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A round up of news and legislative changes that we think you need to be aware of: Search Indemnity Insurance From 6 April 2009 the option to insure against the lack of search information will end. Many investors, especially those involved in fast sales/purchases such as auctions or repossessions, often take out insurance instead of obtaining search information that may delay matters. A little known part of the new HIP legislation is to stop this practice as the Government believes that the search information is now readily available. More info:- http://www.homeinformationpacks.gov.uk/ http://www.direct.gov.uk/HIPs Corgi
Gas Safe Register will replace CORGI gas registration in Great Britain on 1 April 2009. It will be the official industry stamp for gas safety.
In order to continue trading companies/individuals must register with Gas Safe by 1st April.
Landlords and property investors please be aware Gas Safe registration not Corgi registration needs to apply to all plumbing work from then on.
More info:-
https://www.gassaferegister.co.uk/
Sale and Rent Back Legislation The big news to impact on investors is the new Sale and Rent Back Legislation being introduced by the FSA following an OFT study. Currently at consultation stage, the legislation will take effect in July this year.
This legislation has been introduced by the government to "protect" vunerable and distressed homeowners from unscrupulous companies who buy their properties off them far below the true market value, and then renege on a long term rental agreement.
As in any industry, there are rouges who prey on vunerable people, and there are ethical SARB investors who offer a genuine and sympathetic service, allowing the person to stay in their home and avoid repossession.
The costs to register will be beyond most investors reach and it is likely that the big institutional investors will take over this part of the industry and the tenants will lose the more personal service provided by individual/private investors.
Make sure you have your say! More info:
http://www.fsa.gov.uk/pubs/cp/cp09_06.pdf
Tax issues Thanks to the decrease in the BOE base rate, many of us are enjoying increased cash flow across our portfolio. It's worth bearing in mind that if you are making a sizeable positive cashflow you could well be facing an income tax bill next year - for many this would be a first.
If like many landlords you have showed losses for several years across your portfolio then chances are you won't face a huge bill but if you have only shown a marginal loss in recent years or indeed a profit especially if you have a low geared or high cashflow portfolio then you could face a significant tax liability. It would be prudent to put away at least 25% of your cashflow in a high interest account (if you can find one).
On the subject of tax, the Inland Revenue are chasing down Landlords who aren't declaring their rental incomes and are contacting letting agents for Landlord and property lists far more frequently - and neither they nor the agent is obliged to inform you. Make sure you speak to your accountant if you're worried you may face a liability. As with all tax matters it's far better to tackle it before it happens that try and sort it afterwards. And remember paying tax is a good thing - it means you're making a profit! It is also beneficial from the point of view that many BTL mortgages now require you to show an income, so it could, in future, assist you in getting finance. Further information at http://www.hmrc.gov.uk/ New tenant assessment service There is a new tenant assessment service available which costs £25.00 plus VAT. It includes a credit check, verification of employment status, a current or previous Landlord referral, and an Electoral Register check. The underwriters provide a risk assessment to the Landlord with a recommendation of the tenant's suitability for the proposed tenancy, together with a summary of the information their recommendation is based upon.
You can find details at: http://www.redbrick-tenant-assessment.co.uk/ or by phoning 0845 849 4049.
The only other thing we recommend to do is to get details of the tenant's "next of kin". This is a good line of enquiry if the tenant absconds without paying the rent, disappears, or is taken ill - all of which can happen. Landlord's Survey Worrying statistic from the National Landlords Association survey: 37% of Landlords are currently experiencing rental payment difficulties with existing tenants! You can minimise your risk of voids and bad tenants by adopting a professional approach. You can read our Landlord Tips here. Fraud on the increase in the U.K. Fraud cases climbed by 14% in the UK in the first half of 2008 compared with a year ago, according to fraud prevention service Cifas. It said there were 104,548 confirmed frauds filed to its database from January to July, with hotspots in London and the south-east of England. Bank accounts and credit cards remain the main targets for fraudsters, followed by loans and phone deals. Some things you can do to protect yourself against fraud: * Check your bank and credit card statements carefully to ensure they are accurate.
* Shred all sensitive documents containing personal information.
* You can join http://www.cifas.org.uk/ to add an extra level of security to any credit application.
* Never give personal or account details to anyone who contacts you unexpectedly. Your bank will never contact you and ask you for your PIN or for a whole security number of password.
* If you lose your passport or driving licence or they are stolen, contact the Passport Office or DVLA immediately. Cancel any lost or stolen credit or debit cards immediately.
* Keep your personal documents in a safe place, preferably a locked drawer or cupboard.
* Regularly get a copy of your personal credit record from a credit reference agency (addresses at the end of this note) to check that it does not include any entries that you do not recognise.
* If you move house, use Royal Mail's redirection service for at least a year, to stop your post from going to your old address. Also, don't forget to give your new address to your bank, your lender and all other organisations that you deal with. Got a problem or need a question answered? Please join our community at http://www.propertytribes.ning.com/. Post a question or start a discussion and add to your knowledge and contacts.
Source: some material for this blog was taken from Lisa Orme's excellent blog and newsletter at: http://www.pipaforum.com/blog
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