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EasyProperty and the Arsehole of Agents


We would like to issue a correction notice and offer easyProperty a full and unreserved apology. In an article published on 18th September 2014 reporting on the launch event for easyProperty we reported incorrectly ” the crowd was told: “We are looking at the arsehole of agents.” we are happy to correct that this was in fact never said by any of the presenters, in what was a very professional presentation launching easyProperty.com and understand the distress caused by this error.
We apologise unreservedly for this error and for any distress or reputational damage to The easy Group , easyProperty, its directors ,shareholders and staff.
Commenting Rob Ellice, CEO easyProperty, said: “We are very happy that propertyindustryeye has apologised unreservedly and corrected its article  which we accept. Our launch event was a fantastic milestone in our business and we wanted to ensure this was not spoilt by inaccurate reporting “
Commenting Ros from propertyindustryeye said: “Having reviewed video of the event in full we are happy to issue a formal correction and apology and set the record straight. We pride ourselves on our reporting but in this instance we got it wrong.”
Now having read the original article I don’t remember the phrase as being of significance, but seeing the correction it sounds hilarious. I really wish I could now see the original report, and also understand how it was misheard. It sounds fabulous and far more likely to get EasyProperty great publicity than their stuffed shirt PR launch!

Which Flats Count Towards a Licensable HMO?

Licensable HMOs – rather an esoteric subject which turns out to be rather complex. As complicated as it is, a Landlord also has to get it right because failing to license an HMO carries draconian penalties:

  • A fine and costs – the legislation says up to £20,000 but prosecutions are generally brought for multiple offenses, so the biggest fine I have heard about personally was a Blexley Landlord who had to pay £110,000 + £5000 costs.
  • Rent Repayment Order – Tenants and Local Authorities are entitled to have their rent & Housing Benefit returned to them.
  • No Eviction Rights – If a property is unlicensed a Landlord cannot serve legal papers such as S21 Notice, or proceed with evictions.

I think that this illustrates that the issue is more than theoretical and Cotswold District Council established in Court :

This case brought by Cotswold District Council is of particular importance because it clarifies the ambiguous legislation that defines which storeys within a building should be counted when determining if a house in multiple occupation, or part of it, comprises three storeys or more.

A legal judgment on the case given on December 21st 2007 at Gloucester confirmed that a self-contained ground-floor flat at a property does in fact count towards the total number of storeys. This clarified a grey area within the legislation.

However 5 years later another court made what I consider an inconsistent ruling:

when counting storeys in a building for HMO purposes it is not necessary to consider other residential storeys unless they are actually part of the HMO being considered. It is necessary to consider business premises.

And now we have yet another oddity as the above cases relied upon 2004 Housing Act defines a Mandatorily Licensable HMO as:

a)the HMO or any part of it comprises three storeys or more;

(b)it is occupied by five or more persons; and

(c)it is occupied by persons living in two or more single households.

It additionally defines which parts of a building should be defined as a storey where there might be some doubt or argument as to whether they are included in the living accommodation:

3) The following storeys shall be taken into account when calculating whether the HMO or any part of it comprises three storeys or more—

(a)any basement if—

(i)it is used wholly or partly as living accommodation;

(ii)it has been constructed, converted or adapted for use wholly or partly as living accommodation;

(iii)it is being used in connection with, and as an integral part of, the HMO; or

(iv)it is the only or principal entry into the HMO from the street.

(b)any attic if—

(i)it is used wholly or partly as living accommodation;

(ii)it has been constructed, converted or adapted for use wholly or partly as living accommodation, or

(iii)it is being used in connection with, and as an integral part of, the HMO;

(c)where the living accommodation is situated in a part of a building above business premises, each storey comprising the business premises;

(d)where the living accommodation is situated in a part of a building below business premises, each storey comprising the business premises;

(e)any mezzanine floor not used solely as a means of access between two adjoining floors if—

(i)it is used wholly or mainly as living accommodation; or

(ii)it is being used in connection with, and as an integral part of, the HMO; and

(f)any other storey that is used wholly or partly as living accommodation or in connection with, and as an integral part of, the HMO.

These are the clauses which caused so much heartache in the previous 2 cases.

If you have an HMO with 2 principle storeys of living accommodation on the 1st and 2nd floor, but a private access stair from the ground floor, Local Authorities have been reading this as a 3 storey mandatorily licensable HMO. The situation translates directly to the specific example given in the Housing Act where it talks about counting a basement if it is the main entrance to the HMO, so I agree with that.

Link to Original Story

Original Story

However in an odd and contradictory development a recent judgement at Bristol Magistrate’s Court District Judge Zara ruled that a property on the upper two floors of a two story building, accessed by a private staircase leading from the ground floor is not a Licensable HMO. Bristol City Council believed that the layout at the premises was such that the ground floor hallway and first floor landing associated with the maisonette constituted a storey, thus making the premises liable to licensing. The judge however ruled that the areas concerned only formed part of a storey. The ruling means that Local Authorities that have two storey maisonettes with private means of access within their areas may now face claims for the return of licensing fees.

 

Flats to Rent in 2020


Labour Government

I thought it would be interesting to look to the future and see how we will be renting flats in 5+ years time. There are two certainties that we can predict – firstly there won’t be a recession, it beggars belief that we could go a decade or more with a stagnant economy, so I think that it will be safe to assume some sort of economic recovery will have been underway. Secondly there will be a change of government in 2015 – whether the coalition implodes, explodes, or simply fades away I think it is a safe assumption that we will NOT have a centre right government running the show. I will readily concede that it’s not clear whether we will lurch to the left or right, but I think the most likely outcome in 2015 will be a labour government. Helped by three recent publications of the Labour Party Policy views on Housing we can see what renting in the next decade will be like.

Private Rental Sector (PRS) Center Stage

There are some very big surprises – not least that the documents lay out a future for housing which would surprise a labour supporter of the 70s 80s or 90s – the Private Rental Sector (PRS) is center stage in providing homes. Labour is determined that everyone should have a home at a price they can afford, labelled A One Nation housing policy. It intends to achieve this by supporting renters and the majority who are responsible landlords, ensuring that they are not undercut by a minority of rogue landlords. However Labour also clearly sees the PRS in it’s current form as broken, and not working.

Labour acknowledges that most people want to own their own home, however Britain faces the biggest housing crisis in a generation and therefore many people will take longer to buy and will be renting for much longer than in the past. As a consequence, the private rented sector under Labour will play an ever increasing role in meeting housing need.

Private Rental Sector (PRS) Broken

Labour sees the PRS as not fit for purpose. It sees private renting as unaffordable, unstable and subject to poor conditions and bad management.

  1. It sees a need to tackle unscrupulous letting agents and end rip-off charges.
  2. It also wants to give renting families private rented homes that are affordable and stable, providing the predictability and security that allow families to plan ahead.
  3. It considers that there are too many bad landlords who prey on vulnerable tenants and that 35% of private rented stock that is non-decent.
  4. It also sees that the £8.6billion a year paid in Housing Benefit is going to private sector landlords who provide poor and sub-standard housing that ultimately serves to create further socio-economic costs for the public purse.
  5. It also sees amateur landlords who are well meaning but unaware of their responsibilities as a problem.

 

Private Rental Sector (PRS) Solutions

Across the 3 policy documents there are some clear recommendations which are in part already being implemented by some local authorities, and are “Good to Go” as soon as the new government hits the road:

1. A National Register of Landlords

Interestingly HMRC is specifically associated with the register, and no doubt a lot of links will be tied up so that right to operate as a landlord, and use the legal system to recover debts, be paid housing benefit, recover possession of a property will be linked to being on the register, and paying tax on rental income (Landlord Tax Evasion is estimated at £500,000,000).

2. A National Private Rented Property Standard

This is a change from the Housing health and safety rating system (HHSRS) philosophy introduced in the 2004 Housing Act which moved away from prescribed standards, and made the Landlord responsible for assessing and implementing an appropriate level of Health and Safety. The review specifically identifies:

  1. Tenancy deposits
  2. Energy efficiency
  3. Property conditions
  4. Response times and repairs
  5. Improved local enforcement intended to make it easier for local authorities to introduce licensing schemes

3. Tougher sanctions on bad landlords

  1. Reviewing penalties and sentencing guidelines (expect major increases).
  2. Stamping out retaliatory eviction.
  3. Removing bad landlords from the national register so they can no longer operate.

4. Regulation of Letting Agencies

  1. A code of code of conduct
  2. Entry requirements for letting agents
  3. Compulsory business and consumer protection measures.
  4. A regulatory body with enforcement powers.
  5. Transparency, clarity and accessibility of information relating to fees and charges which are easily understandable, upfront and comparable across agents
  6. Restriction on the level and extent of activities that can be charged for, the size of deposits required in proportion to rent and the level of ‘administration’ fees for basic services, such as those for changing rental contracts.

5. New Laws on Tenancy Agreements

This area is potentially the most far reaching, and from a Socio-Economic POV a radical departure from the home owning model of the last few generations. Labour recognise that our society has changed. In previous generations education ended somewhere between 15 & 21, but currently the world of work seems to start somewhere north of 21, if ever. The home ownership model is now a thing for middle age, families are renting much as they did in Victorian times – however the tenancy contract used by landlords (The Assured Shorthold Tenancy Agreement) was designed in 1988 to be used specifically for accidental Landlords. It was intended solely to be used for the renting of property which would otherwise have stood empty whilst waiting to be sold, and the Assured Tenancy introduced in the same Housing Act was intended to be the Tenancy Agreement used by the PRS.

So 25 years later we have a PRS based  around a tenancy agreement designed for 6 month tenancies, but a requirement for 5 – 30 year tenancies. The only surprising thing is that Labour is the only political party to recognise this as a problem. Fortunately they also recognise that their 1977 attempt to create a level playing field was a disaster, and they make it clear that they will not be going down the road of regulated tenancies. The changes that they have indicated are less clear than in the other areas, but expect:

  1. Incentives that will form part of a “something for something” deal for landlords
  2. Direct payment of housing benefit to private sector landlords and housing associations who provide longer tenancies and predictable rents
  3. An improved legal process for long lets to evict renters who fail to pay rent and commit anti-social behaviour, including damage to the property.
  4. Current benefits of the tax system only available to landlords offering longer term stable tenancies.

Sources:

Labour Party Policy Reviews

Private Rented Housing: Improving standards for all

Private Rented Housing: Providing stability and affordability for renters and families

Private Rented Housing

How The Taxman Finds the Tax Cheats

HM Revenue & Customs

Landlords are a recent target for HMRC – in January the latest target was taxpayers who have failed to pay capital gains tax on the sale of second homes & Taxpayers will have until 9th August 2013 to disclose to HMRC details of unpaid capital gains tax on the sale of second homes and up to 6th September 2013 to settle the unpaid tax. HMRC will charge a lower penalty to taxpayers who come forward voluntarily. There may be some taxpayers who may not be aware that they owe tax because they do not know the rules. In particular:-

•The taxpayer(s) may have gifted their second property to a relative (i.e. son or daughter). In this circumstance, capital gains tax could be payable with the open market value of the property at the time of the transfer forming the sales proceeds in the transaction;

•The taxpayer(s) may have lived in the property before moving to a new home. Instead of selling the property, the taxpayer(s) rent out the property to tenants. The Principal Private Residence Relief will not apply to the property when the taxpayer(s) move to their new home so some capital gains tax, relating to the period of non-residence, could be due.

How does the Taxman identify Property Tax Evasion?

•CENSUS – The 2011 census revealed a large number of UK citizens who own a second home including homes abroad;
•BANKS – Now have to provide more information to HMRC;
•PROPERTY WEBSITES – Can give readers an indication of the capital uplift in the value of the house since the last transaction;
•OTHER WEBSITES – Sites such [url=http://www.192.com]Search for People, Businesses and Places – 192.com[/url] contain information from Land Registry showing the value of the last transaction on the property;
•CREDIT AGENCIES – Are required to give details of loans and mortgages linking them to names and addresses;
•DATABASES – HMRC can search databases such as the Northgate Public Services System which shows details of housing benefits paid to landlords by any UK Council;
•LAND REGISTRY – HMRC can ascertain who owns any particular property and details of any sale proceeds;
•ELECTORAL REGISTER – Can ascertain who lives at a particular property;
•PURCHASE DOCUMENTS – These documents should now disclose the National Insurance and Ultimate Tax Reference for individuals and/or VAT numbers for companies and partnerships.

Connect Computer System

HMRC will then use their Connect Computer System to draw all this information together so that they can correctly target taxpayers. It is understood that HMRC have ALREADY used all of this available data to check over 10m property transactions.

When Mike Wells touches a button on his keyboard, a tangle of tiny lines bursts on to his computer screen. Within seconds, it weaves an elongated spider’s web connecting small graphic symbols representing people, addresses, phone numbers, bank accounts and employers.

When he clicks on an icon, another maze of connections ripples across the screen. At a glance, a skilled investigator can detect a pattern of concealment. Wells, director of risk and intelligences services at HM Revenue & Customs, says: “Over time you get familiar with a normal person’s spidergram. When someone is operating in a hidden economy it has a different shape.”
This is the tax authority’s “breakthrough” computer system, a new, powerful weapon against the fraud, evasion and avoidance that costs the Exchequer billions of pounds every year. The system – known prosaically as Connect – was designed by defence contractor BAE Systems and launched in the summer of 2010. It cost HMRC £45m, but even by 2011 it had delivered £1.4bn of additional revenues, according to the National Audit Office. Wells says: “Its power is making it so much harder to hide from us.”

Six out of ten inquiries now make use of the system, with investigators working “hand in hand” with 3,000 Connect analysts in offices up and down the country. It uses a mathematical technique known as social network analysis that ploughs through disparate, previously unrelated information to detect otherwise invisible networks of relationships. It automates analysis that would once have taken months, if it could have been done at all. “If a human being tried to plough through 26 databases, they just couldn’t do it,” says Wells.

Connect is an appropriate name. HMRC has a unrivalled wealth of information about people living in Britain, due in part to its many connections with other databases, such as the Land Registry, Companies House and the electoral roll. “We have more data than the British Library,” says Wells, adding that the HMRC website is one of the world’s biggest websites at peak filing time.

Access to such comprehensive data does not just allow investigators to spot anomalies. It also makes it much easier for HMRC to check up on individuals’ tax returns. Take inheritance tax, where HMRC receives about 300,000 paper returns every year. Around 200,000 of those come from estates claiming to be below the taxpaying threshold.

Using Connect, HMRC can sift through information on property transactions, company ownerships, loans, bank accounts, employment history and self-assessment records to spot where estates might be under-declaring. In its first year it raised an extra £26m in inheritance tax.

Informers

Disgruntled Tenants paying cash are the Taxman’s best friend. City law firm Reynolds Porter Chamberlain (RPC) says HMRC paid out 21 per cent more to informers in the tax year to April 2012 than the £309,620 in the previous year. “HMRC is under intense pressure from the Treasury to increase the tax yield for the Exchequer and it is increasingly resorting to unorthodox methods to get the job done,” says Adam Craggs, tax partner at RPC. “Other informers include those reporting someone bragging in the pub or doing a lot of jobs cash-in-hand.”. Rewards vary from a few hundreds to tens of thousands of pounds, but are paid only once tax has been recovered – and payments are not a fixed percentage of the tax recouped.

Third Party And Online Information

HMRC has recently beefed up its powers to demand “bulk” information from businesses or government agencies. In 2008 it homed in on the medical profession, acquiring information from National Health Service trusts, private hospitals and medical insurance companies to test its suspicions that practitioners were failing to declare fees for consultations, medical examinations and other services. Plumbers and heating engineers have also been targeted, after HMRC obtained information from the Gas Safe register. This trawl resulted in five arrests. The tax authority’s access to Land Registry and DVLA data means it knows how much someone has spent on their house and can see vehicles registered to each address. If someone has bought a Ferrari but is living in a modest flat, that might not fit with that individual’s financial affairs according to the Revenue. Or if someone owned three properties in their name but had not declared any rental income, that would also be a warning sign.

Social Networking sites, such as Facebook or Twitter provide evidence of a lifestyle that’s out of kilter with declared income. If the Revenue has doubts about someone’s tax affairs they will search for any information they can find on that individual, including posts on Facebook and tweets. Several individuals were caught out after appearing on the Channel 4 television programme My Big Fat Gypsy Wedding spending thousands of pounds of undeclared income on lavish family weddings. Another individual came under HMRC’s watchful gaze after posting photos of their luxury holidays on Facebook.

Higher-rate taxpayers with properties abroad are among those targeted by the 200-strong “affluence unit”, which is dedicated to checking that those who pay the 50 per cent tax rate, but are worth less than £20m, are complying with tax law. The team uses “sophisticated data mining techniques” on publicly available information to identify individuals who own property abroad. It then uses risk assessment tools to highlight those who do not appear able to afford those properties legitimately as well as those who have not declared the correct income and gains from the property. The affluence unit has been set a target of raising an extra £560m over the next four years.

Further Reading:

http://www.ft.com/cms/s/0/0f98bbc0-2db6-11e2-9988-00144feabdc0.html#axzz2Nt9eXOZK

http://www.telegraph.co.uk/finance/personalfinance/consumertips/tax/9542989/HMRC-recoups-26m-missing-inheritance-tax-using-complex-PC-systems.html

A Year in Property Forums

Exactly year ago I published this blog about how in the space of 12 months Property Tribes had grown to become the premier UK Property Forum on the internet. I thought it would be interesting to revisit the blog and see whether the world had changed in 12 months – and it has to a dramatic and surprising extent. Property Tribes life as the most popular forum was very transient, but in fact ALL property forums have experienced a loss in traffic.

Property Forum Statistics

Repeating the traffic reports from 12 months ago, again with links through to the traffic reports from Alexa:

Landlord Zone

Alexa Traffic Rank 70,811 DOWN 16,771

Traffic Rank in GB 2,624 DOWN 571

Property Tribes

Alexa Traffic Rank 105,416 DOWN 36,838

Traffic Rank in GB 3,228 DOWN 1316

Tycoons

Alexa Traffic Rank 381,790 DOWN 257,684

Traffic Rank in GB 10,811 DOWN 7161

Singing Pig

Alexa Traffic Rank 556,960 DOWN 400,009

Traffic Rank in GB 38,222 DOWN 32214

Pimlico Flats

Alexa Traffic Rank 572,307 DOWN 3464

Traffic Rank in GB 29,306 DOWN 11769

 

Why do you think Property Investors are shunning the Internet? If you would like to discuss why Property Forums are declining  please join & post on the Pimlico Flats Forum for Landlords and Tenants.

Pimlico Flats Murder Blog Controversy

Yesterday I posted a blog about the press and their inaccuracies in the reporting of the cruel senseless killing of young Hani Abou El Kheir. I apologised in advance to the friends and family of Hani for picking up on the property aspects of the story, when of course the real story is the pointless waste of a young man’s life, his future ahead of him, and the grief of those he has left behind. Nevertheless in spite of my apologies in advance the blog attracted some criticism on twitter for my choosing to write about this murder in the context of newspapers and property prices.

 

Criticisms were about the sensitivity of raising the financial accuracies of the article:

“Offensive, self serving and condescending”

“I find discussing property prices & patronising the residents of Churchill Gdns inappropriate condolences”

” your article is concerned with reassuring private landlords on their rental income not community”

” feelings about muder of a local teenager on a busy street & increasing problems of crime amongst kids which I find offensive”

” I find it unacceptable for the reasons I have given & about standing up for community but largely-that you read the DailyMail”

“he reassures the residents of Pimlico not to worry about their property values? How is that not offensive?”

And also about the article belittling the problem of living on the estate:

“One thing Im not doing is pretending its not really that bad like ur article suggests.”

“Churchill Gdns @ nite is a scary place. There r gangs all over Pimlico. Kid stabbed 2 wks ago on Vaux Bdge Rd. It’s all real.”

 

The aim of the blog was to illustrate with some facts that the headlines and reports don’t tell a true story. I didn’t actually have a socio-political objective to illustrate, but just to say “Hey! – This Pimlico in the Daily Mail isn’t the same as my Pimlico”. I understand that politics will always introduce a class divide, hence the accusation that I must be a bad person for reading the Daily Mail, however I am firmly of the belief that these sorts of attitudes introduce heat, but no light.

I posted a video of the Lupus Street that I see and use on my Website to demonstrate to prospective tenants the wealth of local services at the end of the road. God forbid that one day we erect barriers across Gloucester Street to keep the feral youth at bay, and go shopping down Warwick Way – (which to be fair is a great option, has more choice, and it’s the same distance).

I genuinely feel the anxiety of “Single Mum of a Teen” – motherhood is about worrying for your carefree offspring, young people know it all and are invincible, and it’s only the unwanted wisdom of their parents that keeps them from an early disaster. But whilst acknowledging that her worries and fears are natural and valid, I would like to mention that only on Friday my mate who is 80 went for a few Jars with his friends at the Churchill Gardens social club – and he didn’t need a bodyguard to walk through the estate. This is not a No-Go zone.

Clearly there is a problem – a young man was attacked and killed on a popular shopping street in broad daylight. The people of Great Britain will simply will not accept a society like that. The focus of attention for addressing this issue must be our Member of Parliament who says:

‘I shall shortly be hosting a meeting in parliament with some local Churchill Gardens residents along with Cllr Nickie Aiken and Deputy Mayor and local London Assembly Member, Kit Malthouse, to discuss safety in the area.

Excellent initiative Mark – but wouldn’t the meeting be so much more productive, and closer to the ground if you held it at Churchill Gardens? There are the social facilities for such a meeting.

 

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