Government Attacks Private Rented Sector

Landlords and property investors across the UK have come under attack from most sections of society with the most serve attacks coming from Government in this year’s Summer Budget and Autumn Statements.

So Rooms in Cardiff have put together a handy resource for landlords and investors operating in Cardiff property market.

Summer Budget 2015 & Autumn Statement 2015

Summer Budget 2015 was where the most damage was inflicted. Hot on the heels of an outstanding success at the general election the Conservative party began to set out their stall and plans for the PRS and how they plan to remove small scale landlords via taxation:

Mortgage interest relief for buy-to-let homebuyers to be restricted to basic rate of income tax as it is, the tax relief will be halved for those paying the highest tax rates. The removal of mortgage interest relief will be gradually phased in from 2017-18 enabling landlords to claim relief to 75% their finance costs and reducing 25% each year until 2020-21 where only basic rate relief will be available, essentially higher rate tax paying landlords paying tax on their turn over and not profit.

Removal of 10% Wear & Tear for Furnished Lettings To take affect from 6 April 2016 the ‘Wear and Tear Allowance’ is to be replaced by a new ‘Replacement Furniture Relief’ (RFR) for all landlords whichever type of property, furnished or unfurnished.

Inheritance tax threshold to increase to £1m, phased in from 2017, underpinned by a new £325,000 family home allowance

The Autumn Statement 2015 had a further shock for Landlords and property investors with the introduction of higher rates of Stamp Duty Land Tax (SDLT) for buy-to-let investors and second home owners, new purchases from April 2016 will be taxed an addition 3% above current SDLT rates so a £100K property will now pay £3K (was previously exempt) and a £200K property £10K in Property taxes previously £4K.

Here is the legislation taken from Governments Autumn 2015 Spending Review

 “Stamp duty land tax: additional properties – Higher rates of SDLT will be charged on purchases of additional residential properties (above £40,000), such as buy to let properties and second homes, from 1 April 2016. The higher rates will be 3 percentage points above the current SDLT rates. The higher rates will not apply to purchases of caravans, mobile homes or houseboats, or to corporates or funds making significant investments in residential property given the role of this investment in supporting the government’s housing agenda. The government will consult on the policy detail, including on whether an exemption for corporates and funds owning more than 15 residential properties is appropriate. The government will use some of the additional tax collected to provide £60 million for communities in England where the impact of second homes is particularly acute.”

Benefit Cap & Universal Credit

Benefits have been capped across the UK and there is now a limit on the total amount of benefit that most people aged 16 to 64 can get. The level of the cap is:

  • £500 a week for couples (with or without children living with them)
  • £500 a week for single parents whose children live with them
  • £350 a week for single adults who don’t have children, or whose children don’t live with them

You can find out information of the Government’s Benefit Cap and which benefits will and won’t be affected. Housing Benefit is also frozen for a four year period from 2016-2017 making it even harder for tenants in receipt of Housing Benefit to secure housing in Cardiff and across the rest of the UK when rents continue to rise in the PRS.

November 2015 is a big month in Cardiff as Universal Credit will also begin to be rolled out across the Welsh Capital (Cardiff Council Link to Universal Credit) although this is mostly likely to only affect single “new” claimants.

Rent Smart Wales is here!

We knew it was coming but not quite when, but it’s official it is up and running but seems to be having numerous issues with registering as landlords, agents and taking payments.

You need to determine whether you simply need to register with Rent Smart Wales, or whether you need to register and be licensed you can do so by visiting Rent Smart Wales. As a landlord with property in Cardiff you have two options:

Register Only: If you use a managing agent and do not involve yourself in the setting up of tenancies or day-to-day property management, you will only need to register.

Registration and a licence: If you find tenants yourself or take care of the day-to-day property management yourself, you will need to register and be licensed.

If you haven’t already been on the Landlord Accreditation Wales training course, you will need to do landlord training before being granted a licence. Currently, the required training can only be attained by attending a one-day course in person, but there will be online training available in the New Year.

Rent Smart Wales and Section 21 Notice

 No section 21 notice may be given if:

  • The landlord is not registered, or
  • The landlord is not licensed and the landlord has not appointed a person who is licensed to carry out all property management work in respect of the dwelling on the landlord’s behalf

Ouch! Landlords May Have Rent Stopped or Have to Repay Tenants

Yes Landlords may have their rent stopped via a Rent Stopping Order or your tenant may apply for a Rent Repayment Order! What is even more worrying the person who is alleged to have committed the offence does not have to have been charged or convicted of an offence for a rent stopping order to be made?

The effect of a rent stopping order is to stop, for a period, any rent payable by a tenant. Legally the tenant will be considered to have paid this rent and no rent arrears claim could be made.

Renting Homes Wales Bill

 The Renting Homes Wales Bill has been passed by the Welsh Assembly and is likely to receive Royal Assent in December 2015. The main points of the bill include:

  • All tenancies and licenses are replaced by two “occupational contracts”
  • Tenants will have a minimum 6 month occupation period
  • Landlords to ensure property is fit for human habitation
  • Joint tenancies will be treated differently if joint tenant wishes to leave tenancy the tenancy will continue in remaining tenants sole name

One major benefit stands out for Landlords. The Bill will enable landlords to repossess an abandoned property without needing a court order!

Also there may be trouble on the horizon for HMO landlords across Cardiff. On Friday 6 November 2015, the government published a consultation paper on changes to mandatory Houses in Multiple Occupation (HMO) licensing in England. A new definition for HMOs could bring in smaller properties under mandatory licensing.

The Government is also considering a new national minimum room sizes along the lines of the statutory overcrowding standard in Section 326 of the Housing Act 1985 of 6.5 Sq. m for single rooms and 10.2 Sq. m for double rooms, here is a link to article complied by Residential Landlords Association

It seems that small landlords are under full scale attack and 2016 will be a challenging year for landlords, tenant and PRS as a whole especially in Cardiff where Universal Credit, Rent Smart Wales and Renting Home Wales Bill will all start to shape the PRS.

Diary of a HMO Landlord: Noise, Leaks, Squeaks & Rubbish

After my initial Diary of a HMO Landlord post all was calm and foolishly thought to myself I’m not going to have much to write about this week, but how things change!

So what’s been happening?

I have had the electricians in at one house rewiring each room so they are on their own circuit and meters fitted so I comply with The Heat Network (Metering and Billing) Regulations 2014 and this also ensures tenants are accountable for their usage in their own rooms, all went well until a phone call the next morning about the central heating making a “gurgling” noise. Turns out one of the water pipes had fractured when the wires were being pulled through, which resulted in a lovely water feature in one of the down stairs rooms. On a positive note double boarded ceilings are still intact so it was just mopping up water, drying out carpets and getting the plumber around to solder the damaged pipe.

New tenants moved into a property, former residents of the Salvation Army homeless hostel who are very happy to have a clean and safe environment to live in and have put up with living on the streets but couldn’t put up with the squeaky fire hinges on their new door, so I treated them to a squirt of WD40.

As mentioned the new tenants love the free broadband access, but in other houses it can prove to be a pain in the arse. We all know broadband is a must especially for students and professional working tenants, but there is only so much a landlord can do as I DO NOT provide the service. One house has had intermittent service due to engineering works being carried out by the ISP but still tenants moan on at me and it came to a head when I get calls at 10PM moaning about the service Virgin Media supplies, as you can imagine I wasn’t best pleased especially when my phone ringing woke our baby!

Had the usual calls from Cardiff Council Housing Options Team enquiring what property I have available this week, also chasing “top up” from tenants that have Overpayment Recovery taken from their Housing Benefit Award, the latest tenant having a deduction of £6.50 per week from their Housing Benefit award to pay back about £5000 in overpayments.

At the other end of the spectrum, chasing professional tenants for their rent, the ones who never set up a standing order so the usual text each month to remind them to pay their rent on time and set up the standing order for next month, which they never do.

Rubbish is always a common theme encountered by HMO Landlords up and down the country, tenants don’t seem to like recycling and if they do manage to put rubbish in large black wheelie bins provided by Cardiff Council they don’t like to wheel them out onto the pavement for fortnightly collection so we soon get a build-up of black bags, I don’t know what is going to happen when Cardiff Council half the size of their black bins, be rubbish everywhere!

Finally my favourite aspect of being a HMO Landlord the legalities of the Assured Shorthold Tenancy agreement and tenants serving “Notice to Quit” when they are on a Statutory Periodic Tenancy (SPT), affectionately known as a “month rolling”, or not serving as the case may be. All tenants love it when their fixed term comes to an end and they have the flexibility of a SPT but none of them seem to like the fact that the tenancy runs from one rent day to the next and they have to serve their “Notice to Quit” in writing, giving at least one months’ notice and ending on a rent day. This important point is highlighted when the tenant first signs the AST, also it is on the notice board and once again pointed out once their tenancy moves from a fixed term to a SPT, do they play by the rules, no way!

The latest one believes it is ok to text me on Saturday evening of a Bank Holiday weekend asking if they serve notice this evening, will they still have to pay their next rent payment, then continue to barrage me with text messages and emails up until 7AM today saying they are not paying rent whatever happens because they have found a new place. A phone call this morning has cleared up the situation.

And finally this afternoon I receive a call from the next door neighbour of a property I own. There seems to be an issue with noise, the neighbours words were “it sounds as if they are kicking a football against the party wall all night long”. Next on my “To Do List” find out what or who is creating the continual thudding! I will let you know how I get on.

Feel free to ask any questions via my blog or complete the form below if there are any specific HMO topics you would like me to discuss.

Diary of a HMO Landlord

I have been involved in property investment since 2002, but started getting drawn towards Multi Let property and Houses of Multiple Occupancy (HMO) from around 2008 as the penny dropped that buying for capital appreciation and my retirement was all well and good, but I needed to pay for today.

So in 2008 I started my Houses of Multiple Occupation (HMO) education, I read books, visited internet forums and attended as many free webinars as I could enabling me to slowly piece together the HMO puzzle until I felt confident enough to make my first purchase at auction in 2010.

So for the last 5 years I have been actively purchasing and refurbishing property in Cardiff to create both professional house shares and also multi let property for Housing Benefit tenants, I know everybody says I am mad!
As you can imagine the last 5 years have been quite intense carrying out numerous refurbishment projects and one hell of a steep learning curve dealing with a broad spectrum of tenants, but 5 years later I am still here and loving what I do.

Why this post?

I have learnt so much but until now haven’t had the time to share but if all goes well I intend to share my knowledge in the form of a weekly “Diary of a HMO Landlord” entry which will hopefully provide readers with a real insight into what it is to be a HMO Landlord.
Just in the last two weeks I have had to rod manholes full of crap, had meeting with charities completed numerous tenancies, Housing Benefit forms, been a social worker and put up with the usual of tenants thinking they can terminate their tenancy whenever they like!

I love being a HMO landlord, but I don’t think you could write a job description for the role as there are so many different elements you have to be aware of.

Anyway that’s enough rambling for now; I hope you enjoy my future “Diary of a HMO Landlord” posts and please feel free to ask any questions via my blog or complete the form below if there are any specific HMO topics you would like me to discuss.

We Accept Housing Benefit, DSS & Cardiff Local Housing Allowance

We have a variety of houses, flats, studio apartments, flatlets and rooms available across Cardiff that accepts Housing Benefit. All you have to do is complete the short form and one of the team will call you to discuss your Cardiff Local Housing Allowance rate entitlement and what properties we have to suit your current situation and needs.