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.
Why were the properties in a poor state?
When I say poor state I mean they were not attractive to the local lettings market in their current condition
There was a degree of wear and tear, but the Landlord had upheld all responsibilities for repair in line with s.11 of the Landlord & Tenant Act 1985.
Who were the responsible stakeholders?
The responsible stakeholders refers to the owner of the property, and also us as managing agent.
There were other stakeholders such as the families of the deceased, contractors and other affected parties
Why was there no valid EPC for the properties?
The properties had been let since before the 1st October 2008, which was the date which EPC’s were required for let properties under the Energy Performance of Buildings Regulations 2007
Why was the property wiring ageing and why was the certificate overdue?
The wiring had been deemed safe by the previous electrical condition report. But as we were undertaking a refurbishment it made sense to rewire at this point.
The certificate had been overdue because of access issues, the regulations state that if we have shown all reasonable steps to comply with them the landlord is not in breach. therefore I documented discussions, and set check in dates with both tenant and contractor.
What are the penalties for non compliance with the Electrical Wiring regulations?
Up to £30,000 per property
What other improvements were made to the heating system?
Thermostats
New Radiators in part, with thermostatic valves
Did you consider more renewable heat sources compared with gas boiler?
We did look into renewable options. The only viable option would have been Air Source Heat Pumps. However because of the cost this would have made the financial return worse.
There would have also needed larger radiators to emit the same output which would have made the living space smaller
Why was the gas safety certificates overdue?
This was because of access issues with the tenants. The Gas Safe register published guidance during this time for Landlords. We took all reasonable steps to gain access and documented this down, with regular check ins to see if we could undertake the works.
What was the lockdown in November 2020 and how did it affect the project?
The lockdown started on 5th November and ended on 2nd December 2020
There was then a tiered system in place after this date, Hertfordshire was badly affected - and in Tier 3 for much of this time.
Because the properties were empty works should be undertaken. But any contractors showing signs of covid needed to test and if it was positive they needed to isolate for 10 days.
