Piggybank News

August 7, 2015

An illustration of how the new tax rules on mortgage interest will affect BTL landlords.

Filed under: Property — nspresources @ 5:36 pm

Now I’m not going to apologise that this is blatent plagarism because I think it’s the best explanation of how the new tax legislation will affect landlords that I have seen, but unfortunately is several scrolls down the page.  I don’t want you to miss it! So I am copying and pasting here and will paste link to the whole page below.  Thanks to James Davies of UPad for starting this thread and to Roger R for coming up with such a great illustration.  It is fairly long but please bear with it and read to the end.

After April 2020 (when the restriction will be fully implemented) landlords that incur interest (and other associated finance costs) on residential properties that they let will need to calculate their tax differently. You will no longer be able to deduct interest from your rental income to arrive at your taxable profits, you will instead receive a reduction from your income tax liability equivalent to 20% of those interest costs. If that means you become a higher rate taxpayer (or you were anyway) then you will have to pay more tax as a result of this change. Please see the example below:

Before Restriction (16-17) £   (ie now) After restriction (20-21) £
Salary 40,000      Salary 40,000
Property income 15,300 Property income 15,300
Less Other costs (3,300) Less Other costs (3,300)
Less Finance costs (10,800) Less Finance costs (0)
Property profits 1,200 Property profits 12,000
Taxable income 41,200 Taxable Income 52,000
Less Personal Allowance (11,000) Less Personal Allowance (11,000)
Tax due on 30,200 Tax due on 41,000
Tax at 40% 0 Tax at 40% 3,600
Tax @ 20% 6,040 Tax @ 20% 6,400
Total Tax 6,040 Total Tax 10,000
  Less Finance Costs @ 20% (2,160)
Final Tax 6,040 Final Tax 7,840

You need to look a little further to get the end result which is not good at all. Using HMRC own example:

One property
For simplicity, let’s assume these are the figures for a single property. His real rental profit, as we would understand it, is £1,200. The extra tax that he would pay in 2020/21 is £1,800, which is 50% more than the rental profit. He would literally be better off without it. His net income (ignoring NI contributions) would go down from £35,160 to £33,360. This is HMRC’s own example of a small landlord being pushed into the 40% band. Ms Shaw says in her email “If that means you become a higher rate taxpayer (or you were anyway) then you will have to pay more tax as a result of this change.” Today the tax he pays on his total real income is 14.7%. In 2020/21 it would be 19.0%, 4.3 percentage points higher.

Two properties
If he had two properties with identical figures, the real rental profit would be £2,400. The extra tax that he would pay in 2020/21 is £4,200, – 75% more than the rental profit. His net income (ignoring NI contributions) would go down from £36,120 to £31,920. At this point his extra tax is 19.4% of the finance costs. Today he would still be in the 20% band, and the tax he would pay on his total real income would be 14.8%. In 2020/21 it would be 24.7%, 9.9 percentage points higher.

Four properties
If he had 4 properties with identical figures, the real rental profit would be £4,800. The extra tax that he would pay in 2020/21 is £8,640, or 80% more than the rental profit. His net income (ignoring NI contributions) would go down from £37,680 to £29,040. Today he would exceed the 20% band by £1,800, but the tax he would pay on his total real income would still only be 15.9%. In 2020/21 it would be 35.2%, 19.3 percentage points higher, and more than double. It is clear that the more properties he has, the poorer he will be.

 Summary – using HMRC’s own example – real profit on BTL property =£1200 Tax due =£1800 (more due to new measures)  – £600 is what it will personally cost to run this BTL scenario. That is a LOSS to anyone who hasnt got it yet.

If you want to read the original post and all responses please follow the link below:


April 23, 2015

Heat Network Regulations impose new duties on landlords of HMO’s

Filed under: Property — nspresources @ 9:13 am

An “interesting” new regulation affecting landlords and tenants of HMO’s – residential property which is shared by 3 or more separate tenants (ie not a single family) – takes effect on 30/12/2015.

This legislation seems so far to have largely gone unnoticed in the property media and yet contains some significant implications for how landlords run such properties and the charges tenants are asked to pay for heating. The common system of dividing the cost of supplying heating, hot water etc.by the number of tenants and charging them a share each will become a criminal offence following the introduction of the Heat Network (Metering and Billing) Regulations 2014.  This will apply even if the majority of the bill is paid by the landlord, as part of an inclusive rent, and a “fair use” policy is in place which means tenants may get charged top up amounts.

In some cases landlords will be required to fit separate meters to each unit of accomodation but for the most part this is unlikely to be cost-effective or technically feasible; in which case notification of the property details and a detailed breakdown of the costs can be submitted to the NMRO instead.

The Guild of Residential Landlords has published an excellent article containing full details of this. http://www.landlordsguild.com/how-to-comply-with-the-heat-network-regulations/

A landlord must submit notification to the NMRO regarding details about the heating system of the property by 31st December 2015, and if required, install individual meters by 1 April 2016.

December 12, 2014

Would Santa get a mortage in todays market?

Filed under: Property — nspresources @ 4:20 pm

A festive report from Property Reporter which also contains a serious message about lending in the current market. Couldn’t resist re-posting it here;

http://www.xmas pigpropertyreporter.co.uk/property/claus-for-concern-would-santa-get-a-mortgage-in-todays-market.html?utm_source=Sign-Up.to&utm_medium=email&utm_campaign=21136-86738-Campaign+-+12%2F12%2F2014

September 25, 2014

Should you be joining a Property Redress scheme?

Most Landlords and Letting Agents will be aware that the government has made it compulsory for all Property Agents to join an authorised redress scheme by 1st October 2014.  There have been quite a few articles flying around explaining this obligation and the potential safety net it will offer to Landlords. Property Purchasers, Vendors and Tenants.  The aim is that anyone who feels they are not being treated fairly will have somewhere to go to voice their concerns, with a chance of compensation.

However, what may not have been quite so obvious is the breadth of the government’s definitions of Letting/Property Management/Estate Agent in this regard.  It’s a serious concern because those that don’t sign up risk being fined up to £5,000, via their local council trading standards office.

Essentially any person or business which accepts money in the course of their business for letting, managing or selling property is covered by this act.  So, for example, if you manage a property for a friend and take even “mates rates” fees then you are affected, there are in fact very few exclusions.  (If you would like a full list of definitions then click this link to the Property Redress Scheme website.)

There are 3 schemes currently approved – The Property Redress Scheme, the Property Ombudsman and Ombudsman Services Property.  Of these the Property Redress Scheme is perhaps the most flexible as, alongside Property/ Management/Lettings and Estate Agents, they are also open for other professionals working in the property industry including cleaners, gardeners and inventory clerks.

j0283695Piggy says “Private Landlords, Sourcing Agents and Property Managers are strongly advised to establish the status of their business in relation to this legislation and register with one of the approved schemes before the deadline of 1st October 2014 if required”.


June 10, 2014

Immigration Act 2014 – what you need to know.

Filed under: Property — nspresources @ 11:53 am
Tags: , , , ,

The Immigration Act 2014 has now become law.  Among other things it imposes strict rules for anyone who lets property or rooms to check the immigration status of prospective tenants/lodgers. Fines of up to £3000 can be levied for failure to comply with this requirement.  There has been a lot of speculation in the property news feeds prior to this act becoming law and a lot of fear has been generated that landlords will be victimised for failing to comply with an unworkable law.  After all if government ministers, with all their resources, are unable to be sure of their staff’s immigration status then how on earth can the ordinary landlord do so?

Housing Minister Kris Hopkins has however emphasised that these checks will be ‘as simple and straightforward as possible’ and that the intention is not to catch out ‘well-intentioned landlords for small mistakes’.

So what does all this really mean for you?

1.) Don’t panic: the intended start date for implementation  is October 2014 and there will be full guidelines issued prior to implementation.

2.) This only applies to new tenancies. You won’t have to conduct checks on existing tenants.

3.) The government will create tools to help you, including an online checking resource for landlords similar to that currently available to employers.

4.) Be careful though; these measures will apply to all private landlords, including homeowners who take in lodgers and tenants who sub-let. 


May 30, 2014

New Homes in Partnership Scheme

MKPLA Chairman Alex Caravello has been working closely over the last few months to improve the council’s offering to Private Landlords.  MK has an ever increasing gap between those properties available to rent and those needed.  This problem is particularly acute in the LHA market as many landlords and agents prefer not to accept tenants on benefits due to perceived problems in working with this sector.

MK Council appreciates that it needs to offer something more to landlords if it is to attract them back into this market and their new Homes in Partnership Scheme is designed to do this.  Whilst it will not be for everyone, it does go some way to addressing the concerns that landlords typically have when accepting a benefits tenant. Follow the link below for more details.


May 7, 2014


Filed under: Property — nspresources @ 7:19 pm

This is the meeting run by the council for all local landlords. At the meeting they will be talking about:

Building Regulations

Hear from a member of the Regulatory Unit about the type of building work that requires Building Regulations approval.

Housing Benefits update

The Landlord Liaison Supervisor will explain his new role and how he can support private landlords and tenants.

Homes in Partnership update

The Housing Options Manager will update you on progress with this new initiative. (NB. this is an initiative that has been improved and developed in consultation with MKPLA  as part of our mission to work with the council in a more positive way for the benefit of all Private Landlords in the area)

Empty Homes initiative

Hear about our new initiative to bring empty homes back into use and how you can help.

Licensing consultation and fees update

The Head of Housing Management will give you the latest news on the recent consultation and changes to fees. (Another score for MKPLA and true proof that we are stronger together!)
The meeting will be held in the Council Chamber at the Civic Offices, 1 Saxon Gate East, MK9 3EJ. The meeting will start at 6 pm and finish around 8 pm. Tea and coffee will be provided and there is ample free parking. Booking is essential as places are limited.
If you would like to go along e-mail get.involved@milton-keynes.gov.uk or call Simon or Paula on MK 253264 or MK253756

January 31, 2014

MKPLA Members Meeting 20/2/2014

Filed under: Property — nspresources @ 6:47 pm
Tags: , , , , , ,

The next Members Only meeting of the Milton Keynes Private Landlords Association will be held at the David Lloyd Leisure Club at 7pm on 20th February 2014.  As well as hearing from our speakers, the evening will give members the opportunity to network and share experienced and challenges.  The ticket price includes light refreshments.

This months meeting will start with a short summary of the final consultation report from ORS on the proposed implementation of Additional and Selective Licensing.

This will be followed by the main presentation for the night which will focus on Fire Safety; the history of Legislation affecting the PRS, how to ensure best practice and some of the common pitfalls and misunderstandings.  Our speaker, Tony Bennett, was for many years a Team Leader for Bucks Fire and Rescue Service and had responsibility for assessing fire safety for MK Council. Since 2011 he has been working as a freelance consultant on both residential and commercial property. All landlords have a basic duty of care to their tenants so this is an extremely important area to understand.

Book your Tickets by clicking here

January 25, 2014

MK Council looking to buy houses for homeless families?

The BBC has reported on Milton Keynes proposals to buy more houses in order to fulfil its statutory obligations for housing homeless families. Suggested suitable areas for this project for are the Lakes Estate and Stantonbury. Read the full story by clicking on the link below.


Regarding these proposals, the committee of MKPLA can confirm that, in meetings they have attended, the idea appears to have limited cross party support.  However, councillors are definitely looking for a workable solution to this crisis; which includes the possibility of working more effectively with the private rented sector.

December 11, 2013

MK Housing & Communities Select Committee Meeting

Filed under: Property — nspresources @ 6:42 pm
Tags: , , , , ,

Steve Jarman of the ORS was  given 15 minutes  at this meeting on 10/12/2013 to present the Executive Summary of his report on the results of the Public Consultation into Selective and Additional Licensing. Several members of the MKPLA Committee were present to hear his presentation.

Basically, his report will say that there is no evidence to support introducing Selective Licensing and, although there may be some evidence to support Additional Licensing, there is not enough to actually justify doing it. He said that this evidence could empower MKC to conduct a further, more in-depth consultation on HMO’s, but his evidence in itself cannot be used to justify bringing in Additional Licensing without it being challenged. MKC must demonstrate ASB problems and a direct causal link to HMOs and low demand for housing.

Steve Jarman also stressed the point that MKC must show that they have taken a number of other measures to tackle ASB in HMOs before they can introduce Additional Licensing under Section 57 of the Housing Act 2004 … and to date they haven’t done enough.

He stated very early in his presentation that his evidence shows a stronger correlation between high ASB and high density of social housing, compared to PRS housing. However, it does show a correlation between high ASB and high density of HMOs. 80% of complaints received by MKC are in relation to HMOs.  He did however say that, overall, MK has a very low ASB problem compared to other areas. Only 6 wards in MK have ASB higher than the average for MK as a whole.

The full draft report won’t be finished for another 2 or 3 weeks and MKC must then allow stakeholders 1 month to comment on the draft report before ORS submit their full report to MKC.  MKPLA will continue to contribute to this process and keep members informed of developments.  We would also like to thank those members who took the time to respond to the Public Consultation and ensure that ORS received a balanced view.



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