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Letting Agent Fee Cap Debated in the House of Commons

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MPs debate letting agent fee cap

The Conservative MP for Lewes, Maria Caulfield, secured an Adjournment Debate in the House of Commons to discuss the Government’s actions in relation to letting agent fee capping.

Miss Caulfield reported that research from Seaford and Lewes Citizen’s Advice Bureaux which found that letting agent fees can range from £175 to £922 in addition to an average of a six-week rent deposit.

Also participating in the debate was Kevin Hollinrake, co-founder of Hunters Estate Agents and the Conservative MP for Thirsk and Malton who added that agents may choose to decline tenancies to prospective tenants with inferior credit histories if fees were scrapped rather than capped.

The Conservative MP for Thirsk and Malton, Kevin Hollinrake also contributed to the debate adding that letting agents rely on fees for their income, which would probably be obtained from higher rents or landlord’s costs if such fees were prohibited.

Letting agent fees are attracting increasing political attention as the housing crisis deepens with reports of many letting agents insisting on six month rotating tenancy agreements against the wishes of many landlords or tenants in order to charge additional contract renewal fees.

 

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Government Considers Letting Agent Regulation Adequate

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The Government considers current regulation of private sector letting and managing agents adequate according to a recently published House of Commons Research note.

According to the briefing there is “no overarching statutory regulation of private sector letting or managing agents in England or any legal requirement for them to belong to a trade association, although many letting and managing agents submit to voluntary regulation” despite the rapid growth in the private rental sector over the past two decades.

Furthermore, the Government plans to improve the quality of the rental sector by increasing the range of powers available under consumer protection legislation and has no intention of introducing regulation.

The Government does not intend to introduce regulation in the sector and has pointed instead to the existing range of available powers under consumer protection legislation. However, an amendment to the Enterprise and Regulatory Reform Act 2013 enabled the Government to require agents to sign up to a redress.

This comes as private motions in Parliament have been heard recently in relation to regulating letting agent fees which one Conservative MP described as “an opportunity to fleece tenants”.

The research note states that the Government considers that the present legal framework strikes the right balance between landlords and tenants and that new regulations would “introduce too much additional red tape”.

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Government Responds to Landlord’s Legal Challenge

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Two landlords at the center of a legal challenge to Chancellor George Osborne’s tax changes announced in last year’s budget have confirmed that two government departments had provided an “acknowledgement of service”.

The legal challenge to the Treasury’s tax changes was launched by two landlords, Steve Bolton and Chris Cooper, who used a crowdfunding platform to raise sufficient capital to employ Omnia Strategy, a legal firm founded and chaired by Cherie Blair, to seek a judicial review of the Chancellor’s measures.

The legal battle over the Chancellor’s proposed changes to Mortgage Interest Relief follows the failure of a Petition launched by the Residential Landlord’s Association to attract sufficient support to warrant debate in Parliament.

 

 

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MP Reports only 27% of Poor Housing Reports Investigated by Authorities

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Karen Buck, the Member of Parliament for Westminster North has announced that only 14,000 of a total of 51,316 complaints made to councils about poor housing were subjected to a local authority environmental health assessment in 2014.  Ms Buck, has also claimed that on average councils prosecuted only one rogue landlord each year.

The figures were presented in a debate about standards in the Private Rented Sector on February 6th during which Ms Buck asked  whether the statistics provided irrefutable evident that local authorities lack the resources to investigate cases of housing disrepair.

On being asked what measured the Government proposes to adopt to tackle rogue landlords, the Government’s Minister for Housing and Planning, Brandon Lewis, claimed that enabling councils to issue civil penalties amounting to up to £30,000 and remedy payment orders for up to 12 months proposed under the Housing and Planning Bill would give councils extra resources to improve housing conditions.

Also participating in the debate was the Labour Member for Hampstead and Kilburn, Tulip Siddiqm who claimed that many of his constituents who rent privately have reported being the victim of revenge evictions despite the banning of retaliatory eviction in 2015.

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Cherie Blair Legal Firm Challenges Osborne’s Buy-to-Let Tax Changes

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Omnia Strategy, the legal firm founded and chaired by former Prime Minister Tony Blair’s wife, Cherie Blair, has written a formal complaint to HMRC proposing a judicial review of Chancellor George Osborne’s restrictions of deductions of finance costs related to residential property.

The new tax changes, set to be implemented in the autumn of 2017 would limit the ability of landlords operating as sole traders to offset mortgage interest payments from their tax liabilities.

The decision to seek a legal challenge to the Chancellor’s tax changes comes as a formal petition set up by the Residential Landlord’s Association failed to reach the required number of 100,000 signatures to be considered for debate in Parliament.

The legal challenge to the Chancellor’s proposed tax measures was brought by Steve Bolton and Chris Cooper who raised £50,000 in crowd-funding from landlords’ associations to initiate a legal challenge to George Osborne’s tax changes.

Mr Bolton owns around 20 residential and commercial properties is also the founder and owner of Platinum Property Partners, a buy-to-let specialist with a portfolio worth a total of £200million. Mr Cooper is a part-time landlord who is using buy-to-let as part of his pension.

The letter to HMRC lists Miss Blair as one of two legal advisers for the claimants and bases the challenge on several purported breaches of the European Convention on Human Rights. The letter claims that the Chancellor’s measures infringe on one’s right to hold one’s property in a way without unfair taxation and may also go against European Union competition laws by favoring large institutions over small individual investors.

In it’s official response to the petition, the Government has claimed that the tax changes remove tax advantages enjoyed by property investors which are not available to those investing in other asset classes.

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Landlord’s Association Tax Petition Fails to Gain Support

Reverse-the-planned-tax-relief-restriction-on-individual-landlords-PetitionsA 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.

 

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Landlords Take Court Action as Parliament Petition Fails

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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.

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Petition Started to Regulate Letting Agent Fees

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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.

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Government Responds to Landlord Tax Petition

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The Government has officially responded to a Parliament petition launched by the Residential Landlord’s Association. The petition seeks to challenge Chancellor George Osborne’s plan to reduce landlords’ ability to offset mortgage interest payments from their tax liabilities which were announced in the 2015 Summer Budget and Autumn Statement.

The petition titled “Reverse the planned tax relief restriction on ‘individual’ landlords” claimed that the Chancellor’s proposals to limit Mortgage Interest Relief for landlords operating as sole traders  would unfairly impact their ability to conduct their business. Moreover the lobbyists claim that such restrictions are not denied to sole traders in other industries.

The Government responded officially after the motion obtained more than ten thousand signatures stating that it is committed to a fair tax system so it is “restricting tax relief landlords can claim on property finance costs to the basic rate of income tax.” Furthermore, the government asserts that the ability to reduce tax liabilities by offsetting mortgage interest and other finance costs against their property income is not available to ordinary homebuyers and those investing in other assets such as shares.

“By restricting finance cost relief available to the basic rate of income tax (20%) all finance costs incurred by individual landlords will be treated the same by the tax system. This recognizes the benefits to the economy that investment in property can bring but ensures the landlords with the largest incomes will no longer benefit from higher rates of tax relief.”

The government also states that the measures will only be introduced gradually over four years starting in April 2017 which will give landlords sufficient time to adapt to the new rules.

According to petition guidelines, a motion will be considered for debate in Parliament if it achieves over one hundred thousand signatures.

 

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