Government announces; section 21’s set to be axed for UK landlords.

The government has decided to take action and abolish Landlords ability to serve a section 21 notice. This has come in light of many claims from various tenant support groups, suggesting that 46% of tenants received a notice to leave the property within 6 months.

Removal of section 21 could cause landlords to leave the already struggling property market and would mean many landlords wanting to rent out their property short term will no longer be able to do so, leaving them no choice but to rent indefinitely Unless sufficient grounds were given, of a similar kind to those that have been issued in Scotland.

As of December 2017, Scottish landlords were no longer allowed to serve section 33’s (their version of a section 21) for a no-fault possession, however the government have added a few extra grounds for possession if a landlord has “reasonable cause” for example, needing to sell, refurbish or move back in. Scotland now has open-ended tenancies meaning there is no end date, like the “assured tenancy” and it’s looking like it will be that way here also.

The end of the section 21 comes after many campaigns from various organizations claiming that it causes tenants to ‘live in fear’.

Many tenants and support groups see this as a victory, however, this abolishment will more than likely lead to landlords driving up the cost rent causing tenants to suffer as a result. This will also lead to Landlords that ‘need’ their properties back to cause an even larger decline in the already diminishing housing stock unless additional provisions are put in place. In reality, the government needs to listen to landlords and give them the ability to obtain their property back when ‘needed’ as this is what happens the majority of times anyway.  

Could a tax tribunal ruling mean BTL investors avoid 3% stamp duty surcharge?

Buy-to-let investors could soon fill the HMRC with stamp duty surcharge refund requests. This is following on from a potential precedent set at a recent tax tribunal that saw a couple acquire a neglected building and were able to refute the additional 3% stamp duty charge on purchases of second homes.

It was revealed at the tribunal, held in Bristol, that potentially, buy to let investors could avoid paying the 3% stamp duty surcharge. This instance could cause many more landlords who have already paid the surcharge, to demand a refund from HMRC and suggests that many property purchases could fall short of the additional 3% surcharge and just consist of the standard rate stamp duty.

Paul and Nikki Bewley acquired their uninhabitable bungalow in Western-super-Mare and made the decision to bulldoze the original build in order to make way for a new property, thinking they would not accountable for the 3% charge for Taking on the additional property.

HMRC argued this view, believing that the 3% charge was applicable, as the property was capable of being used as a dwelling sometime in the future.

However, a recent tax tribunal ruled against the HMRC and in favour of Paul and Nikki Bewley, stating that they are only able to charge the 3% if the home is in an acceptable living condition right away.

HMRC has yet to decide on an appeal, stating: “We’re considering the judgment carefully.”

But, this ruling suggests that many buy-to-let landlords could be exempt from the 3% surcharge, when buying a property that is uninhabitable at the time they purchased it.

Commercial Trust Limited, a specialist buy-to-let broker, considers that this ruling could represent an opportunity for past claims from buy-to-let investors who have paid the additional 3% charge on properties that were uninhabitable at the time of purchase.