Is your commute as productive as it could be part two
I have recently begun listening to podcasts and radio stations with live debates instead of my old preferred current music stations. I spend a lot of time in my car with my son going from place to place (locally) or driving a 400 mile round trip to see my parents, so I have decided to use my time more efficiently and build on my education whilst I drive. An outcome of this new passion was listening to a debate on empty houses and how the UK has an estimated 320,000 people homeless in the UK (Shelter) yet we have 200,000 empty homes in the UKwhich is worth £50 billion across Englandand more than 11,000 Ministry of Defence homes across the UK are empty, costing the taxpayer more than £25m a year in rent and maintenance. This fact made me think about how I can try to make a difference as everyone who wants to have a home deserves to have a place they can call home. The crisis is not based in major cities like London but in pre-industrial cities. The solution of the current government to build new big development has not eased the situation as the new developments do not provide enough affordable homes, and this leaves more than 1 million people on waiting lists in England for a home. But as a professional property developer, landlord and management agent converting residential properties in Gillingham and Bromley, Kent into single lets and HMO’s, I feel that there are constant barriers being built to make it harder and harder to create homes for people to rent.
Being a landlord is not about being greedy and creating a profit from those who can’t afford to buy a property, it is about allowing people to be mobile in terms of their vocations and places they choose to live, allowing them to choose an arrangement that suits their current needs and allowing them to have their own space at a time when they can’t gather a deposit, legal fee, stamp duty and mortgage payments. As a human with a good heart, I hope that I can steer TMG into creating homes for people – yet after being in the industry since 2017, there have been more changes to legislation than I can remember, which makes entrance to the market harder and harder and therefore reduces the amount of rental properties that tenants need.
The latest change is the Tenant Fees Actthat has been introduced by the government to reduce the initial costs for tenants in the private rent sector and capping tenancy deposits. It looks to reduce fees and ensure that tenants know the cost of the rental at the start of their search, with no additional/ hidden costs. However, these fees are passed to the landlord, who has already been the target of a huge number of changes in the past few years. This may result in the landlords increasing the monthly rent to cover these fees. This has also coincided with a tenancy deposit cap, where a letting agent can take only 5 weeks rent upfront rather than the previous 6 weeks rent.
Landlords have also been subject to a reduced mortgage interest tax relief since 2017 which means the mortgage interest amount landlords can deduct from their income when filing their tax bill has been gradually decreasing. For the 2017-18 tax year, you can offset 75% of your mortgage interest, and this drops by 25% each tax year until 2020. In 2020, the tax relief is replaced by a 20% tax credit. In 2016, landlords could claim ‘tax relief for replacing furnishings’ which means you can claim tax on the cost of replacing furnishings and not the previous 10% of rent rateand in 2016, the 3% stamp duty surcharge for buy-to-let investors was introduced.
In October 2018, the HMO licensing laws altered which means the TMG strategy needs all its HMO’s licensed. The process is very laborious and involves a lot of paper work and over a £1,000 fee. I am a law abiding entrepreneur and therefore make my HMO’s known to the council and comply with all the rules and regulations, but would all those raise their hand to say they have a HMO?
I hope you can see that over the past few years, the changes in the law makes landlords feel like we are being punished for trying to offer homes to people who cannot afford to purchase their own properties/ want to have the flexibility to move around the country and make landlords feel they are acting unethical. At TMG we endeavour to focus on creating homes and communities that tenants enjoy and allow them to thrive. We value our tenants and always show respect to our tenants by responding to any maintenance issues on the same day and if they cannot be actioned, I keep the tenants updated. I also contact the tenants each month by email to say thank you for the rent payment and check all is satisfactory in the property (and even send small gifts at Christmas and at the anniversary of the tenants rental!).
Take Away Points
- Many barriers have been erected over the past few years to Landlords
- There is a housing crisis with plenty of empty house stock but many barriers in the way to allow these empty properties to be covered into homes
- Legislation changes to make law abiding landlords feel they are doing wrong and are not differentiated from the rogue landlords