Operating in the Private Rented Sector: An Introduction

Neil Young, CEO

Neil Young, CEO

Young Group’s latest biannual PRSupdate publication will be landing through letterboxes just in time for the Easter weekend.

The theme of this new PRSupdate publication is Operating In The Private Rented Sector; timely, since over the past six months my fellow Young Group Directors and I have seen a noticeable change in discussions about the Private Rented Sector (PRS).

No longer is the conversation dominated solely by talk of acquisition, whether land or existing stock.

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Stamp Duty Land Tax (SDLT) for Tenants

Stamp Duty Land Tax (SDLT)

Stamp Duty Land Tax

Stamp Duty Land Tax (SDLT) isn’t only confined to sales.  It’s important that tenants remember that they could have an obligation to pay SDLT when renting a property.

SDLT is due on rents that exceed £125,000, cumulatively, during tenancies and (unlike SDLT for sales transactions) is charged at 1% on any amount over and above that threshold, not on the entire cumulative amount of rent.

Here is some additional information, and a link to the HM Revenue and Customs (HMRC) website, that you may find useful.

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DCLG’s consultation on property conditions in the PRS

DCLG's consultation on property conditions in the PRS

DCLG’s consultation on property conditions in the PRS

Following the 2013 call for evidence on Private Rented Sector quality, regulation and levels of rent (which Young Group responded to), the DCLG has called for further comment on  its Policy Paper ‘Review of Property Conditions in the PRS’, covering a raft of issues, including:

  • Rights and responsibilities of landlords and tenants
  • Retaliatory evictions
  • Illegal evictions
  • Safety conditions
  • Licensing of rented housing
  • Housing Health and Safety Rating System

As an organisation with a long-standing vested interest in the Private Rented Sector, Young Group wanted to ensure that our experience and views were shared.

Our full response can be found here but we have included a few extracts in this blog post to highlight our stance on the issues raised.

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In Conversation with… David Lawrenson

David Lawrenson

David Lawrenson

There’s a plethora of leading figures in the property, investment, finance and charity sectors who we’re regularly in conversation with, many of whom are guest authors for PRSupdate. If you would like to feature in this series, or to suggest someone who might, please get in touch through our contact us page or let us know on twitter. Why not take a lucky dip into our In Conversation archives and discover:

Today we speak with David Lawrenson, Director of LettingFocus.com.

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Capital Gains Tax Targets Overseas Investors

HM Revenue and Customs

HM Revenue and Customs

This article is for information purposes only and in no way constitutes advice.

From April 2015 there will be changes to the current Capital Gains Tax (CGT) rules for overseas sellers. Currently the disposal of UK property by a non-resident individual is not normally subject to UK CGT, while UK residents pay 18% of the profits for basic rate tax payers and 28% for higher rate payers.

However, it is not yet clear exactly how the new rules will be implemented as the Her Majesty’s Revenue and Customs (HMRC) have yet to release the consultation documents. Until then, we will not know exactly what is being proposed.

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The Private Rented Sector Needs Stock And Stability

Harry Downes

Harry Downes

London is on a roll and, while this is great news for the economy, one of the consequences is that housing demand continues to outstrip supply. While house builders are doing their best to play catch up, much of the new stock being brought to market is outside the price range of young buyers, whose only option is the Private Rented Sector (PRS).

According to the Greater London Authority (GLA), the PRS grew by 83% between 2000 and 2010, which has led to one in four households being rented. Demand on private rentals is at its highest since the 1970s, yet the supply is mostly sourced from existing stock, as opposed to new builds. Currently two thirds of landlords own fewer than five properties, and a significant number have been classed as ‘rogue landlords’. This is not unconnected to the fact that approximately one third of PRS properties in London fail to meet the ‘Decent Homes Standard’ as set out by the Department of Communities and Local Government.

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Minister calls for a fairer Private Rented Sector

Kris Hopkins has asked for solutions to certain PRS problems.

Kris Hopkins has asked for solutions to certain PRS problems.

The Housing Minister, Kris Hopkins, has urged landlords and tenants to come forward and offer their views on what more the government can do to improve the Private Rented Sector (PRS) as part of his drive to create a fairer and more flexible PRS.

The minister wants to raise the standards of property conditions and root out “rogue” landlords.

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British Property Federation: Stop flipping property

British Property Federation

British Property Federation

The British Property Federation (BPF) wants the government to set up a formal covenant for Private Rented Sector (PRS) housing to stop developers from “flipping” properties to make short-term gains.

A report by the BPF, and co-authored by law firm Addleshaw Goddard, will be launched at tomorrows BPF Residential Conference in London, which Young Group is a sponsor of. The report will recommend owners agree to hold PRS property for a minimum number of years to “help assuage the fears of councils that developers could quickly flip products”.

London has a target of 5,000 new PRS homes a year, and a 15-year covenant on homes. Peter Hardy, partner at Addleshaw Goddard, said 2014 “could well be the year in which a professional rented sector finally emerges in the UK”.

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House building data (December quarter 2013)

House Building

House Building

The latest data on House Building in England, for December quarter 2013, have been released by the Office for National Statistics. The statistics in the release are figures on new build housing starts and completions throughout England.

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Overhaul of Bank interest rate policy

Bank of England

Bank of England

Mark Carney, governor of the Bank of England (BoE),  has overhauled his guidance policy on interest rates as part of his latest inflation report. The governor had originally stated that a rate rise would not happen until there had been a fall in unemployment, but this policy has now been reviewed after the jobless level fell faster than expected.

The governor has reiterated that the BoE will take into account a number of economic factors before raising interest rates, these indicators would include wages, productivity and spare capacity within the economy.

Mr Carney was quick to point out that when rates increase, they will “only increase gradually”.

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Bank of England in no rush to raise rates

Bank of England

Bank of England

The UK unemployment rate has dropped to 7.1%, close to the point at which the Bank of England (BoE) has said it will consider raising interest rates.

Data released by the Office for National Statistics shows that the number of people out of work fell by 167,000, to 2.32 million, in the three months to November.

The BoE said it would consider increasing the base rate, from its current historic low of 0.5%, when unemployment hit 7%.

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Boris Johnson announces alterations to the London Plan

Boris Johnson

Boris Johnson

Boris Johnson, the Mayor of London, has announced plans to deliver tens of thousands of new homes and jobs in the capital through the creation of four new opportunity areas.

As part of a package of amendments that the Mayor has made to the previously published 2011 London Plan, which sets out the future development of the city,  the London boroughs of Southwark, Bromley and Harrow will see further investment to attempt to address the issue of the current population boom.

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Is there a need for longer term tenancies in the PRS?

Jeremy Leaf

Jeremy Leaf

In October 2013, the Department of Communities & Local Government (CLG) issued their “Improving the Rented Housing Sector” report, otherwise known as the Tenants’ Charter.

The report demonstrates a commitment by the government to increase the quality and choice in the Private Rented Sector (PRS). It is hoped that it might also result in increased investment and improved consumer protection against rogue landlords and letting agents.

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In Conversation with… Jeremy Leaf

Jeremy Leaf

Jeremy Leaf

There’s a plethora of leading figures in the property, investment, finance and charity sectors who we’re regularly in conversation with, many of whom are guest authors for PRSupdate – and here we share more about them, their roles, priorities and backgrounds. If you would like to feature in this series, or to suggest someone who might, please get in touch through our contact us page or let us know on twitter.

Why not take a lucky dip into our In Conversation archives and discover:

Today we speak with Jeremy Leaf (Principal at Jeremy Leaf & Co) who is the ‘Focus Feature’ author in January’s PRSupdate newsletter.

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Autumn Statement 2013: Key Information

Chancellor George Osborne

Chancellor George Osborne

Chancellor George Osborne used his Autumn Statement to update MPs, and the nation, on the state of the economy and the government’s future plans.

The biggest news from the Autumn Statement was that the growth forecast for this year has increased from 0.6% to 1.4% and has also been revised up for next year from 1.8% to 2.4%.

Revised figures showed that in 2008-09, under the leadership of Gordon Brown, UK GDP declined by 7.2% and not 6.3% as had been previously thought. This is the equivalent of £112bn.

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