A move by a landlord’s organization, the Residential Landlord’s Association to overturn Chancellor George Osborne’s changes to landlord tax exemptions suffered a serious blow as its Parliament petition failed to attract sufficient support.
The petition, “Reverse the planned tax relief restriction on ‘individual landlords’” expired today without reaching the required number of 100,000 signatures necessary to be considered for debate in Parliament closing with only 60,894 signatures.
Begun six months ago, the motion sought to challenge Chancellor George Osborne’s reduction of Mortgage Interest Relief announced in his 2015 Summer Budget and Autumn Statement. However, enough support was obtained to warrant an official statement on the topic whereby the Government rejected claims that the proposed tax changes were unfair. In it’s response the Government added that the tax amendments were partly intended to reduce the tax advantages offered to property investors which were not shared by investors in other assets such as shares. The Government also claimed that only 18 percent of landlords are expected to be affected by the changes which are to be introduced gradually over four years beginning in 2017.
The petition’s sponsors, the Residential Landlord’s Association claimed that the tax changes were unfair and likely to result in higher rents for tenants as landlords seek to offset higher costs by increasing rents.
It is understood that some landlord groups are now seeking a judicial review of the Chancellor’s tax changes.
A BBC investigation has uncovered the a rapid rise in rental fraud in England and Wales. According to figures from Action Fraud, which collates national fraud statistics for the City of London Police, the number of rental fraud cases rose from 2,216 in 2014 to 3,193 in 2015.
The most common type of fraud consists of scam artists offering flats to rent which they do not actually own and demanding instant deposits. Very often the lure of a significantly below market rate rent is used to attract victims. Extreme examples often ask prospective tenants to pay for 6 months or 1 years’ rent in advance to secure the property prior to visiting it. Payment of large sums of money in advance targets foreign nationals who are frequently required to pay 6 month’s rent in advance by established letting agents in London and student towns such as Cambridge and Oxford.
Further, since the fraudsters leave no legitimate correspondence address, it is almost impossible for victims to pursue fraudsters in court. Other variations include instances where fraudsters do access the property and show around prospective tenants. The property already be rented or has been rented to multiple victims at the same time.
The scam which in the past gained notoriety from its early association with the listings website Gumtree, has now extended to other property lising and flat-sharing websites. EasyRoomMate for example blocks 5% of the 1,000 adverts placed on its UK site each week over fraud suspicions. Other common websites targeted by rental fraudsters include Gumtree, Air BnB.
The National Renters Alliance recommends several measures which tenants can take to help protect themselves from falling victim to this scam.
- Never pay money upfront before visiting a property. Always be suspicious if anybody refuses to let you visit the property before paying a deposit.
- Ask to see identification such as a driving license and/or passport from the prospective landlord or letting agent. If you are dealing with a company ask for a correspondence address.
- Prospective tenants can also check whether the landlord is a member of the National Landlords Association (NLA) using the NLA accreditation website www.landlords.org.uk
- If you are still a student, you can often uses your student union or accommodation office to check whether a landlord is on an approved housing list.
- If dealing with a letting agent check whether the agent is accredited by organization. Examples of such bodies include the Association of Residential Letting Agents (ARLA). the Royal Institution of Chartered Surveyors (RICS) or the National Approved Letting Scheme (NALS),
- Use commonsense. If the property looks too good to be true, too cheap for the location then it possibly is.
- Before paying a deposit ask the landlord or agent which government-backed deposit scheme is being used. Currently there are three: mydeposit, The Dispute Service (TDS), The Deposit Protection Service (TDPS).
- If the property is shared ask the current occupants how they found the property and how they pay their rent. If the landlord or agent collects only cash or regularly changes bank accounts this should warrant further vigilance.
- If possible use a credit card to pay for a deposit after the letting agreement has been signed. Be wary if you are asked to transfer money via money transfer agents such as Western Union or Money Gram. Only use these services to send money to people you already know and trust.
- Always check the legitimacy of an advert. This is especially true for a non-property website such as Gumtree, Avoid adverts with no photographs or ones with photographs used on multiple adverts.
Two property developers, Steve Bolton, Chairman of Platinum Property Partners, and Chris Cooper are have raised £50,000 through a Twitter crowdfunding campaign to challenge Chancellor George Osborne’s planned tax changes for landlords. Under the Chancellor’s proposals, landlords operating as sole traders would no longer to be able to claim Mortgage Interest Relief when calculating their taxes.
Bolton and Cooper began fundraising towards the end of a Parliamentary Petition launched by the Residential Landlords Association titled: “Reverse the planned tax relief restriction on ‘individual landlords’ which argued that the Chancellor’s plans were unfair to private landlords and may result in higher tenant rents.
The Residential Landlord’s Association petition attracted 60,894 signatures, well short of the required 100,000 necessary for the motion to be considered for debate in Parliament which may leave Court action the only option to challenge the proposed tax changes. The motion did however receive enough support to merit an official response from the Government reiterating the Treasury’s support for implementation of the Chancellor’s measures. In its response the Government claimed that the tax changes were fair and merely removed tax exemptions for property investors which are not enjoyed by those in other asset classes.
Speaking about the Chancellor’s plans, Bolton stated “It’s not clear why the government has chosen to just launch an attack on buy-to-let owner-operators with mortgages. It’s a tax from Alice in Wonderland – truly absurd and divorced from real life. Not only is this tax grab unfair, undemocratic and underhanded, but we believe that it could also be unlawful.”
It is believed that the pair have sought legal advice matter from Omnia Strategy, a legal firm founded and chaired by Cherie Blair.
A petition to regulate estate agency fees has been launched on the Parliamentary Petitions website. The motion started by Nigel Whitley requires 10,000 signatures to obtain a government response and 100,000 signatures to be considered for debate in Parliament.
Titled “Regulate agency housing fees” the petition calls for regulation of estate agency and private landlord fees and the full refund of tenants’ money if a prospective tenant fails the vetting criteria.
The deadline to achieve this goal is 16th July 2016 and follows in the wake of other campaigns to regulate the private letting sector. Mr Whitney claims that many private letting agencies and landlords perform costed background checks knowing in advance that they have no intention to leasing the property to an applicant, often charging disproportionate sums for the said reference checks. Mr Whitney claims that in many cases ten or more people are invited to apply for a single property with many being deliberately failed and charged by letting agents.
Letting agent fees are currently subject of much debate in parliament with some members of Parliament attempting to introduce private members bills to regulate the sector.