords and how the ban might affect how the redress schemes operate. The forum was also reminded by representative from the Department of Communities and Local Government that the ban was unlikely to be kicked into the long grass and remained the ‘political will’ of ministers. Primary legislation is expected this Autumn with a fees ban to come in during early 2018. But industry representatives highlighted how a ban would lead to a poorer service to tenants and increased…
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York signs up agents to student To Let boards ban
City councillors in York say they have persuaded four agents in the city to sign up to a voluntary scheme that will see a To Let boards ban within key student areas around its university. It is claimed that four of York’s leading agents – Adam Bennett, IG Properties, Access Properties York and Sinclair Properties – have agreed to reduce or stop their usage of the boards. “We’ve been told many times over the years that these signs have a big impact on how neighbourhoods look, and there are concerns that they can advertise when student properties are empty,” Labour councillor David Levene (pictured) who used to be a student in the city until 2011 and was elected as a council on a platform of representing students and student issues, told the local paper The Press. “In reality, the vast majority of students find their accommodation online. I’m very pleased and grateful that Sinclairs, AP York, Adam Bennett, and IG have shown real leadership in signing up to this agreement.” The campaign to start a voluntary agreement over To Let boards in York was begun in November last year after complaints by local residents about too many boards in these…
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Foxtons branch fined for not explaining tenant administration fee
Foxtons has been fined £2,500 after a tenant administration fee it charges was found to be not adequately explained. The sanction follows an inspection by Trading Standards at its Stratford branch near the Olympic Park in East London. The London Borough of Newham has been cracking down on agents all over the borough over the past two years as part of its Fair Lettings Project, which has sent out reminders about agents’ “obligations to consumers” and inspection teams dispatched to check branches to “ensure they don’t rip off tenants or landlords”. Foxtons was visited in January last year by a local Trading Standards officer who found that a £425 tenant administration fee charged to prospective tenants was not properly detailed. Despite the error being pointed out by the officer, the fee remained unexplained at the branch for several months and a penalty charge of £2,500 was accepted by Foxtons. “The Newham initiative was introduced to ensure that all of the 200 or so residential letting agents in the borough are complying with legislation designed to stop tenants being exploited,” the council says. “This includes ensuring that fees are transparent, that deposits are protected and that agents have fair terms and conditions.”…
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Wales debates what to do with own Stamp Duty in April 2018
The Welsh government is consulting on what to do when it takes control of Stamp Duty with a local version called Welsh Land Transaction Tax, in April next year. Landlord groups including the Welsh arm of the Residential Landlords Association director Douglas Haig (pictured, left) are calling for the 3% levy on buy-to-let and second homes to be scrapped because it will ‘limit supply and push up rents’, it is claimed. The RLA says landlords in Wales have seen the average Stamp Duty bill rise from several hundred pounds to £4,850 since the new rate was introduced across the UK. But the RLA is unlikely to get its way in Wales. A Welsh government spokesman told the BBC that the additional revenue of £58m created by the 3% additional tax will be “essential to the delivery of public services across Wales”. Agents have been represented at the enquiry into the devolved LTT by the NAEA whose MD Mark Hayward (pictured, right) spoke to officials in October last year. He recommended a gradual changeover to allow for a “full discussion and full awareness as to not skew the market”. Welsh Cabinet finance and communities Secretary Mark Drakeford said he wanted to…
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Property Ombudsman launches new portal for agents to monitor complaints
Salisbury-based The Property Ombudsman (TPO) has promoted its Casework Director Jane Erskine to the role of Deputy Ombudsman and launched a new online portal to enable agents and consumers to review cases as they proceed. Jane’s promotion is part of a reorganisation at TPO that Katrine Sporle, the Property Ombudsman, says are part of efforts to provide a “streamlined service that puts the consumer at the heart of the process”. Durham University education Jane (pictured, left) joined TPO as a case officer in 2007 after a nine-year stint working in private practice specialising in wills, conveyancing and probate, and has risen through the TPO ranks. In 2010 she was promoted to Senior Case Officer at the property dispute resolution organisation before rising to Casework Director two years later. She is a regular fixture on the property speaking circuit including at several regional NAEA conferences and masterclasses. Key to the TPO’s reorganisation is a new online portal that Katrine says will “transform the way the scheme reviews complaints by allowing agents and consumers to review live case updates, with additional functions for agents who will soon be able to renew their membership and update their contact systems at the click of a…
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Sheffield is eighth city to see anti To Let boards campaign
Moves to restrict To Let boards in predominantly student areas of Sheffield are under, adding to existing measures already underway or being considered in seven other cities. These include Brighton, Liverpool, Durham, Belfast, Leicester, Newcastle and London. In Sheffield a local campaigner, retired 57-year-old Tony Flatley, has raised a petition to persuade the city council to ask the Secretary of State for powers to control To Let boards in the city’s mainly student areas including Walkely (pictured), Crookes, Broomhill and Sharrow. “With the number of ‘to let’ boards that are up, it’s the visual impact, but it’s also the fact that actually it’s a burglar’s paradise,” he told local newspaper The Star. “It highlights areas where burglars can go in and steal while the houses are empty.” Flatly says he believes most student and many other tenants now find their properties online and that new restrictions “would not affect agents too much”. “For the people that live in these areas, it has quite a large impact,” he said. “My petition will go in front of Sheffield Council on February 1. The point for me is just to get discussion started.” Meanwhile, in Durham – the latest city to embark on…
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MP predicts letting fees ban will cut agent turnover by up to 20%
The letting fees ban will cut agent turnover by up to 20%, says Mike Freer, the Conservative MP for Finchley and Golders Green in North London (pictured). Freer, who is a buy-to-let landlord himself, says he has talked to letting agents in his constituency about the ban including Martyn Gerrard, which he describes as an ‘industry leader’ in his area. The company is unusual within the lettings sector because it does not charge tenants administration or contract fees. The MP says his research reveals that agent turnover is likely to reduce by between 10% and 20% among “agents who have been charging these spurious fees to tenants” if a ban is introduced and that this will weed out the “cut price unregulated agents” within the industry. He says agents in his area believe that such a dramatic drop in turnover will encourage agents to increase their charges to landlords, who in turn will raise rents to cover the increased costs. “In Scotland, where all but rent and refundable deposits were banned in 2012, the evidence shows that rents have risen as a direct consequence of the ban,” the MP says in his blog on website conservativehome.com. Freer then goes on…
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