Monthly Archives: August 2014

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By Judith Loeffler

slow growth

Whilst for property sales prices it sometimes seems the sky is the limit, the rise in private rental prices has been very muted over the last 12 months: Figures released by the Office for National Statistics for April to June 2014 indicate that
  • Private rental prices paid by tenants in Great Britain rose by 1.0% in the 12 months to June 2014
  • Private rental prices grew by 1.0% in England, 1.1% in Scotland and 0.2% in Wales in the 12 months to June 2014
  • Rental prices increased in all the English regions over the year to June 2014, with rental prices increasing the most in London at 1.4%.

This means rents in the private rented sector have been rising by less than inflation across the board. Looking at the broader context, rents have risen below inflation in the majority of individual months since January 2010. Over the 52 month period since the start of 2010 there were 33 months where inflation was higher than rent rises. Rents rose more quickly than inflation in only the remaining 19 individual months.

 

By Judith Loeffler

Labour TO USE

As political parties are getting ready for next year’s general election, Labour has unveiled some of its key ideas related to the rental sector over the last few months. To tackle the ‘cost of living crisis’ Ed Miliband announced that Labour would

  • cap rent increases in the private sector
  • push for longer, securer tenancies
  • scrap letting fees to be paid by tenants

On capping rent increases BBC reports ‘Mr Miliband said tenants need greater protection and predictability regarding their monthly outgoings. (…) While landlords would still be able to increase what they were charging following changes in market conditions, there would be an ‘upper ceiling’ to prevent rent hikes out of step with the overall market.’

The intent is furthermore to extend the default tenancy from one to three years. After an initial six month probationary period, tenancy agreements are proposed to run for a further 29 months. Landlords would only be able to terminate the contract with a 2 months notice if the tenant breached their agreement, the landlord needed to sell, use the property for family purposes or if the property was to be refurbished.

Whilst housing charity Shelter welcomed these proposals, the Institute of Economic Affairs said rent controls would distort the market. Ian Potter, the Managing Director of the Association of Residential Letting Agents (ARLA) states: ‘I am deeply concerned that Labour has today announced a series of ill-thought through proposals which will have an adverse effect on tenants in the private rental sector. The proposals show a real lack of understanding of the rental market.’

By Judith Loeffler

hmrclogo

Letting agents have been requested by HM Revenue and Customs (HMRC) to disclose information on rents collected for both let only and managed properties. Specifically, all agents are required to submit the name and address of each landlord for whom rents were collected, the amount of the total gross rent collected from the tenant for the landlord for the year ended 5 April 2014 and the address of the let property to which the rents relate. This information is to be submitted by the 10th September 2014. It is part of a wider campaign of HMRC closing in on landlords with undeclared buy to let income to counteract assumed widespread tax evasion on property lettings, whether intentional through inflated claims on expenditure or unintentional through a lack of knowledge.

The Let Property Campaign run by the tax authorities gives landlords an opportunity to bring their tax affairs up to date by telling HMRC about undeclared income through a voluntary disclosure. Officials are not just obtaining data from letting agents but also from local authorities and other bodies to track down those who don’t come forward. The tax office has sent letters to thousands of buy-to-let investors it suspects of bending the rules in order to pay less tax asking them to make contact or run the risk of a large fine or a criminal investigation. Landlords will have 30 days to respond prior to any action being taken.

To help landlords fully understand the legal requirements and avoid tax evasion through lack of knowledge, HMRC has issued a Property Rental Toolkit intended to give further guidance.