1. NLA NEWS and LEGISLATIVE UPDATE
Teresa Kaczmarek: Area Representative

2. Contents New Tax Changes for Landlords Energy Efficiency Right to Rent
Stamp Duty Increase
Mortgage Interest Relief Cap
Wear and Tear Allowance
Capital Gains Tax
Micro-entrepreneurs
Energy Efficiency
Right to Rent

3. Budget Stamp Duty
A 3% surcharge on Stamp Duty Land Tax (SDLT) on purchases of additional residential properties from 1 April 2016.
No exemptions for significant investors or corporates.
36 months to claim a refund.
Refund form can be found on GOV.UK website
Background
The higher rates will apply to purchases of additional residential properties on and after 1 April 2016.
·         The government has decided to apply the higher rates equally to all purchasers without an exemption for significant investors.
•          To help those moving in difficult circumstances, purchasers will have 36 months rather than 18 months to claim a refund of the higher rates ‎if they buy a new main residence before disposing of their previous main residence. The refund can be claimed once the previous main residence has been disposed of.
•          Purchasers will also have 36 months between selling a main residence and replacing it with another without having to pay the higher rates‎. The 36 month period will begin from Autumn Statement 2015 for those who had sold a previous main residence prior to the Spending Review and Autumn Statement 2015.
·         When applying the higher rates, a small share in a property which has been inherited within the 36 months prior to a transaction will not be considered as an additional property.
·         The government will consider married couples who are separated and living in circumstances that are likely to become permanent, as divorced for the purposes of applying the higher rates.
Further information can be found here.

4. Budget 2016 - Stamp Duty Current Rates New rates from 1 April
Up to £125,000 0% 3%
The next £125,000 (the portion from £125,001 to £250,000) 2% 5%
The next £675,000 (the portion from £250,001 to £925,000) 8%
The next £575,000 (the portion from £925,001 to £1.5 million)
10%
13%
The remaining amount (the portion above £1.5 million)
12%
15%
If you buy property 40k or under it will be 0% SDLT.
1p over that and you pay the full 3% on whole amount up to 125,000.
See briefing here
Media comment here

5. Budget 2016 - Stamp Duty Existing Rates New from 1 April
First £125,000 £0
£3,750
Next £125,000 (125,001 to £250,000)
£2,500
£6,250
Final 25,000
£1,250
£2,000
Total SDLT
£12,000
Example on buying a house for £275,000

6. Identify chattels to reduce SDLT

7. Identify chattels to reduce SDLT
Carpets (fitted or otherwise)
Curtains
Blinds
Free-standing furniture
Kitchen white goods
Electric and gas fires (provided that they can be removed by disconnection from the power supply without causing damage to the property)light shades and fittings (unless recessed)

8. Mortgage Interest Relief Cap
The government will restrict the relief on finance costs that landlords of residential property can get, to the basic rate of income tax, e.g. higher rate payers will only be able to claim at the lower rate.
Known as Section 24 of the Finance (No.2) Act 2015
The restriction will be phased in over 4 years, starting from April 2017.

9. Wear & Tear Allowance Replaced
From April 2016 the 10% wear and tear allowance replaced by a system that based on the actual costs incurred

10. Wear & Tear Allowance Replaced
Renew
Repair

11. Budget March 2016 Capital Gains Tax (CGT)
The higher rate of CGT will be reduced from 28% to 20%, and the basic rate from 18% to 10%, from April 6th 2016
Not applicable for gains on residential properties.
Micro-entrepreneurs (or AirBNB break)
From April 2017 there will be two new £1000 allowances for property and trading income, aimed at for example people letting rooms or property through Airbnb.
Anything under this amount need not be declared
A.N. Other
Personal Tax
 Increase Income Tax Personal Allowance to £11,500 from April 2017
 Increase Higher Rate threshold to £45,000 from April 2017
 Abolition of Class 2 National Insurance contributions from April 2018
 From 2018, landlords who are keeping tax records digitally and providing regular digital updates to HMRC will be able to adopt pay-as-you-go tax payments to better manage their tax flow
Corporation Tax
 The Government will reduce the corporation tax rate to 17% from April 2020
Insurance Premium Tax (IPT)
 Standard rate of IPT will be increased from 9.5% to 10% from 1st October 2016

12. Tenants right to request energy efficiency improvements
A tenant can now request a Landlord make energy improvements (in writing). A landlord may not unreasonably refuse consent
A tenants’ request is only valid if they identify:
what improvements they want to make (from a list of approved measures)
the necessary funding for those improvements.
Landlords not obligated to pay for any improvement (yet to be finalised).
Unreasonably refuse consent = key phrase
Cost
It is the sole responsibility of the tenant making the request to organise funding, and tenants should ensure that suitable funding is available before they make a request.
NLA successfully lobbied the Government to ensure that there are no upfront costs for landlords. A landlord can choose to fund or part-fund efficiency improvements, but this is entirely at their discretion.
Before submitting a request, the tenant must first identify what improvements they want to make (from a list of approved measures) as well as the necessary funding for those improvements.
This funding may come from:
The Energy Company Obligation (ECO)
Central Government or local authority funding, or third party funding such as a grant,
A Green Deal Finance Plan (or future equivalent as the Green Deal is currently closed)
Tenant funding where they pay the upfront costs themselves (either fully or in combination with another source of funding above).
A tenants’ request for improvements is not valid without these two things.

13. Right to Rent Checks (Immigration Act)

14. Right to Rent Checks (Immigration Act)
Landlords need to carry out checks to identify whether a potential tenant has the right to reside in the UK.
The Requirements were rolled out across England from 1 February 2016.
* This slide is just designed to remind people of obligation – there is a separate presentation in terms of how to conduct checks, as otherwise this issue alone would take up all of presentation.
Refer them to GOV.UK site for more info or remind them the NLA have courses on this very issue!!!
Four basic steps to conducting an initial right to rent check:
Establish the adults who will live in the property as their only or main home;
Obtain original versions of one or more of the acceptable documents for adult occupiers;
Check the documents in the presence of the holder of the documents, &
Make copies of the documents and retain them with a record of the date on which the check is made.
New Immigration Bill has been published, this provides new possession powers and procedures for landlords needing to end a tenancy with a tenant disqualified because of their immigration status. Bill currently going to Lords
Richard Lambert has given evidence to the Public Bill Committee in Parliament about these powers, and the new criminal offence of continuing to let to those without the right to rent on October Video of this session is available at landlords.org.uk

15. Tel: 07739863583 Email: teresa.kaczmarek@landlords.org.uk
Thank You
Teresa Kaczmarek
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