Case Study Flashcards
Why was the tenancy governed by the Rent Act 1977?
Both tenancies had began prior to the 15th January 1989 and therefore were governed by the Rent Act 1977
What is the base date for Capital Gains Tax?
The base date is the previous sale date or 31st March 1982, whichever is most recent
When did MEES regulations come into effect?
The Minimum Energy Efficiency (Private Rented Property) Regulations 2015 came into effect for new tenancies from 1st April 2018 and existing tenancies from 1st April 2020.
Were there written tenancy agreements for the properties
No there weren’t written tenancy agreements
Why did the tenants pay no rent?
The tenants had previously been employees of the landlord. Cleaner & Nanny. They had an amicable relationship and the landlord had never wanted to charge rent as a result
What if someone had wanted to charge rent what would you have done?
- I would have met with the tenants to make them aware of the intention
- I would then apply to the VOA for a fair assessment of the rent using a RR1 form
- Following assessment I would inform the tenant of the increase by a form 1 notice
- this would increase the rent by giving 4 weeks notice minimum
- I would then update our property terrier system
What would someone need to qualify for succession to a rent act tenancy?
1) If at the point before the tenant’s death her spouse resided at the property, they would have succeeded the tenancy
2) If at the point before the tenant’s death a member of his family was residing in the property for a period of 2 years then they will succeed the tenancy and be entitled to an assured tenancy
What are the relevant taxes that affect properties owned by companies?
Properties owned by companies are affected by the Annual Tax on Enveloped Dwellings (ATED) for all residential property over £500,000
When was the valuation date for ATED?
1st April 2022 was the last valuation date
What are the ATED reliefs?
Let to a third party
Homes for Ukraine scheme
open to the public for 28 days per year
What are the rates of ATED?
under the current regime there are rates applicable to property value, for example properties between £500,000 - £1m have an annual charge of £3,800
What would be a good level of return for the properties?
For previous property refurbishments, and improvement works between tenancies the client had aimed for a 10% return on investment. Therefore this is what we had in mind.
Did you consider a sale?
Yes we did, but the client wanted to invest to gain a level of return. There was also likely a high corporation tax bill. I consulted a senior valuation colleague at this early stage, and we envisaged a likely gain of around £700,000. Which would result in a tax liability of around £130,000
Why had little investment occurred over the time period?
We had conducted all letting compliance checks and resolved repairs when applicable, inspecting once per year, annual gutter clearance and 5 yeartly ex decs. But there had been little investment because of the negligible return to the client.
Why had little investment occurred over the time period?
We had conducted all letting compliance checks and resolved repairs when applicable, inspecting once per year, annual gutter clearance and 5 yeartly ex decs. But there had been little investment because of the negligible return to the client.
