Property Update – August 2021

Taxman Set For More Powers To Snoop On Landlords

Here we look at the latest updates in property for this month. The taxman is taking on even more far-reaching powers to snoop on landlords. An unpublicised clause in the Finance Act 2021 lets tax officials ask for a landlord’s financial details from banks and building societies without permission for the first time. The power means landlords will not know if HM Revenue & Customs (HMRC) is investigating their finances.

According to a new consultation, HMRC also wants to compel AirBnB and other online short-let portals to hand over information about holiday lettings. The aim is to check if landlords are declaring their holiday let income on tax returns. Platforms must keep financial data for up to five years, says HMRC. The power will also check on money collected by digital platforms. This includes restaurants, taxi drivers and sellers using services like Amazon and eBay.

Upgrade to the Law

Both measures are in response to upgrading British laws to match international standards.

“The growth of the digital economy also creates challenges of compliance and tax collection for HMRC and other tax authorities. To address some of these challenges, the Organisation for Economic Co-operation and Development (OECD) has developed rules for digital platforms to report the income of individuals or companies selling goods or providing services via their platform to the tax authority where the platform is resident, incorporated or managed,” says the consultation document.

“This information will then be sent to the tax authority where the seller is resident. The platforms will also be required to provide a copy of the information to the seller, which will help the seller declare the correct amounts for tax purposes.”

The powers are aimed at speeding up requests for information from overseas tax authorities. HMRC says the current process involves a tribunal to consider each case, which takes too long.

“International obligations are no excuse for sweeping away established self-assessment safeguards and enabling HMRC to obtain information on taxpayers from financial institutions without prior approval,” claims accountancy industry trade body the ICAEW.

wallet hit by covid

How COVID-19 hit landlords in the pocket

According to a new survey, one in seven landlords are more than £10,000 out of pocket due to the COVID-19 pandemic.

Half of the 560 landlords quizzed say they lost money during the pandemic. This is due to tenants not being able to pay rent or not being able to fill their empty buy to lets.

Other headline numbers from the research by landlord insurer Simply Business include:

  • 28% of landlords arranged rent repayment plans with tenants, but 44% of renters failed to stick to the agreements
  • More than a third of landlords expect to take at least a year to recoup losses
  • 14% of landlords offered rent reductions
  • 7% of landlords took a mortgage holiday

To make up their losses, one in four landlords dipped into their savings to pay their bills. While 8% took action to cut their living costs.

Despite the disruption from the pandemic, 59% of landlords still feel property is a good investment.

However, around a fifth of landlords are thinking about leaving the market. “Contributing over £16 billion annually in pre-tax spending, an exodus of smaller landlords from the buy-to-let market could have a devastating impact on the UK economy,” said the firm’s CEO Alan Thomas.

house prices
Real estate investments and mortgage concept. House and stack of coins. Saving money for buy a house for family. 3d illustration

Average house prices soar by £31,000 in a year

The latest official house price data is good news for landlords. Average house prices have surged to a record high. The average home now costs £266,000 – a rise of £31,000 in the past year, says the Office for National Statistics (ONS). Home values increased by 13.2 per cent over the past 12 months. The last time house prices increased so much was in November 2004. The ONS highlights Chancellor Rishi Sunak’s stamp duty holiday as the main driver behind the rising prices. A record 198,000 homes changed hands in June. Although prices are rising everywhere, those in London and the Home Counties are increasing more slowly. London saw a 6.3 per cent rise – while the East and South East also failed to keep up with the rest of the country.

Rents fly past £1,000 a month ceiling

Average monthly rents hit £1,029 in July. Beating the £1,000 a month marker for the second month in a row, says tenant referencing agency Homelet. However, there’s some discrepancy between the official data and the Homelet sample. The ONS rent data shows rents have not changed since April compared with a 2.2% increase between June and July Homelet. Yearly, the ONS posts a 1.2% rise, while Homelet reports a 6.6% change.

“The data shows the exceptional growth in rental values, particularly in areas that are within commutable distance to London. “Throughout the pandemic, the rate of change in some regions has more than doubled against previous years,” said Homelet CEO Andy Halstead. “We see positive signs in the capital. Rents are now just 1.2% down on pre-pandemic levels from July 2019. With boroughs in central and inner London showing growth in achieved rental values. Moreover, with restrictions easing, optimism is returning. As a result, demand will steadily grow for the rest of the year.”

How rents have changed since July 2020

property values
Annual Change in Rent Prices [Courtesy of Homelet]

pet on property

Let landlords charge extra for pets, say MPs

In another update, a cross-party group of MPS led by Tory Andrew Risindell is urging the government to let landlords charge tenants extra fees for keeping pets in a rented home. They have written to Housing Secretary Robert Jenrick asking him to amend the Tenant Fees Act to lift the ban on pet-related charges, like insurance and additional deposits.


Want to read more? Check out our blog on What is Affordable Housing? Everything You Need to Know

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