UK Landlords Advised to Be More Accurate Over Property Decoration

This article by the Property Wire on October 1st, 2013 the failure of UK landlords to protect themselves from redecoration disputes.

Landlords in the UK are failing to protect themselves from redecoration disputes because they are not accurately recording the condition of their property at the start of a new tenancy, it is claimed.
 
They are also not being clear with tenants on issues such as what constitutes a ‘neutral’ colour, according to the Association of Independent Inventory Clerks (AIIC).

In any dispute involving redecoration costs where the check out evidence shows it is definitely needed, one of the first things an adjudicator will do is look at the check in inventory to see what state the décor was in when the tenant took up residence. The next investigation is how long the tenant has lived at the property.

Industry guidance indicates landlords should expect to decorate every three to five years. It is also suggested that if a tenant has lived in a property five years or more, and they are not required by a contract to carry out redecoration themselves, there is little prospect of success in a claim for costs, where the tenant hasn’t caused the need for redecoration.

‘As a general rule, responsibility for redecorating lies with the landlord. However, lots of disputes are presented where parties agreed to the tenant redecorating, but the precise details were not clearly defined. Landlords can be very shocked to find the walls have been painted jet black or bright red, rather than the desired neutral magnolia or white,’ said Pat Barber, chair of the AIIC.

She explained that the AIIC gets involved with numerous disputes over décor. Recent cases feature a bedroom, which the tenant had been given permission to redecorate. However, he created Lion King murals on all walls. At the end of the 12 month tenancy, the landlord needed to re-let the property, but this room was now firmly designated as a small child’s room due to the décor. As a result, although the walls were in a really good condition, the tenant had to pay for a complete redecoration.

Another case involved four mature and professional sharers. One of them decided to repaint the lounge with the landlord’s permission and a stipulation that it had to be in a neutral colour. At the end of the tenancy, the lounge had been repainted in a dark purple, instead of the required magnolia as agreed.

Fortunately for the landlord the inventory clearly stated the original colour and condition and even though the original décor had been fairly marked, the tenants were made to pay for complete redecoration to return the room to the original neutral colour. The adjudicators agreed with the landlord that purple walls would impair the search for new tenants.

‘Even when a tenant repaints in the correct or authorised colour scheme, there are still problems. We see instances of bad paint application, very patchy walls, paint spills on fixtures and fittings, carpets and curtains, all of which the tenants will be responsible for at the end of the tenancy,’ said Barber.the AIIC has put together to help agents and landlords prevent a dispute over décor. This includes ensuring that there is a detailed account of the décor with description and photographs at check in and making sure the tenancy agreement stipulates clearly that any changes to the property must only be made with the landlord’s permission.

If tenants request to redecorate any areas it should be made clear, in writing , with any authorised colour schemes and any permission given to tenants to redecorate should also include a clause stating the landlord’s right to return the room to its original colour if unauthorised paint colours are used by the tenants.

 Article Source: http://www.propertywire.com/news/europe/uk-landlords-decor-disputes-201310028300.html

UK Taxman Launches New Crackdown on Residential Landlord Payments

This article by the Property Wire on September 25th, 2013 reveals how private residential landlords are being advised to put their house in order as the UK's taxman has announced a crackdown on unpaid taxes.

It is estimated that around £500 million is owed by landlords in unpaid tax and HMRC has launched a campaign to target buy to let, student and holiday let landlords who it believes are underpaying or deliberately not declaring rental income.

Residential landlords can expect a knock on the door during the Let Property Campaign which builds on previous initiatives aimed at plumbers and electricians, building contractors, takeaway restaurants, motor traders and many other sectors that have collectively seen HMRC collect over £800 million in unpaid tax.

The so called ‘amnesty’ will last 18 months and failure to come forward could result in criminal proceedings. ‘All rent from letting out a residential property or holiday home has to be declared for income tax purposes,’ said Marian Wilson, head of HMRC Campaigns.

‘We appreciate some people will have made honest mistakes, and some may not be fully aware that the rent from a property is taxable, and that is why it always makes sense to talk to us so we can help,’ she explained.

‘It is always cheaper to come forward voluntarily and pay the tax you owe, rather than wait for HMRC to come calling. Telling HMRC about your tax liabilities is simple and straightforward, and help, advice and support are available. The message for all landlords owing tax is simple; it is better to come to us before we come to you,’ she added.

Stephen Barratt, private client tax director at accountants James Cowper said landlords should not be wary and take it as an opportunity to put their tax affairs in order.

‘This campaign is designed to give residential landlords the opportunity to come forward and disclose any unpaid or under paid tax.  This is a window of opportunity to get tax affairs in order before HMRC comes knocking,’ he explained.

He pointed out that in targeting residential landlords, HMRC recognises that there will be instances where individuals have either deliberately not declared rental income on let properties or made an honest mistake. This distinction is important when looking at what penalty might be imposed.

‘HMRC is using increasingly sophisticated software to identify those who are not paying sufficient tax and the chances of going undetected are therefore diminishing. This campaign offers landlords the opportunity to come forward voluntarily and pay any unpaid tax, interest and penalties at a preferential rate,’ said Barratt.

‘Landlords who continue to close the curtains and hide behind the sofa can expect HMRC to find them and enforce much stiffer penalties or even criminal prosecution,’ he added.

The advice from the firm for residential landlords who believe that they may have an outstanding tax liability is not to approach HMRC directly without first speaking with an accountant or tax adviser as HMRC is an increasingly tough negotiator and without detailed knowledge of the tax system larger tax bills and penalties than necessary might be charged.

It also says landlords should not ignore this clampdown as it is possible that HMRC is already aware of landlords’ financial details.  Also, if HMRC make the first move because no voluntary disclosure has been made, penalties can be expected to be more severe.

Article Source: http://www.propertywire.com/news/europe/uk-landlords-tax-crackdown-201309258276.html

West Bromwich Raises Interest Rates for Buy-to-let Mortgage Borrowers

This article by Rupert Jones of theguardian on September 23th, 2013 states that borrowers with tracker mortgages will see their rate rise by two percentage points.

Thousands of customers holding buy-to-let mortgages with West Bromwich building society will see their monthly costs rise sharply after the terms of their deals were changed.

Angry borrowers are already pledging to fight the move after it emerged that about 6,700 customers will be hit by the society's decision to increase their interest rates by two percentage points on 1 December. This is despite the fact that the Bank of England base rate, which these mortgage deals track, has been at 0.5% since March 2009 and seems unlikely to rise for at least two years.

Some of those affected – for example, those currently paying a rate of 1.49% – will see their mortgage rate more than double at a stroke.

The change follows a similar move earlier this year involving 13,500 Bank of Ireland UK customers, which prompted an outcry and later led to the bank cutting the numbers of people affected.

The West Bromwich said the 6,700 borrowers were all BTL landlords with mortgages that track the base rate. The affected customers took out their deals from early 2006 onwards and are on a variety of different interest rates. They all signed up with the West Bromwich Mortgage Company, a division of the building society.

A spokesman for the society said: "The West Bromwich has advised a number of BTL borrowers who have tracker mortgage accounts with the West Bromwich Mortgage Company that their rates of interest will be increasing by 2% from 1 December 2013. All borrowers affected are landlords of multiple property portfolios.

"These changes, which are permitted under the terms and conditions of the accounts, are a reflection of market conditions and the need for us to carry out our business prudently, efficiently and competitively."

Customers have already started to post comments on websites. On the Property118 website Gavin Ewan said: "I will be phoning them on Monday to complain, as there is nothing in my acceptance of offer suggesting that they can increase it. Basically it is a tracker BOE [Bank of England] base rate +0.99%, ie 1.49% until the term end (25 years from November 2006)."
He added: "I expect there are going to be a lot of very unhappy people."

Another, Shaun McAllister, said: "I shall be fighting them all the way."

In February 2013, Bank of Ireland prompted fury after revealing it was triggering a "special condition" clause in loan agreements that allowed it to increase the "interest rate differential" on some of its UK base rate tracker mortgages.

The changes would have affected about 13,500 residential and BTL customers. However, in May the bank wrote to 1,200 of the borrowers to advise them they would not face the rise in payments after all, following a review of customer complaints.

Article Source: http://www.theguardian.com/money/2013/sep/23/west-bromwich-interest-rates-buy-to-let-mortgage

Region’s Buy-To-Let Property Boom Will Last

According to the reports by Knighht Knox International, a leading property firm, the buy-to-let property boom is here for the long haul as shown on this article by lep.co.uk on August 22, 2013.

The buy-to-let property boom is here for the long haul, reports leading property firm Knight Knox International.

The North West is one of the best-perfoming areas, with Manchester and Liverpool particularly buoyant, latest figures show. More purpose-built student accommodation has been heralded as the answer to an increasing demand for rental stock.

The number of first-time buyers in England has now fallen to 200,000 per year, a staggering drop from 600,000 in 1999 according to Jones Lang La Salle.

Although rewards are strong for landlords investing in the buy-to-let market across the country, LSL confirmed in their buy-to-let index for April 2013 that rewards were in fact the strongest in the North West, where yields were highest.

The index documents that the North West produced yields of 7.2 per cent, topping London’s 5 per cent.

The average North West rent was £568, outshining the average rents of near counterparts Yorkshire and the North-East.

Article Source: http://www.lep.co.uk/news/business/region-s-buy-to-let-property-boom-will-last-1-5976941