July Property Newsletter
Will taxing landlords at the source become the norm?
Under a proposed new scheme aimed at reducing rental fraud, letting agents and property websites would collect and report tax on behalf of landlords.
This proposal has been met with firm opposition by finance professionals and landlords. It has also raised many questions about data privacy and who would be liable in the case of any mistakes.
The Association of Accounting Technicians (AAT) have also expressed their opposition, stating that “the idea had a “theoretical attraction” but that a range of significant practical barriers made such an approach unlikely when an individual’s tax circumstances and expenses were factored in.”
The proposed scheme was considered during the Office of Tax Simplification’s (OTS) review of property income back in 2016, however, the research wasn’t published until March 2022.
Unless significant guidance on the technicalities of the scheme is published, it is unlikely to be implemented. However, it could be brought in as a voluntary scheme and be loosely based on the Non-Resident Landlord Scheme (NRLS).
Housing shortage causing tenant bidding wars
Tenant bidding wars have become increasingly common as the number of homes available to rent has failed to keep pace with demand. This shortage of rental properties has led to landlords receiving multiple applications for every vacancy, and in some cases, tenants are even willing to pay above the asking price in order to secure a lease.
While this may be good news for landlords, it can be very stressful for tenants who find themselves in a competitive bidding situation. According to the BBC, prospective tenants are not only offering more cash but also offering CVs for their children and photos of their well-behaved dogs.
Landlords are being hit with a double whammy and it’s making property ownership less profitable. Changes in taxes have made letting properties more expensive, while legislation related to maintenance and energy pushes costs even higher.
The Department for Levelling-Up has stated that “good landlords” had nothing to fear, and that the reforms were designed to “give tenants greater security”.
Tourists asked to check if holiday let is affecting the housing crisis
With summer in full swing, many families are beginning to plan their annual holidays. For many, this means renting a holiday home in one of the UK’s popular tourist destinations. However, tourists heading to the southwest of England are being urged to check prior to travelling if their rental will worsen the area’s affordable housing crisis.
In many parts of the country, tenant bidding wars are becoming more common. This increased competition is often pricing out low-income tenants and exacerbating the already critical shortage of affordable housing for locals, especially in southwest England.
In response to this growing problem, the government is urging holidaymakers to exercise “ethical consideration” when choosing a rental property. By selecting a property that is not contributing to the housing crisis, tourists can do their part to ensure that everyone has access to a safe and affordable place to call home.
The executive of the Cornwall Community Land Trust has called for tourists to simply ask their landlord to assure them that the accommodation is not having a negative impact on housing needs in the area.
300% council tax increase for second homes in Wales
From next year, some owners of second homes in Wales could pay up to four times their current rate of council tax.
Currently, councils can charge a council tax premium of up to 100% for second homes. However, the government has announced their plan to increase it to 300% from April 2023.
The increase is part of the Welsh Government’s efforts to open up the market to first-time buyers and make it more affordable for people to purchase homes where they grew up.
As imagined, this has stirred up a lot of debate, with some stating that the change is discriminatory and “morally indefensible”, while others argue that it is the right move to protect communities and help locals onto the property ladder.
The timing of this increase is also not well received by many, as it comes at a time when the cost of living continues to rise and there are still looming effects from the pandemic.
Each council will be able to decide the premium amount that is appropriate for their local circumstances. Some councils only charge the premium in certain situations, for example, properties that have been left empty for a long period of time.
The increase is expected to take effect from April 2023 and you can contact your local council to enquire about the amount.
How long can house prices continue to rise?
At the beginning of the Covid-19 pandemic, there were widespread concerns that the economic downturn would lead to a sharp decrease in house prices. However, this did not happen. In fact, despite the challenges posed by the pandemic, house prices have continued to steadily increase.
There are a number of reasons for this. Firstly, the lockdown caused many people to reassess their priorities and decide that they wanted to live in a more spacious home, which increased demand. Secondly, the government introduced several measures to help boost the housing market, such as the SDLT holiday.
Halifax bank recently stated that prices increased by 1.1% in April, bringing the average home price to a new high of £286,079. In addition, they mentioned, “For now, at least, despite the current economic uncertainty, the strong increases we’ve seen in house prices show little sign of abating.”
Experts are uncertain about the future of the housing market. While some predict that the increased cost of living and rising mortgage rates could see housing prices start to fall, others do not agree. There is, however, one thing they can all agree on: the risks are big.
The content in this article is correct as at 11/07/2022. See terms and conditions.