Monthly Archives: January 2015

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By Judith Loeffler

Pressure

 

The pressure on landlords to improve their rental properties is increasing with properties with a low energy efficiency rating becoming non-letable as of 2018; this is likely to apply to properties with EPC energy efficiency ratings of F or G, estimated to be around 13% of properties in the private rented sector according to the English Housing Survey.

Ways to improve the energy efficiency of a property are wall, roof and floor insulation, double glazing of windows, choice of heating and hot water solutions as well as low energy lighting. This comes at a time when organisations like Citizens Advice Bureau lobby for tenants to get their money back if a landlord is not fulfilling their repairs obligations. CABs report Renting Uncovered states that ‘people are now better protected when buying a toaster than when renting a flat, while taxi drivers are more tightly governed than the landlords who let – and have access to – our homes.’

With Labour calling for stricter regulation of the private rental sector with extended tenants’ rights, it is certain this topic will continue to be in the public debate prior to the general election.

By Judith Loeffler

SDLT

 

During his autumn statement George Osborne announced an unexpected reform to Stamp Duty Land Tax (SDLT).

Previously there were 5 bands of SDLT between 1% and 7%, depending on the total value of the property purchase price. As of 4th December 2014 the slab structure for SDLT has been replaced with a structured rate comparable to the income tax bands – HM Treasury explains: ‘Under the old rules, you would have paid tax at a single rate on the entire property price. Now you will only pay the rate of tax on the part of the property price within each tax band – like income tax.’ The different rates to be applied on the different parts of the property purchase price are

  • up to £125,000 – 0%
  • £125,001 – £250,000 – 2%
  • £250,001 – £925,000 – 5%
  • £925,001 – £1,500,000 – 10%
  • above £1,500,001 – 12%

In practice, this means on a £275,000 property purchase price no SDLT has to be paid on the first £125,000, 2% has to be paid on the next £125,000 and 5% has to be paid on the last £25,000 making it a total SDLT bill of £3,750. This compares to a SDLT bill of £8,250 under the old regime. Anyone purchasing a property below the value £937,500 will be better off under the new rules with high value property buyers being put in a worse financial position than before.

Whilst for now this is applied equally across the UK, Scotland will have a different system from April 2015 when stamp duty is being replaced by Land and Building Transaction Tax (LBTT).

By Judith Loeffler

Capital gains

 

HMRC’s Property Sales campaign in 2012/13 was an opportunity for  buy to let landlords who had not declared Capital Gains Tax (CGT) on property sales to come clean. With the deadline for voluntary disclosures having passed during the 2013/14 tax year, HMRC is now using the information collected to target investors who might not have used this opportunity.

ThisIsMoney reports that ‘HMRC says it holds a database for all property sales that attract stamp duty land tax and will crosscheck this with people’s tax records to establish if they should have paid CGT – and whether they have done so.’  With HMRC estimates that only 1/3 of landlords who own second properties are registered with them, the Telegraph’s assessment is not surprising: ‘HM Revenue & Customs’ tax inspectors obtained £136m as a result of probes into underpayments of capital gains tax for the year 2013-14. This marks a 24pc increase from the previous year, when £110 million was collected.’

We covered the Let Property campaign by HMRC in our August blog last year – this one is aimed at encouraging landlords who have failed to declare rental income to make voluntary declarations. This campaign was announced in September 2013 and is expected to run for at least 18 months. In the meantime, HMRC are collecting information on rental incomes from – amongst others – lettings agents for future investigations.