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Tax relief for residential landlords

The tax relief that landlords of residential properties get for finance costs will be restricted to the basic rate of Income Tax, this will be phased in from April 2017.

How the tax reduction is worked out

The reduction is the basic rate value (currently 20%) of the lower of:

  • finance costs – costs not deducted from rental income in the tax year (this will be a proportion of finance costs for the transitional years) plus any finance costs brought forward
  • property profits – the profits of the property business in the tax year (after using any brought forward losses)
  • adjusted total income – the income (after losses and reliefs, and excluding savings, pensions and dividends income) that exceeds your personal allowance

The tax reduction can’t be used to create a tax refund.

If the basic rate tax reduction is calculated using the ‘property profits’ or ‘adjusted total income’ then the difference between that figure and ‘finance costs’ is carried forward to calculate the basic rate tax reduction in the following years.

The restriction will be phased in gradually (25% at a time) from 6 April 2017 and will be fully in place from 6 April 2020.

More info at https://www.gov.uk/government/news/changes-to-tax-relief-for-residential-landlords   and  https://www.gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies


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Tenant Eviction

tenantBest Practice Guide: Tenant Eviction

(Guide from PRS)

Evicting tenants is never a nice situation for a landlord to find themselves in. It can be a complicated process, which is why we spoke to Paul Shamplina of Landlord Action for his expert advice.


There are 3 steps to evicting a tenant:-

Step One. You need to serve a notice on your tenant. The notice will have an expiry date on it. If the tenant does not leave before the expiry date, then you will need to go to step two.

Step Two. You need to issue court proceedings to get a Possession Order. If the tenant does not leave before the date for possession on the possession order, then you will need to go to step three.

Step Three. You apply to court to appoint a Bailiff to obtain possession of the property.

Periodic or Fixed-term
If the tenancy is periodic or if the fixed-term has come to an end, landlords can evict fairly easily. There is no need
for a landlord to give a reason to the court but they must be able to show that an Assured Shorthold Tenancy
(AST) was in place and that the correct notice has been served. An AST is one in which the tenanted property is let
to an individual, the tenanted property is used for residential purposes and an agreement exists between landlord
and tenant whether it be written or oral. The correct notice in this instance would be a notice pursuant to Section
21 of the HA. This is a 2 month notice and care should be taken when serving the notice, as depending on whether
or not the tenancy is periodic or still during its fixed term, would determine the type of Section 21 notice to serve
(Section 21(1)(b) or Section 21(4)(a)).

A landlord may wish to evict a tenant during a fixed-term, but in order to do so they must have a valid reason. The
most common reason is rent arrears but, under Schedule 2 of Section 8 of the HA, others may include:-
• The tenant has broken the terms of the tenancy, such as subletting;
• The tenant is consistently late with the rent payment;
• The tenant has damaged the condition of the property;
• The tenant has caused nuisance


STEP ONE Serving Notice – Section 21

There are two types of Section 21 notices. One notice is served during the term of the tenancy (S21(1)(b) and one is served when the term of the tenancy has expired (S21 (4)(a)). A Section 21 notice is used when the landlord requires possession of the property (and there may or may not be rent arrears). The landlord does not have to give a reason for wanting possession of the property and there does not have to be a breach of the tenancy agreement. Some tenants use a Possession Order under Section 21 to seek housing assistance from their local housing office. If this is the case, tenants are told by local authorities to remain in the property until a Possession Order has been granted and sometimes to remain in the property until a Bailiff has been appointed, regardless of whether or not the rent is being paid.

One key factor to consider before serving a Section 21 notice is compliance with Deposit legislation. If you are not certain that the deposit has been protected correctly and that the full Prescribed Information has been served upon the tenant within 28 days of receipt of the deposit, it is advisable that you seek legal advice regarding the position with the deposit. Failure to have the deposit in order prior to serving a Section 21 notice is likely to see your notice and claim for possession fail, with a possible penalty fine against you for one to three times the amount of the deposit.

STEP ONE Serving Notice – Section 8

A Section 8 notice is a notice seeking possession, which is served on the tenant when they have breached one or more clauses within the tenancy agreement which may be during a fixed term tenancy or a periodic tenancy. A Section 8 notice is commonly used when the tenant is in arrears of rent and gives the tenant 14 days to vacate the property. There are 17 Grounds for possession (17 reasons that the law gives for when a section 8 notice can be issued), rent arrears being the most popular grounds (Grounds 8,10 & 11 of Section 8 of the Housing Act 1988 (as amended)) (HA).

If a tenant owes a minimum of two months arrears when a notice is served, Ground 8 is to be included within the notice. This is a Mandatory Ground, giving the Judge limited power when it comes to making an Order for Possession. Grounds 10 & 11 relate to arrears of rent below 2 months at the date the notice is served and sporadic late payments throughout the tenancy. All three rent related grounds can be included within the Section 8 notice (8, 10 & 11) if the tenant owes a minimum of 2 months rent at the date the notice is served. If the tenant fails to clear the arrears and/or vacate the property when the Section 8 notice expires, then court proceedings are required. The tenant will need to owe at least 2 months rent on the day of the court hearing in order for a landlord to rely on all three grounds for possession, otherwise, it would be on a Discretionary basis under Grounds 10 & 11, being the weaker grounds.


STEP TWO Section 8 – Court hearing and what it means:-

Where a claim is for possession and rent arrears (Section 8), there will be a Court hearing before a Judge. The hearing is held in Judges Chambers and is not open to the public. The landlord will be required to attend the hearing, or appoint an agent to attend on their behalf. An agent is a letting agent or somebody appointed to manage the tenanted property on a day to day basis for the landlord. The landlord or agent must be fully conversant with the tenancy and have all relevant paperwork readily available, such as the tenancy agreement and an up to date schedule of arrears at the hearing. If the landlord or agent is unable to attend the hearing, the Court may accept a witness statement, but it is recommended that this is drafted by a legal landlord and tenant expert, to ensure its content is in order.

If the tenant clears the arrears prior to the hearing date, then it is unlikely a landlord will get a possession order. Some Judges will grant a postponed possession order, which is a possession order postponed/suspended on the terms that the tenant continues to pay the full rent as it falls dune and if he fails to do so, the landlord can apply for a Bailiff without the need to return to Court.

If the claim is successful, the Judge usually grants a 14 day possession order; this means the tenant has 14 days from the date of the hearing to vacate. In the event the tenant does not vacate, the landlord will be required to appoint a bailiff to carry out the eviction. In addition, an order for the arrears of rent may also be granted at which point a landlord may also make a claim for interest and costs, provided the tenancy agreement contains the relevant clauses that the landlord can rely upon. If an order is granted under Ground 8, it is always wise to ensure the Judge marks the Order as one made out under Mandatory Ground 8. Judges are quite happy for a gentle reminder of this at the point of making the Order.

Exceptions If a tenant defends the case by, for example, raising a disrepair issue, then proceeding under Section 8 may see the matter adjourned.

STEP TWO Section 21 – What it means:-

Where a landlord’s claim is for possession only (Section 21) he/she can use the Courts’ accelerated procedure. The Court serve a copy of the claim form on the tenant who then has 14 days to reply to the claim. Tenants can file a defence, but under Section 21, they are very limited as to what constitutes a defence. Disrepair issues are not a defence to a Section 21 claim. Some tenants seek an extension of time in which they have to vacate. The maximum extension a Judge can grant is 42 days from the date of making the Order. If no defence is filed, a landlord can apply to the Court for an Order for Possession. It can take approximately 8 weeks to receive the Order for Possession, depending on the workload of the Court. London Courts are extremely busy and may encounter some delay. Claims under accelerated Section 21 do not enable a landlord to claim for arrears of rent. The Court will send a copy of the Possession Order to the tenant.


STEP THREE Eviction – County Court Bailiff

If a tenant fails to vacate on or before the expiry of the Possession, a County Court Bailiff must be appointed to carry out the final stage, eviction. Applying for a Warrant of Possession can mean the process takes up to a further 6 weeks.

It is always advisable to appoint a locksmith to attend at the same time as the Bailiff in order to assist with entry, if required, and to change the locks. A landlord must wait for the Bailiff outside the property (on the street), Never inside the property, or in a hallway/lobby. The Bailiff will only approach the property if he can see somebody outside.

Appeals/Applications Unfortunately, tenants do have rights to appeal. The law allows a tenant to make an application to set aside the Possession Order, or the Bailiff Appointment. If this should happen, the Court will notify the landlord immediately and a hearing will be set down for the tenant to plead their case to the Judge. A Judge will decide whether or not it is reasonable to set aside the Order or Bailiff Appointment and make an order accordingly. The tenant would have to prove that there is a dispute over a point of law that would see a successful outcome in the tenants favour, or prove exceptional hardship if he is seeking an extension of time. These are rare cases.

Landlord Action Founder: Paul Shamplina Involved in the legal system since 1987 – Paul specialised in landlord/ tenant disputes, and when he was a certified bailiff he acted for landlords across the country. He is a recognised expert in eviction matters and is often featured on TV, Radio and in the press.



Right to Rent

Tenants – You now need to prove you can legally live in the UK


Right to Rent

Under the Immigration Act 2014 From 1 February 2016 all tenants have to show proof they can legally reside in England.


Who has a right to rent?

  • Adults over 18 years old. From the following: British citizens; European Economic Area nationals (Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the UK.); and Swiss nationals,
  • People who have a right of abode in the UK; who have been granted indefinite leave to remain; or have no time limit on their stay in the UK.



Cooper Adams will require to see original documents and take copies noting any time limits on documents.


One form of ID from List A or two forms from List B


A valid UK or EU passport with no time limits. Without a passport see the following lists.


List A –


British, EEA, Swiss Nationals or those with an indefinite right to be in the UK Any one of these documents will prove indefinite right to rent

1          A passport (current or expired) showing that the holder is a British citizen or a citizen of the UK and Colonies having the right of abode in the UK.

2          A passport or national identity card (current or expired) showing that the holder is a national of the European Economic Area or Switzerland.

3          A registration certificate or document (current or expired) certifying or indicating permanent residence issued by the Home Office, to a national of a European Union, European Economic Area country or Switzerland.

4          A permanent residence card, indefinite leave to remain, indefinite leave to enter or no time limit card issued by the Home Office (current or expired), to a non-EEA national who is a family member of an EEA or Swiss national.

5          A biometric immigration document issued by the Home Office to the holder indicating that the person named is allowed to stay indefinitely in the UK, or has no time limit on their stay in the UK. The document must be valid (not expired) at the time the right to rent check is made.

6          A passport or other travel document (current or expired) endorsed to show that the holder is exempt from immigration control, is allowed to stay indefinitely in the UK, has the right of abode in the UK, or has no time limit on their stay in the UK.

7          A current immigration status document containing a photograph issued by the Home Office to the holder with an endorsement indicating that the named person is permitted to stay indefinitely in the UK or has no time limit on their stay in the UK. The document must be valid (not expired) at the time the right to rent check is made.

8          A certificate of registration or naturalisation as a British citizen.


List B –


Any two of these documents will prove indefinite right to rent

1          A full birth or adoption certificate issued in the UK, the Channel Islands, the Isle of Man or Ireland, which includes the name(s) of at least one of the holder’s parents or adoptive parents.

2          A letter issued within the last 3 months confirming the holder’s name, issued by a UK government department or local authority and signed by a named official (giving their name and professional address), or signed by a British passport holder (giving their name, address and passport number), or issued by a person who employs the holder (giving their name and company address) confirming the holder’s status as an employee.

3          A letter from a UK police force confirming the holder is a victim of crime and personal documents have been stolen, stating the crime reference number, issued within the last 3 months.

4          Evidence (identity card, document of confirmation issued by one of HM forces, confirmation letter issued by the Secretary of State) of the holder’s previous or current service in any of HM’s UK armed forces.


5          A letter from HM Prison Service, the Scottish Prison Service or the Northern Ireland Prison Service confirming the holder’s name, date of birth, and that they have been released from custody of that service in the past 3 months; or a letter from an officer of the National Offender Management Service in England and Wales, an officer of a local authority in Scotland or an officer of the Probation Board for Northern Ireland confirming that the holder is the subject of an order requiring supervision by that officer.

6          Letter from a UK further or higher education institution confirming the holder’s acceptance on a course of studies.

7          A current full or provisional UK driving licence.

8          A current UK firearm or shotgun certificate.

9          Disclosure and Barring Service certificate issued within the last 3 months.

10        Benefits paperwork issued by HMRC, Local Authority or a Job Centre Plus, on behalf of the Department for Work and Pensions or the Northern Ireland Department for Social Development, within the 3 months prior to commencement of tenancy.


Autumn Statement: Buy-to-let homes face higher stamp duty

Buy-to-let landlords and people buying second homes will soon have to pay more in stamp duty, the chancellor has announced.

From April 2016, those in England and Wales will have to pay a 3% surcharge on each stamp duty band.

If you buy a second home to replace your main residence you can get the 3% refunded as long as you sell the original house within three years. Here’s the documents https://www.gov.uk/government/publications/stamp-duty-land-tax-apply-for-a-repayment-of-the-higher-rates-for-additional-properties 

George Osborne said the new surcharge would raise £1bn extra for the Treasury by 2021.

Other changes announced by the chancellor included an extended Help to Buy scheme in London, and more money for the Starter Homes programme.

The stamp duty surcharge will lift each band by 3%. That means that for properties worth between £125,000 and £250,000, where the stamp duty is 2%, buy-to-let landlords will pay 5%.

For the average buy-to-let purchase of £184,000, that means they will pay an extra £5,520 from April 2016.

Commercial property investors, with more than 15 properties, are expected to be exempt from the new charges.

Stamp Duty Rates (on purchases)

Property value Standard rate Buy-to-let/second home rate (April 2016)
Up to £125,000 0% 3%
£125 – £250,000 2% 5%
£250 – £925,000 5% 8%
£925 – £1.5m 10% 13%
over £1.5m 12% 15%

Source: HMRC

Buy-to-let landlords will also be hit by a change to Capital Gains Tax (CGT) rules.

From April 2019, they will have to pay any CGT due within 30 days of selling a property, rather than waiting till the end of the tax year, as at present.

Landlords are already due to get a lower rate of tax relief on mortgage payments.

In his summer Budget, the chancellor said that landlords would only receive the basic rate of tax relief – 20% – on mortgage payments, a change being phased in from 2017.

Up to £60m of the money raised from the stamp duty surcharge will go to help home-buyers in England in places where holiday homes have forced up local prices.

An extra £2.3bn will be lent by the government for building starter homes

Help to Buy

The Help to Buy (equity loan) scheme in England will also be extended to 2021, one year longer than planned.

An extension to the scheme in London will see buyers who can find a 5% deposit given a loan worth up to 40% of the property.

The loan will be interest free for five years.

Elsewhere the existing maximum loan is for 20% of the property’s value.

In total, the government will put an extra £6.9bn into housing.

This includes an extra £2.3bn in loans for the government’s starter homes programme, and £4bn lent to housing associations and local authorities to build more homes for shared ownership.

Another £200m will be used to build homes for rent, which will allow tenants to save for a deposit.

There will also be a pilot scheme to trial the government’s Right to Buy programme for housing association tenants.

Five housing associations will take part, to help design the final scheme

From bbc.co.uk


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