IN ASSOCIATION WITH
Asian
HOUSE&HOME WINTER 2017 ISSUE 8 £2.75
T H E U LT I M AT E R E A D F O R P R O P E R T Y
DOWNSIZINGI
Inheritance tax downsizing rulesi
SOCIAL HOUSINGI
Right to buyi
PROPERTYI INVESTORS MEETI
Spotlight on:
HARROW
Boom time for buyers
A round upi
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PLUS: DIGITAL TAX: TRANSFORMING THE TAX COMPLIANCE SYSTEM
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To olley ’s
FINALIST
Let’s discuss property
Whether you already have a UK proper t y por tfolio or are planning to invest in the UK proper t y
Advice on structuring the transaction Preparation & submission of UK T Ta ax Returns Inheritance T Ta ax planning Capital gains tax planning HMRC Investigations Commercial Properties Where clients hold commercial proper ties within their por t folio, we provide a range of ser vices including V VA AT and capital allowance advisor y ser vices. Congress House, 14 Lyon Road, Harrow, HA1 2EN
Contact us on +44 (0)20 8515 1234 or at tax@godley.co.uk www.godley.co.uk @GodleyCo Godley & Co is the trading name of Godley & Co Ltd
God God dley ey Property Pro opertty Ad d A4 A v05 v05.iindd ndd 1
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Asian
HOUSE&HOME THE NATION HAS WAITED with bated breath for Chancellor Phil Hammond’s very first Autumn budget especially due to the ongoing political bickering and Brexit’s fallout. At the time of going to press the Chancellor announced the abolition of Stamp Duty for first time buyers for houses up to £300,000, promised planning reforms to boost building and announced the creation of 300,000 new homes per year by the mid 2020s. Will this offer succour to those looking for a step on the property ladder? Only time will tell. In the words of the government the housing sector is a ‘broken’ one. The answer is obvious – we need more homes. It was way back in 1978 that the UK managed to build 250,000 homes a year. That was when councils built 44% of all new homes. So the government’s plans for councils to build more homes is a welcome step but this must involve all councils. On a positive note, the landscape and fortunes of Harrow in north west London are set to dramatically change driven by the £1.75bn Harrow Opportunity Area investment programme. The council is planning to build up to 5,000 new houses by 2026. Harrow has excellent transport links to London and surrounding areas. But the burgeoning population was in dire need of new houses. With the new plans in place, hopefully, it will be ‘all change’ for Harrow. With an ageing first generation within the British Asian community many are now looking to downsize to a care home. Inheritance tax downsizing rules can seem daunting but there are ways to benefit from them. This has been briefly touched upon in this edition. We have included several topics in this special edition keeping in mind the British Asian community’s huge appetite for property investment. This magazine is part of our endeavour to ensure that your house and home is truly your castle.
THE ASIAN HOUSE & HOME MAGAZINE has looked to raise the bar with each successive edition. This edition, probably, is the best so far, thanks to all those involved. Simultaneously, we have started running property meet-ups, with expert panelists. We have had two this year, both well attended, and the latest one, oversubscribed. We are looking to replicate this next year. There is clearly an appetite in the market place for such meet-ups, both as an opportunity to network and to get some valuable insights. This year has been an interesting year, with the property income tax being phased in. The consensus from the panel, of the last meet-up, was to operate well within the rules, and not let the tax situation drive investment decisions. There are some areas within the current environment, which still can be used for efficient tax relief, for example, Entrepreneurs Relief and Furnished Holiday Lets. Furnished Holiday Lets are exempt from the changes to higher rate interest relief, which are currently being implemented. There are also some further benefits which apply to this niche, which are worthy of investigation. The smart Indian money, from India, is now coming to the UK in a strong wave. I say smart, because there has been money coming in previously by some very high profile developers, which swept up some very high profile buildings. However, the conversion rate was not favourable and the top end of the market took a dive. In short, there was at least a 40% decrease in value from the perspective of a Rupee based investor. Currently, the environment is conducive for money to come in, the geopolitical and currency situation are in favour of investment in the UK from India. Watch this space, they will be making headlines in the coming years. I hope you enjoy this edition.
PUBLISHER/EDITOR
PUBLISHER/EDITOR: CB PATEL CHIEF EXECUTIVE OFFICER: L. GEORGE MANAGING EDITOR: KOKILA PATEL ASSOCIATE EDITOR: RUPANJANA DUTTA DEPUTY EDITOR: URJA PATEL NEWS EDITOR: KAMAL RAO EDITORIAL EXECUTIVE: RESHMA TRILOCHUN CONSULTING EDITOR: JYOTSNA SHAH ADVERTISING MANAGER: KISHOR PARMAR
CONSULTING EDITOR
HEAD OF SALES & MARKETING: ROVIN GEORGE HEAD - NEW PROJECTS AND BUSINESS DEVELOPMENT: CECIL SOANS ART DIRECTOR: LISA DUKE GRAPHIC DESIGNERS: HARISH DAHYA & AJAY KUMAR CUSTOMER SERVICE: RAGINI NAYAK
ASIAN BUSINESS PUBLICATIONS LTD KARMA YOGA HOUSE 12 HOXTON MARKET, LONDON N1 6HW Tel: 020 7749 4085 Fax: 020 7749 4081 www.abplgroup.com ©Asian Business Publications Ltd
WINTER 2017 I ASIAN HOUSE & HOME
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HOUSE&HOME
CONTENTS
WINTER
2017
upfront 6
NEWS Property update, aroma therapy, levitating beds, food intolerance..... 11 FACT OR FICTION Mortgages – inside story 13 LOCATION How location works
6
features 14 SPOTLIGHT ON HARROW Boom time for buyers 19 DIGITAL TAX Transforming the tax compliance system 21 CRYPTO Crypto currencies & land 25 VASTU Safe & peaceful space tips 26 SOCIAL HOUSING Right to buy 29 99 HOMES Online estate agency 30 LEASE Expand your knowledge 32 HMO Wise up on the legal side 34 C0-HABITING Importance of co-habiting agreements 36 DOWNSIZING Inheritance tax downsizing rules
13 19 30
at the back 38 AUCTIONS Buying commercial property in auctions 40 MONTESSORI Less clutter make for happier kids 42 EVENT Property investors meet - a roundup 44 ENERGY Get up to speed up on new laws 46 Q&A Buy-to-let tax 50 OVER COFFEE Ingenious Akshay Ruparelia
Asian
HOUSE&HOME Rachel Dimond Editor Rachel Dimond, Contributing Editor has brought her wealth of editorial experience to Asian House and Home. With her extensive background in publishing, she has enjoyed guiding the team throughout the development and rebranding of this publication.
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46 Yogesh Patel Executive editor
Yogesh has a passion for anything property related! He helps SMEs and private clients with their property taxation matters and supports them grow their business in a tax efficient way. Yogesh works for Godley & Co, a firm of Chartered Accountants & Tax Specialists. He is a Chartered Tax Adviser and accountant drawing on over ten years of advisory experience, including 7 years’ experience at PWC. After graduating from LSE, Yogesh worked at Blackrock Investment Managers, analysing property investments both in the UK and overseas.
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NEWS
PROPERTY BUDGET SNIPPETS IN BRIEF STAMP DUTY Stamp Duty to be abolished for first time buyers on properties up to £300,000. For those spending between £300 and £500,000 this will represent a £5000 saving.
GRENFELL TOWER Kensington and Chelsea council will get an extra £28m for mental health services, regeneration support and a new community space for the Grenfell United group.
HELP TO BUY This scheme is to be extended with an extra £10 bn to extend it to 2021. Fears are it could lead to a RISE in house prices
SECOND HOMES JUST BECAME MORE EXPENSIVE Councils will be handed power to double tax on empty homes to tackle the issue of empty properties.
UNIVERSAL CREDIT From 2018, those who need it will be able to access up to a month’s worth of universal credit within five days via an interest-free advance. Not much was added to make UC roll out more smoothly.
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ASIAN HOUSE & HOME I WINTER 2017
LANDLORD INCENTIVES
For those who offer longer term secure tenancies, the government will explore tax breaks
TRAVEL COSTS The young person’s rail card is to include those up to age 31. Good news for young people looking to find homes slightly out of Central London
OUT & ABOUT
IN BRIEF
A row of colorful town houses in London Notting Hill
TINY HOMES 188 square foot of home for £275,000 in 2014 was seen as big news. It was all about location. But we shall see more micro-homes in the coming years as Londoners struggle to find anywhere to live in their capital city.
BOOMERANG GENERATION According to recent data from the ONS, about a quarter of young adults in the UK are now living with their parents – the highest number since records began in 1996.
WHICH ONE TO CHOOSE
Michelin House at Chelsea
Who chooses where to live in the 33 London boroughs? Expats like traditional Chelsea, Notting Hill for its diversity and Fulham, which is a particular a favorite for Australians. South London has so much to offer, especially now transport links are getting better. It has a completely different character to North London. Historical tours take place across all boroughs and are well worth it.
Spot a Red stag at Richmond Park!
UPTAKE IS DOWN ONLY ONE IN TEN RENT TO BUY TENANTS PUCHASE THEIR HOME ACCORDING TO THE LATEST SURVEY I’M A CELEBRITY & PLAN TO STAY HERE St John’s Wood, Tufnell Park, Richmond, Highgate and Notting Hill are all home to many celebrities. Highgate is the sleepiest, so a very popular hideaway.
DID YOU KNOW
Richmond Upon Thames
FAMOUS TREES Trees are important for air quality on our streets and much loved. After the 1987 storm Londoners were asked to name the landmark trees of the capital and 41 were awarded ‘Great Tree’ status and have plaques next to them. Check if you have one near you.
HOUSE BUILD The City of London is in an area that has no indigenous building stone, so bricks and slate for the roof have traditionally come from many areas of British Isles. Although there are about 350 quarries in England, much brick and stone is now imported. The market has grown but colour, size and economics tend to outweigh other considerations.
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NEWS
WORDS: JANEY LEE GRACE
HOUSING INTERIOR TRENDS DITCH THE PLASTIC ‘Unless the flow of plastics and industrial pollution into the ocean is reduced, marine life will be poisoned by them for many centuries to come’ David Attenborough on Blue Planet Let’s take the ‘small change big difference approach’ as we can all take responsibility for our purchases. It seems simplistic to settle for ‘not buying plastic bags’ but it’s a start. Around 500 million plastic bags are in use, taking over a thousand years to degrade. Aim to buy as few products as possible that are packaged in plastic. It’s ridiculous to buy an avocado sitting on a polystyrene container wrapped in more plastic.
MUST HAVE! LIVING ROOM TLC MEANS GORGEOUS SOFAS AND COMFY CHAIRS… IT’S NOT EASY TO FIND THE KIND OF FURNITURE THAT FITS YOUR ROOM, YOUR DÉCOR, LET ALONE THAT BRINGS QUALITY, COMFORT AND THAT EXTRA SOMETHING INTO YOUR HOME. SO THESE DESIGNS ARE MADE WITH TENDER LOVING CARE AND YOU WILL KNOW IT. ●
www.thelovingchaircompany.com
FOOD TRENDS
DID
HEALTHY GUTS!
The importance of good gut health is very much in the news, and many people are realising the need to replace some of the ‘good bacteria’ we lose as a result of our ‘imperfect’ diets with good quality probiotics. They aren’t all equal though, so look out for liquid probiotics that arrive and survive the stomach acid. Kefir is an amazing drink, perfect even if you are lactose intolerant as you can now get the high strength coconut kefir shots from Rhythm health ● www.rhythmhealth.co.uk
YOU KNOW
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HOUSE&HOME THERMOMETER CHECK
1
HEAT UP!
UPCYCLING
The fundamental idea behind Thors-Design’s furniture is upcycling. Rustic Azobé wood, sourced from decommissioned Danish wharves, is turned in to simple and stylish designer furniture. Thors-Design creates bespoke, hand-made furniture with an original raw look and a natural Nordic feel that retains the integrity, history and natural character of the wood.
harmonious music, for example, classical, spiritual…the choice is yours!
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NOT ALL SPIDERS ARE BAD!
Spider plants eat toxins in the home and they especially enjoy those in kitchens and bathrooms. Burn oil - Lavender calms everyone!
2
KEEP CALM
Essential oils can be burned or diffused. Lavender calms everyone and Bergamot is great for lifting the spirits
Upcycle with Thors-Design’s furniture
Trees are not just for Christmas
3
SALT IS GOOD!
End your day in a bath with salts to cleanse, purify and relax you. Sea salt, Himalayan rock salt and Epsom salts bring peace and pain relief. Good for eczema too!
4
TURMERIC
To ensure its remarkable potency for body and mind, enjoy it with black pepper and oil.
5
NATURE KNOWS BEST
Natural oils in a spray of water can clear the air and bring joy. Artificial sprays and air fresheners can exacerbate allergies and asthma.
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HOME HARMONY
Even our pets and our plants feel better if we play
1
COOL DOWN!
TREES ARE NOT JUST FOR XMAS
If you plan to get one why not get a tree with roots so you can plant it and use it again next year?
2
DID YOU KNOW?
Microplastic is everywhere, in the air and oceans. A huge amount is flushed down our toilets.
3
THROW IT OUT
Resist buying another ‘throw’. These soft cosy blankets are full of microplastic, as are the fleece jackets we love and use to keep warm.
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NEWS
WORDS: JANEY LEE GRACE
A R O M AT H E R A P Y
For that soothing bath, make sure the bath soak is natural and organic. Try the Africology Body & Bath Soak, a wonderful way to unwind after a long day. It contains marula, neroli and sweet orange essential oils, which helps relieve stress. ●
https://uk./index.php
KEEP IT IN THE KITCHEN GROWING HERBS IN YOUR KITCHEN NOT ONLY INSPIRES YOU TO COOK BUT IT TANTALISES YOUR TASTE BUDS. BRING SOME MAGIC INTO YOUR HOME
TOP BUY
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ASIAN HOUSE & HOME I WINTER 2017
Meditation and even learning to levitate are familiar to us and bring untold benefits. But sleeping off the ground in real comfort is new. If you haven’t heard of levitating beds, these gorgeous bespoke designs might meet your need for something special that is really comfortable. Craig Phillips is an inspired and inspiring designer who actually joined the Magic Circle aged 12 and hasn’t looked back, or down! ● www.levitasdesign.com
FACT OR FICTION? There are some 11.2 million mortgages in Britain but how many people actually understand what one is? A mortgage literally means, ‘Dead Pledge’: late Middle English: from Old French, literally ‘dead pledge,’ from mort (from Latin mortuus ‘dead’) + gage ‘pledge.’
SCIENCE LAB
GET TESTED
We have to deal with dust and environmental toxins galore, but have you ever wondered why you might be lacking in energy, feeling bloated or lethargic? Intolerant of or allergic to certain foods or drinks but are unsure how to find out for sure? Yorktest are Europe’s leading food intolerance testing provider. It’s a fully accredited laboratory, using state-of-the-art testing equipment to analyse your IgG reactions to over 200 ingredients, all from just a few drops of blood. You’ll get your results, often within just a few days of posting your sample. l www.yorktest.com
SPRITZ IT AWAY Artificial fragrance can often exacerbate allergies so it’s a great idea to ditch petroleum based scented candles and conventional air fresheners. Try an aromatherapy spray mists to help harmonise your energy with the environment. l www.findhorn essences.com
A pledge is a promise. A mortgage is a dead promise. On the face of it, it seems very straightforward – a person receives a loan, called a mortgage, for a property and in doing so, agrees to pay it back within a set period, usually 25 years. Should they fail to do so, the creditor (the lender) claims the right to take the property by way of the registered charge created by the signature on the Mortgage Deed, which forms their sincere promise to pay. However, it is more complex than many of us would imagine.
NO LOAN HAD TAKEN PLACE? HOW COULD THAT BE? The bank loaned me the money and I used it to buy the house and the land. I borrowed their money, therefore, I have to pay it back.’ However, this is an illusion. HOW? The bank (the mortgagee) did not actually loan you any of its own money. Most money is created as debt in the form of ‘loans’ and every ‘loan’ is created as a ‘promise to pay’ – just like the Bank of England notes in your wallet. HOW DOES IT WORK? The key document is the mortgage deed. When you sign it, you are acknowledging, without any evidence, that you have received a sum of money. You are also falsely and unlawfully advised to sign it before you are the owner of the property. It is false, on the simple basis that no one can place a charge on a property which is not theirs at the time the deed was signed. This document is also a valuable
financial instrument to the bank (the mortgagee). In fact, being a promise to pay, it is as good as cash to the banker who takes it and deposits it in a special account that they never tell you about. In this sense, you are, in fact, the creditor. Your signature has created the line of credit, which is streamed from that account and used to buy the property.
THE MORTGAGE DEED IS THE KEYSTONE IN AN ELABORATE FRAUD The banker is, quite literally, creating the money out of thin air by way of strokes on a computer keyboard. No deposits are loaned, neither out of the bank’s vaults nor from customers’ accounts. Once the deed is signed, but always undated, at a time when you are not the owner, have received no moneys and have no written contract with the bank (as required at law) the swindle moves into full swing. The banker misrepresents the facts by falsely claiming you borrowed money, then compound interest is added on top of the fake loan and, in the event you fail to make the payments for 3 consecutive months, it will instruct its solicitors to make a false possession claim against you which will invariably result in the house – the purchase of which you funded – being stolen by way of a fake County Court Order.
WORDS: SURESH VAGJIANI
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Knowledge-based monitored capability
NO GOBBLEDEGOOK
Just clarity The law firm that’s right for you is the one that speaks your language. Enough said.
Gujarati | Hindi Are you buying, selling, remortgaging, or extending your current lease? Manish and his team of experienced property lawyers can also assist, guide, and coach you through the process. Manish Patel Senior Associate 01223 326617 manish-patel@birketts.co.uk
Cambridge . Chelmsford . Ipswich . Norwich
Birketts_Asian Voice_House and home magazine_Full page_210x297mm.indd 1
www.birketts.co.uk/property
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INVESTMENTS
WORDS: GILL FIELDING
LOCATION LOCATION LOCATION
Is there a way to spot the best place to invest? Some might say so, but here we get some very timely, down to earth advice
I
’ve been a property investor for over 40 years and one of the most frequent questions I get asked, time and time again, is where the best location is to buy an investment property. In all honesty I struggle to answer the question, as it’s fundamentally flawed. This is because there is no ideal place to buy, just as there isn’t any ideal time to start – so you may as well just get on with it NOW. The concept that there is a geographical place and a specific address like 27 Acacia Avenue, which is the perfect investment is clearly an unsafe assumption and quite scary as it illustrates hugely worrying thought patterns for a potential investor. I have heard many silly stories over the years including comments like a buy to let doesn’t work in London. A place as big as London has widely different properties, property prices and very specific and localised demand and supply.
HOT SPOT!
HOT SPOT!
So my view is that it’s crazy to say that any investing does or doesn’t work in any geographical area overall because, frankly, as long as you can find one property that works for you somewhere, then it works! But what we can say is that investing works in some places, so for instance every time I send a letter off to the DVLA in Swansea I think about where all the workers at the DVLA live. There must be thousands of them and they all need to live somewhere so my guess is that the part of Swansea near the DVLA must be a good investing environment. Furthermore, if you can find a good property on the road next to a university campus that must work. Likewise, how about a nice house next to a teaching hospital where there might be young medical students and nurses? That could work. As you can hear, it’s not so much a physical geographical location that works, more a situation that works. For me, it’s all about maximising the chances of getting a tenant or a buyer and getting the financial return for the property and we can only do that if we have volume and lots of options. So the more you can buy properties that will appeal to the masses the better. If you’d like anymore of my property investment tips, let’s catch up at one of my free property investing seminars taking place in and around London. Visit www.fieldingfinancial.com/freeticket for more information.
LOVE U - TUBE A nearby tube station adds £42,000 to the price of a London house. Although many people move like extreme Monopoly players to find a house near a good school, and there is no sign that this will change, rather the opposite given the direction state schools are going in, far more people just want a frequent and reliable train service.
We love London
A NATIONWIDE SURVEY SOME YEARS BACK FOUND THAT 94% OF LONDON HOMES ARE WITHIN 1,500 METRES OF A STATION AND CAMDEN IS TOPS IN THE COUNTRY FOR BEING BEST SERVED BY TUBES AND TRAINS!
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Harrow View – The Old Kodak Site
HARROW: CHANGES AFOOT Harrow is a melting pot of period properties, big interwar houses, cultural diversity and a vibrant town centre with fast transport links to Central London. However, the Harrow we all know is set to change dramatically largely driven by the ÂŁ1.75bn Harrow Opportunity Area investment programme.
Above: Map of Harrow outlining various key developments
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SPOTLIGHT
WORDS: YOGESH PATEL, HARROW ENTHUSIAST
S
o what does this mean for the future of our beloved Harrow? In this article I talk through some of the key developments. I’ve pulled together some analysis to make sense of the sea of cranes that seem to have become a permanent feature of the Harrow skyline.
RESIDENTIAL SPACE The Masterplan is impressive – Harrow council is targeting to build up to 5,000 new houses by 2026
across a number of small and large developments throughout Harrow, but mainly in Central Harrow. This ambitious building strategy is supported by many large council-owned sites being converted into new residential quarters supported with their own schools, nurseries and leisure facilities. From analysis carried out using Bigharrow. com, you can see from the table (below) and map (opposite) there are over 4,350 new homes expected over the next 5-10 years across only a handful of
MAJOR DEVELOPMENTS IN HARROW NAME
LOCATION
DEVELOPER
NUMBER OF FLATS
COMPLETION DATE
Harrow Square
College Road, Former Post Office site
Barratts Homes
318
2018
Lyon Square
Lyon Road, Former HMRC building
Redrow Homes
300
Autumn 2017
Lexicon
Gayton Road, Former Harrow Library and car park
Fairview New Homes
383
TBC
Grange Farm
Harrow-on-the-Hill
TBC
568
TBC
Poet’s corner
Station Road, Harrow Civic centre
TBC
800+
2020+
Artisan Place
Ladysmith Road
Barratts Home
189
2016+
Harrow View
23 Old Kodak Site
Land Securities / Persimmon Homes
1800
TBC
TOTAL
4358+
SOURCE: HTTP://WWW.BIGHARROW.COM/WHAT_IS_BIG/BIG_MAGAZINE
Harrow Square, College Road - Site of the Royal Mail Sorting Office
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SPOTLIGHT
Lexicon, Gayton Road – Former library
key developments. Many of these homes will be built as flats in 10+ storey buildings which will have a significant impact on the skyline of Harrow. If the traffic in Harrow wasn’t already an issue; these new homes will have an increased impact on the local transport infrastructure, also putting pressure on schools, nurseries, hospitals and other public services. However, it will also boost the size of Harrow’s economy resulting in an increasing quality of retail outlets and more businesses moving to the area. Below are five of the major developments to give you a flavour of the size of the regeneration:
1
HARROW VIEW – THE OLD KODAK SITE
Land Securities in 2015 received planning permission to build up to 1,800 homes, a 3-form entry primary school, offices and shops. On the old Kodak site of over 23 hectares. The development is also expected to create up to 2,300 new jobs in retail, leisure, business and healthcare and be a hub for start-ups and small-medium sized businesses.
2
POETS CORNER, HARROW CIVIC CENTRE
3
HARROW SQUARE, COLLEGE ROAD - SITE OF THE ROYAL MAIL SORTING OFFICE
R E TA I L S PA C E & E AT E R I E S Harrow town centre has recently gone through a significant ‘public realm’ programme and over the last few years has seen many more household brands/chains move into the area including Pret, Nero, Metro Bank, Tony & Guy and Foxtons. I’m sure more will follow (perhaps John Lewis occupying the large retail space left by BHS!) There are plenty of hidden gems dotted around Harrow. Here are a few eateries for you to try….
RESTAURANT
COMMENTS
Castle Pub
Perfect for a lazy Sunday pub lunch
Aumkar
Great for a guju thali or if you are craving for a samosa whilst shopping in Harrow!
Ancona
Lunch option (delicious homemade lasagne)
Trattoria Sorrentina
Authentic Italian with great service
Blue Zenzer
Italian restaurant with an Indian twist, very child friendly
The current Home of the Harrow Council, which sits on a 4.6 hectre site is planned to be redeveloped into 800+homes, a community facility, a school, workplace, retail and public realm. It is called Poet’s Corner in reference to the poet-named streets that historically occupied the site. Work was meant to start in summer 2017.
This is a central site (opposite Harrow-on-the-Hill station) being developed by Barratt Homes, in
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SPOTLIGHT
partnership with Hyde Housing Association. Once finished the development will have 318 homes and a public square with retail outlets and a new library. The development is expected to complete in 2018. Prices according to the developers’ website start from £399k to £679k.
4
LEXICON, GAYTON ROAD – FORMER LIBRARY
Fairview New Homes are regenerating the old library and car park on Gayton Road and building 383 new homes. The site is 1.31 hectares and the homes will be built across 5 blocks of between four and ten storeys. Prices according to the developers’ website start from £472k.
5
Lyon Square, Lyon Road – Former HMRC building
LYON SQUARE, LYON ROAD – FORMER HMRC BUILDING
Redrow Homes are redeveloping the former HMRC building on Lyon Road. Certain blocks of the development are complete but once fully completed the Lyon Square will have more than 300 new homes and incorporate office and commercial space with improved pedestrian access to the town centre. According to the developers’ website price start from £350k to £650k. Many of the sites currently being redeveloped are dusty, derelict or dated sites, so it is pleasing to see a better use of the space. I do hope some of the history can be preserved.
PROPERTY PRICES According to Rightmove in 2016 most property sales in Harrow involved flats which sold for on average £360k. Semi-detached properties sold for an average price of £597k, while terraced properties fetched £520k. The priciest area within Harrow was
Harrow-on-the-Hill
Harrow school
Hatch End (£665k). In 2016 sold prices in Harrow were 7% up on the previous year and 24% up on 2014 when the average house price was £427k. As the regeneration takes place it will be interesting to see if this level of price growth continues or will there potentially be a slowdown. I believe a slowdown is unlikely given the demand for housing outstripping supply in the area and the recent announcement by the Chancellor abolishing stamp duty for first time buyers up to £300,000.
TRANSPORT
Harrow has great transport links. From central Harrow the Metropolitan line can take you to Baker Street in less than 20 minutes. It also has the Chiltern Railways which can fast track you into Marylebone Station in 15 minutes but also take you deep into the Chilterns for some fantastic scenic walks. It was pledged by Major of London, Sadiq Khan, that the Harrow-on-the-Hill station will be made step-free. This is currently planned for 2019/20. Local councillors are also pushing for this to be extended to other stations in the region. Watch this space! FINAL THOUGHTS I am optimistic about the new open spaces and community hubs that will be established. There is also great potential for the new quarters at the Kodak Centre and Harrow Civic Centre redevelopments which I am sure will be bring a fresh buzz to the area. However, this needs to be balanced with improved local infrastructure and tackling transport congestion. For more information have a look at BigHarrow.com & buildingabetterharrow.co.uk which provides a great overview of the various projects going on in Harrow.
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TAX
WORDS: YOGESH PATEL
Landlords will need to start reporting quarterly to HMRC from April 2018 or 2019 (depending on annual turnover)
MAKING TAX DIGITAL H
MRC and the Treasury, through the Making Tax Digital (MTD) initiative, are transforming the tax compliance system affecting the self-employed, partnerships and landlords. The goal is to make tax administration more efficient and increase the transparency of information transfer. So will this affect you, and how? Read on to find out.
WHAT THE FUTURE HOLDS FOR LANDLORDS
PROPERTY BUSINESSES WITH AN ANNUAL TURNOVER OF:
At present landlords are keeping their accounting records in numerous ways including paper records, spreadsheets and accounting softwares which are then used to prepare an end of year tax return. However, the government’s plan is to migrate the current tax system to a fully digitised online tax system which will: Require landlords to maintain their records digitally through a software or apps; Report summary information quarterly t o HMRC; and Provide an end of year declaration to HMRC confirming that everything is complete and correct following any adjustments such as disallowable expenses.
MORE THAN £85,000 (VAT THRESHOLD) START DATE: 6 APRIL 2018
WILL IT APPLY TO ME?
SO HERE ARE A FEW THINGS TO START CONSIDERING:
In a nutshell – Yes. However most people will have until 6 April 2019 to get their affairs in order. See adjacent table showing when the start date will be depending on rental turnover.
BELOW £85,000 BUT ABOVE £10,000 START DATE: 6 APRIL 2019 LESS THAN £10,000 EXEMPT
WHAT SHOULD YOU BE DOING? The key thing right now is to accept that: i) the future is digital – going forward HMRC want landlords to keep digital records (manual cashbooks and excel spreadsheets won’t be acceptable) and ii) HMRC want quarterly updates of your income and expenses.
Worth considering setting up a separate bank account for all income and expenses for the BTL portfolio, especially if the rent is being received into your main personal
current account; Start discussing with your accountant about cloud accounting and how this will be managed (be warned there is likely to be more work for your accountant to deal with, especially at the outset); and If the property is owned jointly, HMRC will need you to have a nominated individual who will fulfil the new obligations of MTD. Whilst the other joint holder(s) will have an automatic feed of the info via their own Digital Tax Account (another new feature which HMRC have rolled out). DISCLAIMER THIS ARTICLE IS INTENDED TO BE A GENERAL GUIDE AND CANNOT BE A SUBSTITUTE FOR PROFESSIONAL ADVICE. NEITHER THE AUTHOR(S) OR GODLEY & CO LTD ACCEPT ANY RESPONSIBILITY FOR ANY LOSS OCCASIONED TO ANY PERSON ACTING OR REFRAINING FROM ACTING AS A RESULT OF MATERIAL CONTAINED IN THIS PUBLICATION.
Our expert
YOGESH PATEL A CHARTERED TAX ADVISER, AND PRIYESH KOTECHA BOTH WORK AT GODLEY & CO LTD, CHARTERED ACCOUNTA NTS & TAXATION SPECIALISTS BASED IN HARROW WITH STRONG FOCUS ON UK PROP ERTY TAXATION.
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FINANCE
WORDS: SURESH VAGJIANI
CRYPTIC, CRYPTO...
MORE THAN A BIT OF A MYSTERY A look at the new digital currenciesi focussingi on the link betweeni Crypto Currencies and landi The word Crypto has been used in the English language since at least 1760. It comes from the Latinised form of the Greek kryptos “secret” or “hidden”. The root of the word is used in other words such as EnCRYPTion and CRYPTography. The word has evolved; and in recent times if you use the word Crypto, to most people it will be understood in connection with currency.
SO WHAT EXACTLY IS A CRYPTO CURRENCY? It is a digital currency, meaning its existence is restricted to the internet. It is used to make payments of any value without any fees. Records are kept on a blockchain, a decentralised ledger. These are kept running by “miners” whose powerful computers crunch transactions. People see real value in money free from government control and the fees banks charge as well as the transparency of a centralised ledger, to verify transactions. Crypto Currencies are seen as a tool for private, anonymous transactions. One of the most well known at the moment is Bitcoin. As of July 2017, there were around 16.5m Bitcoins in circulation. In March 2017, the value of a Bitcoin, at $1,268, exceeded that of an ounce of gold ($1,233) for the first time.
THE DIFFERENCE BETWEEN FIAT & CRYPTO CURRENCIES? The main point of a Crypto currency is it is finite, and therefore holds and indeed rises in value. The problem with Fiat currencies,
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FINANCE
which are generated by Central Banks, THE COMMONALITY BETWEEN CRYPTO CURRENCIES & LAND? are that they can be created from thin air The simple answer is that they are both and have no limit to how much is printed finite. There are many attractions to using and released into the system. To illustrate Crypto currencies, including how they are this, we can look at the money created outside of the system and not caught up for the bank bailouts, during the so called in the regulations which govern transfers. credit crunch. Since 2007 the UK has However, the main attraction for Crypto committed to spending £1.162 trillion at currencies is clearly that you cannot create various points on bailing out banks. How anymore. This is the same principle with does this money manifest itself? From land. Property in most cases, is a square where does it come from and to whom box, and in the case of London, most new is it owed? These are basic fundamental builds are small cubes. The point being questions, which no one seems to ask any these have very little intrinsic value, they more. We are fed information which we acquire value by virtue of the location they accept without question. occupy on a piece of land. The main point of a Crypto currency, So, ultimately, when unlike the infinite nature of Fiat we speak of property currency, is that it is finite, en Ultimately, wh ty investment we are and therefore holds and er we speak of propctually actually speaking of indeed rises in value. a investing in land. This This means you cannot investment we arevesting is the foundation of create anymore. The speaking of in the more you increase the in land. This is erty property investment. p Land acquires value supply of something, the foundation of pro t. when it changes its utility. less it is worth. en investm For example, Farmland has Originally, we had a system less intrinsic value. However, if you of barter, meaning an exchange change its utility it goes up in value multi fold. of goods, this was replaced by a common currency such as gold coins. Naturally this UTILITY AND TIME: has a supply restriction and an intrinsic THE GOOGLE FACTOR value attached to each coin. It has been Utility is changed through an common, historically, for governments understanding of the planning laws and to dilute coinage by mixing the gold with the overall situation of the council. They other less valuable metals. The modern also have targets and constraints, so it equivalent of dilution has involved first is well worth having a good grasp of this basing currency on a gold standard and to ensure the planning application hits then turning these currencies into Fiat as few obstacles as possible. Political currencies. The result is not just partial lobbying also has a strong part to play in dilution but infinite dilution. Now, there is no the process. Understand and be effective limit to how much currency can be created.
with these laws and processes and you can change the utility of land and thus its value. Time is also a finite resource. We only have 24 hours in a day, and within this allocated time we must perform many activities, including sleep. As the world becomes increasingly saturated with information this results in each one of us having a short attention span for certain things. This is called “share of mind”. Think of it like virtual land within our minds. Companies like Google have brilliantly occupied this spot. Each time we want to search the internet, most of us don’t spend time thinking about which search engine to use. Our default position is to use Google. This has become so much the case that “Googling” is a verb synonymous with searching online. Google has almost monopolised this particular “share of mind” and its domination of this time resource places it in a very powerful position. In other words, you could say that Google has managed to create huge wealth by owning a significant share of our virtual mind by saving us much time, that other special limited resource.
CONSTRAINTS ON LAND: GREEN BELT Although land and time are both finite, they are constrained in different ways. However, according to our planner, much of it is green belt in name only, meaning it is not very attractive to look at, and can hardly be classed as outstanding natural beauty. Much of this land is not serviced logistically, in terms of transport and connectivity, and, therefore, will not ever come into use in the foreseeable future. This makes the land which is in within reach, with no restrictions, even more valuable.
LAND AND FIAT CURRENCY Land is the root cause of property price uplift in a medium to long term basis. Its finite nature ensures that over time it rises, as the money supply increases. On one side you have a finite commodity, and on the other you have a Fiat currency which is increasing in supply. There is also the demand aspect which can be considered, such as net inward migration; the breakdown of the family nucleus; a more transient population; and people staying single for longer. When you look at the raw fundamentals, it is easy to see why land, and therefore, property prices increase on a medium to long term basis.
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VASTU
Focus on
WORDS: SRI SUDEVI
FRONT DOOR & HALLWAY This area can help or hinder all our activities, and Vastu has some practical suggestions to ensure a safe and peaceful space. This area can help or hinder all our activities, and Vastu has some practical suggestions to ensure a safe and peaceful space
that the door is secure, conforms to fire regulations and easily accessible for anyone.
BEST TO AVOID l Sliding, slanting, circular, or self closing doors l A wall in front of the entrance door. l A front door facing directly into another’s home l Obstructions in front of main door such as rails or trees l The door facing a temple or religious place l Shadows over main doors, especially shadows of other buildings l Arched doors and windows as they distort the energy flow.
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IN THE HALLWAY OR RECEPTION AREA
It is suggested that you keep this area as clear as possible in order to maximise light and space at all times as well as energy flow. COLOUR SCHEME The hallway or reception area can be painted in light pastel colours, such as light green, yellow or a shade of pink, such as the fashionable millennial pink. AROMAS Rose and jasmine are classic aromas to uplift the spirits, and can be diffused in the hall area. Plants always bring a muchneeded sense of calm to this area that can be full of movement at times. If they have a beautiful scent this adds to the pleasure of arrival and departure. The north-east portion of the hall is best for flowers.
V
astu Shastra helps to maintain a harmonious balance of form and energy in your home. There are many guidelines and rules to follow to ensure that the positive forces override the negative. However, it is essential to remember that a peaceful person can reside well in a non Vastu-compliant house and a dissatisfied one be disturbed a perfect Vastu design. Our own intentions and behaviour influence our lives deeply and we are all connected to our environment, so take heed of ancient Vastu wisdom, but remember your ongoing part in the overall design too!
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THE FRONT DOOR
It is said that the front door reflects the quality of vibrations in the home, and it is the first thing that we notice on approaching a house. If you are in the process of designing your home, then it needs to be positioned to attract the most positive energies. One reason it is best
facing east or northeast is that you get the early morning light, bright and positive as the sun rises. SIZE It is said that the main door is like the mouth of the Vastu Purusha - or protecting deity - so it is suggested that it be bigger in size than all the other doors in the house, with the height twice the width. COMPOSITION It needs to be attractive yet strong, and a good quality wood is recommended and a wooden handle. Noise free when it opens, and threshold to avoid wealth loss with a beautiful nameplate to attract wealth and prosperity. PRACTICAL CONSIDERATIONS A heavy door and or steps are inconvenient to anyone with disability issues however much they convey strength and the importance of the home. So it is important
ACCESSORIES NORTHWEST WALL: This is the best place for the shoe rack. EAST WALL: Paintings of the rising sun or natural beauty can be hung here. SOUTH WALL: Images of mountains can be effective, creating a good mood. SOUTHWEST WALL: Any heavy furniture is best placed in this area. Generally mountains, horses or elephants are good and promote the financial position of the family. Feng Shui and Vastu both advise an aquarium opposite the entrance of the hall to help bring in a pleasant mood and distract any negative energies.
FLATS These have more complex considerations, which we will look at in another article, but generally the above suggestions hold. However, in a flat, pictures of water on the north or east wall are said to bring happiness to the family, and a water fountain is good on this side of the hall as it will bring good luck.
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SOCIAL HOUSING:
RIGHT TO BUY YOUR OWN HOME That everyone wants to own their own home is an assumption rarelyI questioned in this country. We take a look at the current situation.I
T
he cost of buying in London is now prohibitive for the majority of first time buyers and homelessness has increased not only in London but nationwide. The lack of affordable homes has hit crisis point. One group of people who may be able to afford to buy are those already living in social housing, either Local Authority or Housing Association stock. We look at options in the current climate where housing policies are under review due to the current housing crisis. In southern England in 1981 the average valuation of a right to buy property was £19,557, a tenth more than the average price paid for a private-sector home by an English first-time buyer. Yet most right to buy purchasers actually paid much closer to £10,000: The average discount obtained nationally, according to the 1988 survey, was 44%.” Buyers typically borrowed almost the entire cost of their property. This survey asked 1,230 buyers why they had bought and the answers were that it was a good financial investment, a bargain, which discounts on sales provided. They said it gave a sense of security, pride and the freedom to repair or improve. One of the other main reasons was the
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desire to have something to leave for the family as well as a way to move up the housing ladder.
RIGHT TO BUY BASICS - HISTORY The Housing Act containing Right to Buy came into force on 3rd October 1980. Since April 2012, major changes have been made to Right to Buy. Maximum discounts were increased from as little as £16,000 in some areas to a maximum of up to £78,600 across England and £104,900 in London. More than 63,000 households have taken up their Right to Buy since discounts were increased. In May 2015, the eligibility criteria also changed reducing the requirement of five years public sector tenancy to three, making thousands more tenants eligible for Right to Buy.
WHO IS ELIGIBLE? Right to Buy allows most council tenants to buy their council home at a discount and has been extended to Housing Association Tenants. You can make a joint application with someone who shares your tenancy, or up to 3 family members who’ve lived with you for at least 12 months.
WORDS: RACHEL DIMOND
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You can apply if: it’s your only or main home its self contained, you’re a secure tenant and/or you have had a public sector landlord for 3 years (this doesn’t need to be 3 consecutive years
RIGHTS AND RESPONSIBILITIES You will now be responsible for service charges, but not for unexpected costs in the first five years after purchase Service charge costs must be included in the offer notice (Section 125 letter) you get from the landlord Home improvements: you may need to get permission, but this information should be clearly stated in the lease Be aware that some lenders do not lend for this kind of property. Even if you don’t need a mortgage, it is a consideration, as if you want to sell the flat in the future, the buyer might not get a mortgage easily. Be wary of taking advice from a Right to Buy Company Get professional advice. The Leasehold Advisory Service (020 7832 2500) or the Law Society have free, unbiased information and guides available and are a good starting point.Check your lease carefully with your solicitor before you sign anything.
FROM THE LOCAL AUTHORITY VIEWPOINT Camden owned a Victorian block overlooking Hampstead Heath but 48% of the flats have now gone to right to buy, mostly to private landlords. The council has to give the money to the Treasury, rather than keep the money to build more homes. Rather than subsidising housing, much goes on housing benefit to the new private landlords. A couple of years ago a tenant’s flat in this part of Camden was valued at £590,000 as part of their right to buy process. With the ever-increasing generous subsidy offered this makes the decision to buy a great long-term investment. One person or family is then back on the property ladder, but one more property is lost in the shrinking housing stock still in Local Authority hands.
AS A WOULD-BE HOMEOWNER, IS IT WORTH BUYING AN EX LOCAL AUTHORITY OWNED HOUSE? There are many key questions you need to ask. For example, it depends on whether it is on an estate that might be part of a redevelopment plan. If there is no major rebuilding, the upgrades could cost you a lot in terms of additional service charges. If the flats are to be pulled down, although you would get the offer of shared ownership or something similar, this might be out of your price range. Another consideration is that your neighbours may well be paying far less than you for the same flat or house, but this could be
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BUYING A LEASEHOLD PROPER
the situation anywhere Few houses are leasehold, bu TY where there is a mixture t mo are, especially in larger devel st flats of tenure. When it comes opme to dealing with noise If you buy a leasehold propert nts. y yo or harassment issues, have rented from LA or Hous u ing if the accommodation Association, your current lan is mixed social housing, dlord will still hold the freehold. private landlord and owner occupied, sorting problems can be more complex. But whatever you buy and wherever you move to, it is essential to get to know the ins and outs of the neighbourhood you might live in.
WHAT IS THE WIDER SOCIAL IMPACT? The official Government Right to Buy website states that money raised through extra sales is now going towards building new affordable homes for rent. This is debatable due to planning loopholes used by developers and houses sold are not being replaced at the same rate. There are many criticisms of the scheme. Many would argue that Right to Buy is one of the main reasons there is now an increase in homelessness, as socially affordable stock has been reduced and not replaced like for like. Recent freedom of information requests also reveal that with soaring house prices, councils are paying vastly inflated sums to buy back what they once sold off at a discount, in order to meet current housing needs. Companies, mostly quite unreliable, regularly leaflet London Housing estates in desirable districts, tempting residents to part with their secure tenancy with no concern for the fact they if they sell, they will never be eligible to take another tenancy from the Local Authority. It is quite legal to urge council tenants to sacrifice their security for an instant pile of cash and this of course presents a strong temptation for people in debt. USEFUL LINK: https://righttobuy.gov.uk
CAMDEN OWNED A VICTORIAN BLOCK OVERLOOKING HAMPSTEAD HEATH BUT
48%
OF THE FLATS HAVE NOW GONE TO RIGHT TO BUY, MOSTLY TO PRIVATE LANDLORDS.
SELLING
WORDS: SACHIN GUPTA
THE RISE OF THE ONLINE ESTATE AGENCY At 99home, 95% properties sold online fetch the vendor’s desired price and 90% letting meet the rental landlord’s outcome. So why pay percentage based commission to high street agents?
T
hrough an online agency vendors and landlords can discuss their property, often with more knowledge than your average agent. The online estate agency is a relatively new business model, offering a one stop shop for property requirements with a fixed fee, and no hidden charges. The 99home’s business model is not just a unique opportunity for many small agents, but also for those who prefer to be selfemployed and run a private management company by using 99home’s platform to let or sell their client’s property. Currently three major overheads overwhelm many small agents: The cost of the office where they pay rent, rates, bills and marketing expenses to keep their business going; Employee wages and software subscriptions for property management, whether they have constant business coming onboard or not; The ongoing cost of insurance, phone bills, fuel and stationery;
1 2 3
It’s not just about agent’s fees, it’s a matter of equality of services provided and savings on your deal. High street commission fees can be prejudicial. For example, someone selling their house at one million would pay more than someone selling at £250,000 for the same service. 99home’s agents are available for viewings, marketing pictures, floor plans and so on, and the service offered is comprehensive and 24/7. 99home offer vendors an online dashboard, access to all major property portals, a call centre which works for them from 6am to 11pm, plus a personal assistant/agent to facilitate the customer journey. This is why many people are now unwilling to pay heavy commissions based on a percentage of the transaction, when you can get the same or a more accessible service for smaller fixed fee. There are further factors that favour the online estate agency model and this is to do with the way taxes are changing for PRS landlords. Local authorities are
getting stricter as regards compliances and obligations for landlords, so it’s important to work smart by understanding housing laws. By using online agents one can save money and survive in a difficult market. In time, tenants’ fees will be banned, deposits will have a cap, and fair rent policies could apply. This means the landlord will struggle, as these changes will increase the high street agency’s fees. There is certainly a potential risk of loss to be borne by the landlord when it comes to balancing the income and outgoings for tax, maintenance, compliances and agents’ fees. For example, if there is a limited deposit paid by the tenants and the property is left in a bad condition this would result in total loss. There is a similar scenario with sales too. In many cases the seller has to reduce the agreed price after the survey or close the deal in time for various reasons. It is very obvious that if the seller can avoid the hefty agency fees it will be help them to stay in profitable position. Even with a large portfolio, landlords and vendors can let or sell their property with an easy 1-2-3 step and avoid substantial fees from agencies. 99home.co.uk offers a unique experience in selling or letting your property to make your move hassle free and profitable. They provide a free consultation, guide and cutting edge technology to clients 24 X 7. Their main USP is saving clients money.
HIGH STREET COMMISSION FEES CAN BE PREJUDICIAL. EG. SOMEONE SELLING THEIR HOUSE AT ONE MILLION WOULD PAY MORE THAN SOMEONE SELLING AT
£250,000 FOR THE SAME SERVICE.
Our expert
SACHIN GUPTA IS THE CO-FOUND ER OF 99HOME.CO.UK. HE HAS 10 YEARS’ OF EXPERIENCE IN UK’S REAL ESTATE BUSINESS OF RUNNING MULTIPLE BRANCHES OF ESTATE AGENCY
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WORDS: MANISH PATEL a period of time to accumulate the deposit required to obtain a mortgage. The buyer is also guaranteed to purchase the property at the pre-agreed price at the end of the option term. Done properly and diligently, lease options can create wealth whilst avoiding the uncertainty of the open market and economic volatility.
ARE THERE ANY DOWNSIDES?
GET ON THE LADDER OR EXPAND YOUR PORTFOLIO management agreement and this allows the EITHER WAY EXPAND YOUR KNOWLEDGE Lease options are investor to maintain the property and let it out to draw an income. becoming a popular and powerful investment strategy, giving an WHAT ARE THE ADVANTAGES? investor the control and income of Lease options are a relatively novel and a property, without the headache flexible strategy that generate a monthly income whilst minimising the need for associated with ownership
WHAT ARE LEASE OPTIONS? A lease option is a contract between a property owner and an investor giving the investor the option to purchase the property at an agreed price at the end of a fixed period. This is usually five years, however It can be negotiated to suit both parties. During that fixed term the property owner will not be able to sell the property nor can they remortgage the property without the consent and agreement of the investor. The option agreement is accompanied by a
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resources and capital to buy property outright. The strategy is flexible enough to be customised to suit the seller and the investor’s requirements. Lease options also provide price certainty for both sides by setting a fixed purchase price for the property at the end of the option term, regardless of any underlying fluctuations in property prices during that time. The flexibility of lease options also allows the investor to exercise their option at any time prior to expiry of the option term. Lease options are also being used by those trying to get on the property ladder. A lease option can give the buyer
Lease options may not be suitable for all sellers and all investors. They are especially suitable for sellers with little or no equity, landlords who cannot afford to maintain upkeep of their property, or sellers who are in mortgage arrears and at risk of repossession. Do also bear in mind that legislation and regulations which affect landlords who own freeholds are as likely to apply to someone operating a property under a lease option arrangement. For example, we are currently advising our investor clients, whether they are investing through lease options or buy to lets, on Minimum Energy Efficiency Standards (MEES). From 1st April 2018, landlords of buildings within the scope of the MEES Regulations must not grant new tenancies if the building has an energy performance certificate (EPC) rating of F or G unless the landlord carries out works to improve the energy efficiency rating or is able to register one of a limited number of exemptions. From April 2020 the restriction will be extended to all existing tenancies in place on that date, and the same obligations to either improve the rating or apply for an exemption will apply. The penalty for renting out a property in breach of the new requirements can be a fine from the local authority of up to £5,000 for each breach. Whilst interest rates may have recently risen, bricks and mortar continues to be a good investment, whether you are a first time buyer, a property investor, or simply safeguarding your retirement.
For more advice:
MANISH PATEL IS A SEN IOR ASSOCIATE IN THE COM MERCIAL PROPERTY TEAM AT TOP 100 UK LAW FIRM, BIRKETTS LLP . IF YOU’D LIKE TO KNOW MORE, THEN MANISH PATEL AND HIS CONVEYANCING TEAM AT BIRKETTS LLP HAVE BEEN DEALIN G WITH LEASE OPTION STRUCTURES WITH A PRO VEN TRACK RECORD AND WILL BE ABLE TO PROVIDE GUIDANCE AND ASSISTANCE, WHETHER AS AN INVESTOR OR FIRST TIME BUYER.
Albury Associates Flyer.qxp_A4 Temp 27/11/2017 16:19 Page 1
PROPERTY PORTFOLIO TRADING & INVESTMENTS FACT: A property portfolio business has advantages over passive investments!! FACT: You may be running a property business and not know it!! FACT: You may be losing out on valuable tax relief!! FACT: You may be paying too much tax!!
Our services include: n Audit, Accountancy and Tax Compliance
n Management Consultancy, Advice and Planning n Payroll Management and Compliance
We have established a number of methods and delivered many tax efficient structures, for property trading and investments. Come and talk to us to see how we can help you grow in this difficult sector.
Contact Us:
Email: kiran@alburyassociates.com Mobile: 07710 989 926
Director: Kiran D Patel BA (Hons) FCA Registered Office Address : 79 College Road Harrow HA1 1BD Registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C004064860 “Albury Associates� is the trading name of Albury Associates Limited. Albury Associates Limited is registered in England and Wales with registered number 9347218
HOUSING
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WORDS: KISH BHUDIA
Seems like a great way to make money, but ensure you are wised up on the legal side
H
MO. These 3 letters have become the most popular acronym amongst the residential lettings fraternity in the last decade. If you didn’t know, they stand for House in Multiple Occupation, and most landlords see pound signs in their eyes when you mention HMO. Essentially an HMO is a house occupied by a number of non-related persons, sharing communal facilities such as a bathroom and kitchen. Essentially this means you can rent out individual rooms in a house to a number of different people and maximise upon the rental yield, as rent is paid per person or room, and could double your rental income. Sounds too good to be true. There has been a surge in the number of recent press reports highlighting unscrupulous landlords who have taken the HMO rules and stretched them, packing houses full of tenants. In some extreme cases landlords have been caught with over 30 people sharing a standard 3-bedroom family house, with some tenants found to be living in garden outbuildings, and the landlords operating a time-share facility, where shift working tenants take turns to use the beds.
LEGAL REQUIREMENTS It is a legal requirement to register your property with the local authority if it is a HMO. Registration imposes conditions upon the landlord to ensure the accommodation meets minimum health and safety provisions. Licences are generally valid for 5 years, and the landlord is expected to provide electrical and gas safety certificates every year, and random inspections may be carried out to ensure regulations are being met. Heavy fines may be imposed on those defaulting on their duties ranging up to £20,000. Many landlords who have registered their premises with the local authority registration scheme are under the illusion that this is the end of their responsibility. In many cases they are wrong. A building with less than 3
floors and no more than 6 people sharing facilities would fall into Planning Use Class C4, which as a change from C3 (dwelling houses) would be permitted development. However, a larger house with 3 floors or more, and/or with more than 6 unrelated people occupying it, will require specific planning permission for a change of use, as this falls out of the C4 category, and is defined as ‘Sui Generis’ in planning terms. This may become an obstacle, as many planning authorities will resist the loss of
LANDLORDS HAVE BEEN CAUGHT WITH OVER 30 PEOPLE SHARING A STANDARD 3-BEDROOM FAMILY HOUSE, WITH SOME TENANTS FOUND TO BE LIVING IN GARDEN OUTBUILDINGS family housing to large HMO’s as they attract social problems such as overintensive housing, anti-social behaviour, increase in noise, traffic and rubbish, and such applications are always sure to receive objections from the local residents and councillors alike.
would also check to ensure the building meets minimum standards, and issue a Completion Certificate. However, this is only required at the time when the works are initially being carried out, and is not needed periodically.
THE CURRENT DILEMMA More importantly, something that is not very well known, is that it can often be challenging to convert an already established large HMO back into a single family dwelling house, as the planning department could resist the loss of what would be deemed as a much needed affordable housing provision, and could force the owner to retain its HMO status. This is important to realise if you are seeking to dispose of the asset, as it could inadvertently become a very expensive liability. What we are now witnessing is a growing number of landlords with larger properties, struggling to let their portfolios, as tenants cannot afford the rents for large houses, and don’t want to necessarily share their homes with other people. Some houses are simply not big enough to convert into self-contained flats, and where they are, the cost of a proper conversion is prohibitively high with a low rate of return on the investment. Houses are not necessarily the nest eggs they were, and could become a financial noose around the neck if you are not careful.
BUILDING REGS FOR HMO’S The other aspect that is also overlooked is the need for HMO’s to comply with the building regulations. Such premises are required under HMO rules to have Fire Doors, Fire Alarm/Smoke detection systems, and suitable washing facilities etc. The installation of such is covered by the Building Regulations, and an application should be submitted to Building Control, and their inspectors
Our expert
KISH BHUDIA IS A CHA RTERED ARCHITECTURAL TECHN OLOGIST & PARTY WALL SURVEY OR WITH OVER 20 YEARS EXPERI ENCE IN LOCAL AUTHORITY & PRI VATE BUILDING CONTROL. NOW RUNS AN ARCHITECTURAL & BUILDING CONSULTAN CY BASED IN HARROW, SPECIALISING IN HOME EXTENSION, RENOVATION AND NEW BUILD MARKET.
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WORDS: ZHARNA SUTARIA
COHABITING?
Cohabiting Couples Are Not Protected By Divorce Laws ONS figures show that cohabiting couples are the fastest growing family type in the UK, but the legislation has not moved with the times
W
hen Bhadrak Reddy (34) moved into a flat in Harrow five years ago with his then girlfriend Tanya Bhatt (32), making plans in case they broke up was the furthest thing from their minds. Bhadrak owned the property but the household bills were split evenly between the couple. Their relationship soon deteriorated and they decided to separate. Tanya felt she was entitled to half the property. Bhadrak disagreed. Like many people, Tanya thought they had a ‘common law marriage’ with the same legal rights as married couples. This is not true. (Case study is fictional and for illustration purposes only). The latest figures from the Office of National Statistics (ONS) shows that the divorce rate has fallen by 30% since 2003 - more people are choosing to live together before becoming married and this means many cohabiting couples find themselves in the same difficult situation as Bhadrak and Tanya. On cohabitation breakdown there is no right to claim against a financial asset that is in the sole legal ownership of one party.
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However it may be possible to establish a claim by an alternative doctrine known as equity (or what is considered fair and just). A claim may arise where one party has made a financial contribution or it can be established that there was a common intention to share assets but this can be difficult, time consuming and expensive. There is also no right to claim maintenance except for any children of the relationship.
of a partner’s death, cohabitation alone does not provide the surviving partner with any automatic right to inherit part of the deceased’s estate if there is no Will. The survivor could have a potential claim against the estate for financial provision under the Inheritance (Provision for Family and Dependants) Act 1975, but this will depend on the circumstances. It is therefore important to have an up-to-date Will referring to the cohabitee if you would like them to inherit from your estate. This reduces the risk of costly disputes between the survivor and other relatives after your death.
IS THERE ANY WAY TO ENSURE FINANCIAL SECURITY? The only way to ensure some financial security or to protect assets in these cases is to have a cohabitation agreement in place from the outset. Parties should seek legal advice at an early stage. Cohabitation agreements are similar to prenuptial agreements. They involve both parties taking independent legal advice, making financial disclosure and agreeing how their assets should be divided if there is a relationship breakdown. The agreement creates an enforceable contract between the parties. It is also worth noting that in the event
Our expert
ZHARNA SUTARIA IS A FAMILY LAW SPECIALIST ACCREDITED BY THE LAW SOCIETY AND IS A MEMBER OF RESOLUTION, WHICH HAS LOBBIED GOVERNMENT TO AMEN D THE LAWS FOR COHABITANTS. CONTACT ZHARNA FOR ADVICE ON FAMILY LAW ISSUE S AT ZHARNA.SUTARIA@VYMAN.CO.UK. FOR MORE ADVICE TO FIND OUT HOW VYMAN SOLICITORS CAN HELP YOU WITH MAKING COHABITAT ION ARRANGEMENTS PLEASE CONTACT: 020 8429 1010 OR INFO@VYMAN.CO.UK. YOU CAN ALSO VISIT: HTTP://VYMAN.CO.UK
Project4_A4 Temp 16/11/2017 14:02 Page 1
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HOUSING
DOWNSIZING FACTS & FIGURES Now the kids have left, are you thinking to let of go your family home and move to something smaller, or settle in your dream location? DEALING WITH ‘EMPTY NEST SYNDROME’ OR CONSIDERING DOWNSIZING YOUR HOME?
36
If so, it’s worth trying to understand how the new Inheritance tax downsizing rules work so you can still benefit from the new Residential Nil Rate Band threshold before selling up the family home.
edition of Asian H&H. However, to avoid this new policy deterring people from downsizing or disposing their property before their death, the government announced that no family will lose out if they sell an expensive property to downsize provided that the part of the estate is left to direct descendants.
THE BACKDROP
HOW DOES THIS WORK IN PRACTICE?
Ex-Chancellor, George Osborne, announced new additional residential nil rate bands to make good a headline-grabbing manifesto promise to allow couples to pass up to £1m from the value of their main home to their children when they die. For more details of the additional RNRB see our last
An additional inheritance tax allowance becomes available if someone has sold, given away or downsized to a less valuable home before they die. This is known as an Additional Threshold and all the following conditions must apply for the Additional Threshold allowance to hold:
ASIAN HOUSE & HOME I WINTER 2017
WORDS: YOGESH PATEL
The individual has sold, given away or downsized to a less valuable home on or after 8 July 2015; The former home would have qualified for the Additional Threshold if they’d kept it until they died; and The direct descendants inherit at least some of the estate; If someone dies on or after 6 April 2017 and their estate is above the basic Inheritance Tax threshold (currently £325,000) but below £2m, the estate may be entitled to an Additional Threshold before any inheritance tax is due. The Additional Threshold bands are listed below:
CALCULATING THE ADDITIONAL THRESHOLD As per HMRC guidance, when someone downsizes and still has a home when they died, the additional threshold for the estate will be made up of both: the additional threshold on the home included in the estate; and any downsizing addition due for the former home. The downsizing addition will usually be the lower of: the amount of additional threshold that’s been lost as a result of the downsizing move; and the value of the other assets in the estate left to direct descendants. I really wanted to prepare a worked example but as you have read from the above it will involve several steps and probably not something you want to read over your afternoon chai.
Tax year Threshold (£)
Additional Threshold (£)
Total Nil Rate Band including £325k IHT threshold (£)
2017/18
100,000
425,000
2018/19
125,000
450,000
FINAL THOUGHTS
2019/20
150,000
475,000
2020/21+
175,000
500,000
These rules are complex and not for the faint hearted, even HMRC’s own guidance states, “The downsizing rules are complicated!” The good news though is that if you decide to downsize to a care home you would qualify for the downsizing relief and it is a transferable relief to your surviving spouse.
However, it is worth noting that the Additional Threshold doesn’t apply to any gifts of assets (lifetime transfers) prior to death. It can only be applied against the estate on death.
DISCLAIMER THIS ARTICLE IS INTENDED TO BE A GENERAL GUIDE AND CANNOT BE A SUBSTITUTE FOR PROFESSIONAL ADVICE. NEITHER THE AUTHOR(S) OR GODLEY & CO LTD ACCEPT ANY RESPONSIBILITY FOR ANY LOSS OCCASIONED TO ANY PERSON ACTING OR REFRAINING FROM ACTING AS A RESULT OF MATERIAL CONTAINED IN THIS PUBLICATION.
An additional inheritance tax allowance becomes available if someon e’s sold, given away or downsiz ed to a less valuable home befor e they die. This is known as an Additional Threshold
WINTER 2017 I ASIAN HOUSE & HOME
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AUCTION UPDATE
WORDS: NILESH PATEL
GUIDE PR
COMMERCIAL
AUCTION Update
With auction sales reaching their highest levels since 2006 here is the latest news and some essential advice from our expert
A
fter a long summer investors GUIDE PRICE: seemed as keen as ever to get their hands on some (5.0% GROSS) stock, with Allsop enjoying its RESULT: biggest sale since 2006 in October (3.9% GROSS) - £150m of commercial property at an average lot size of £687,500! We were pleased to welcome the Allsop Auction team as guest speakers at LOT 92 (ALLSOP) PREZZO,I our Autumn Market Review (our annual BUCKHURSTIHILL, GREATER LONDONI investors’ seminar) on 9th November in DESCRIPTION: Freehold restaurant with London, where these results were analysed ancillary upper parts TENANCY: Let to in more detail for over 100 of our investors. Prezzo Ltd for 30 years from 30/03/2015 for Interestingly for The Prideview Group, £65,000 p.a. FR&I (no breaks) with RPI-linked the October round of auctions was the first rent reviews LOCATION: Good retail location in some time where we did not acquire in an affluent London suburb any properties for our clients - clearly a OUR COMMENT: A very strong price, which in reflection of the strong bidding, but make of the current market is actually quite justifiable. it what you will! There are a lot of new faces A whole building, nice London location, in the room these days, many of who come huge 30 year lease and inflation-proof rent from residential backgrounds, having been increases - what more could an investor want? stung by the recent residential tax changes. Auctioneer George Walker analysed this sale The below blue-chip investments are at our Autumn Market Review and interestingly representative compared it to Lot 197 - Prezzo, Hertford of the pricing which sold for £1.45M (3.7% gross) off a guide for quality of £1M (5.4%). It’s also a whole building, but investments the location is slightly weaker - not London in the current but still an affluent Hertfordshire town centre. market. Do get The biggest difference was that this lot had in touch if you only 5 years until lease expiry! So what seems are looking to to have motivated the frantic bidding was the invest in auction medium term potential to take back the uppers or privately before for possible residential conversion. the year end!
£1.3M +
£1.67M
Our expert
IF YOU ARE LOOKING FOR A COMMERCIAL PROPERTY INVESTMENT IN 2017 VIA AUCTION OR PRIVATELY, DO CONTACT ME ON NILESH@PRIDEMANAGEMENT.CO.UK OR 0203 113 2142. WE HAVE A NUMBER OF OFF-MARKET INVESTMENTS AVAILABLE NOW, AND WILL BE ACTIVELY BUYING AND SELLING IN THE UPCOMING MARCH AUCTIONS.
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ICE: £540,00 0+ (6.3%) RESULT:
£575,000 (5.9% GRO SS )
LOT 37 EUROPCAR, LIVERPOOLI DESCRIPTION: Freehold whole building with parking TENANCY: Let to Europcar for 14 years for £34,000 p.a. FR&I LOCATION: Busy arterial roadside location 3 miles from the city centre OUR COMMENT We acted for the seller on this as we did with several other Europcar investments, which sold earlier in 2017, and it was guided in line with those sales. In the end the lot did not go to the room as an SIPP investor, who had started working on this property several months earlier when it was on our website, managed to get his pension trustees to exchange prior on this at a price agreeable with our client. Who said SIPP’s can’t buy in auction?! RESERVE BELOW:
£280,000 (5.2% GRO SS )
RESULT:
£300,000 (4.8% GRO SS )
LOT 9 DOMINO’S PIZZA, EDENBRIDGEI DESCRIPTION: Freehold take-away investment with ancillary on the upper floors with parking for 5 cars TENANCY: Let to Domino’s (DP Reatly Ltd) for 20 years from 25/11/2014 for £14,500 p.a. FR&I (break in 2025) LOCATION: High street location in an attractive Kent town OUR COMMENT: We assisted the seller in marketing this property, as it is the kind of lot that fits well with our private investors. Our summary of it pre-auction was simple: “For an investor. Nice small lot in an affluent town. Low yield is due to very low rent. Secure long-term investment.” The bidding and solid sale price justified that billing - at this lot size it’s rare to find a whole building with parking let to a blue-chip tenant at such a low and sustainable rent - and the low yield reflects that.
Project1_A4 Temp 29/11/2017 14:15 Page 1
INTERIORS
WORDS: MAYA GUDKA
IN THE HOME Put the toys away and see how much excitement this creates!
M
y second maternity leave has been very special - and a lot more challenging than my first! One thing that came at the right time for me was attending a 6-part course entitled ‘Montessori in the Home - for 3-6 year olds’. I found that it strengthened my intuition about my little ones and provided an inspiring alternative to the lamentations of ‘terrible twos and threenagers’. Montessori in the Home is about acknowledging that everyday life at home is as developmentally rich as the classroom. It is about making positive behaviour something the children want to do. More than anything, it is about helping your kids to become happily independent, at home and beyond. The issues addressed on the course come up increasingly in conversations with parent friends of this age bracket. And I found many concepts relevant to adults, as well as fitting with my own explorations at work and beyond. Seeing concepts such as ‘flow’ and ‘purpose’ applied to 3-6 year olds stripped these concepts back to basics. I have shared one of these ideas and how it worked out in practice. As some of you know I’m a Marie Kondo fan, so imagine my excitement when we started talking about ‘everything having a home’ on our Montessori course. When kids have too many toys on display to play with, they flit from one thing to another without being able to lose themselves in the activity - becoming the antithesis of the Montessori approach. They get easily overwhelmed, just as we might when faced with a toolong menu in a restaurant. The solution is to carefully select what you have on display, make it easily accessible and not in piles of boxes that are tricky to access. Think seasonally about what you have out. For example, have the book about autumn out in autumn, not in summer. Try to have only one type of each toy, such as, one set of art materials, one set of construction toys, one puzzle etc. Observe what they are currently drawn to, so you get a sense of their current prime interests, and regularly rotate the toys to prevent boredom. I don’t know about you but I never feel in control of my kid’s stuff. We are fortunate to receive lots of gifts and hand-me-downs from extended family, as well as the influx of toys at Christmas and birthdays, and don’t often think carefully about what toys she should have
*AT THE MARIA MONTESSORI INSTITUTE ON BAKER STREET
40
ASIAN HOUSE & HOME I WINTER 2017
next. And my daughter will always be drawn to the most fiddly messy toys, and find a way to cram bits and pieces into containers and bags which get taken everywhere and spread all around! With the encouragement of the course tutors, I managed to put a huge amount of stuff out of sight (behind the sofa). It helped to not have to throw it out immediately but just put it in reserve, because a lot of the complexity comes from having the second baby and knowing that some of the things might be right for him soon. I did the first clear-away with my daughter, seeking input from her about what she wanted to keep out. We left a much clearer environment with a few carefully chosen items and well tended drawers. The next day, when she wandered in from nursery, I noticed a very different approach to her shelves - she was quieter and more thoughtful. It was like she could see and think straight. Plus, the house looks less cluttered. The challenge is remembering to rotate items. Usually she serves as a cue as she reaches behind the sofa to take out stored toys. I try to use one after-nursery slot to go through her toys with her every fortnight or so. It could be better, but having less clutter and knowing that its good for her concentration is a nice feeling! YOU CAN FIND MORE CONTEXT AND POSTS ABOUT MY LEARNINGS FROM THIS COURSE HERE: WWW. LIFELABS.PSYCHOLOGIES - SEARCH MAYA GUDKA
SHARPS PIXLEY LTD.qxp_A4 Temp 06/11/2017 16:20 Page 1
Asian
HOUSE&HOME
SPONSORS
PROPERTY INVESTORS MEET insightful & engaging Asian Voice hosted the Asian House and Home Property Investors Meet on 16th November at Harrow College. Attended by property investors and experts in the sector it was sponsored by Metro Bank and Galliard Homes, a leading British residential property developer, in collaboration with Sow & Reap, a specialist property investment company. The event is part of the Asian House & Home magazine. The next event is scheduled for the first quarter in 2018. The dates will be announced in Asian Voice, Gujarat Samachar newsweeklies and on our website www.abplgroup.com The evening started with an introduction to the central theme, “Tax: a perfect storm or a navigable headwind?”, by Suresh Vagjiani, founder of Sow & Reap, and the moderator for the evening. This was followed by a panel discussion between five experts from the sector and then a Q&A with the audience. Speaking on the theme for the evening, Suresh Vagjiani was critical of the then prevailing stamp duty and attacks on property incomes. Stamp duty has since undergone changes in the Autumn budget, with relief for the first time property buyer. Richard Margrave, the director of the Harrow branch of Metro Bank welcomed the audience on behalf of Metro Bank in his opening remarks. David Galman, Sales Director, Galliard Homes presented an overview of property investment and explained why it was still a solid, long-term investment. He spoke about the available opportunities in the prevailing unfavourable property environment, and added
that the government needs to do more on the planning side and the authorities need to rethink their current obsession with Strategic Industrial Land to focus on housing. Simon Farrell QC, Three Raymond Buildings, and Ellis Sareen, Barrister, Foundry Chambers, spoke about the legal aspects of new property schemes on offer by UK banks. They discussed tax strategies to legally minimise leakage, and ways to avoid attractive but risky tax planning schemes. Simon Farrell also took questions on aggressive anti-avoidance schemes. He explained the risks of not seeking advice from one’s own legal team beforehand, and made an important point that “tax planning is not tax avoidance”. Jay Sanghrajka, Partner at Price Bailey Chartered Accountants, advised the attendees on property tax planning, and encouraged the audience to sort out their commercial reasoning before getting advice on tax saving. He
is also a specialist in advising on the government approved Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS). Roshan Patel, Director Metro Bank, Slough and Ali Pirbhai, Regional Commercial Banking Director, Metro Bank, spoke about the various ways in which Metro Bank was customer-centric when it comes to property buying. Member of the audience Kirit Pattni FCCA queried if the Metro Bank had provisions for a client purchasing multiple student-housing properties in London. In his response to the query Ali Pirbhai was optimistic. Bhavik J. Shah, co-founder and Director at Niveda Group, asked for advice for his clients on risk and procedure of shifting property from a personal name to a corporate structure, and on its legitimacy. He was advised by Jay Sanghrajka on the ways in which this can be successfully done, especially with regard to the HMRC approval. Shandip N. Shah, MD at Balance Consultancy, raised concerns over inheritance tax with the government taking potentially 40% of a citizen’s estate after death. He asked the panel what property owners could do to pass it on to the next generation without incurring such a huge loss. Cllr. Zaffar V. Kalwala from Stonebridge Ward said to Asian Voice, “The panel was a good mix of financial, legal and banking professionals. We received a hands-on insight on the current property market.” A similar view was shared by other audience members, investors, chartered accountants, bankers and property lawyers. The overall view of those who attended was that they found it immensely informative and insightful, and that they would be keen to attend similar events in future.
WORDS: CHARUSMITA 42
ASIAN HOUSE & HOME I WINTER 2017
Anup Vyas with Sanjay Rugani
Elizabeth Awaifo with Isi Inyang
CB Patel addressing the audience
An investor poses a query A guest is all ears
Picking the panelists’ brains - Bhavik Shah
as with Rugani
Sunil Gupta with guests
Guests pose for the camera
Symren Randhaw and Sabrina Omar
Panelists Jay Sanghrajka and Roshan Patel
Richard Margrave from Metro Bank Ajay Dhanak lending a patient ear
Dak Patel, Mukesh Mamtora, Harshad Kothari, Dinesh Bajaria
Sharad Bhagani with Paul Rogers
Guest engrossed in the discussion
Ali Pirbhai and James Baughan with Roshan Patel Sandip Shah listening to panelists
Organisers, Sponsors and Panelists
David Galman addressing the guests Moderator Suresh Vagjiani
Rapt attention
WINTER 2017 I ASIAN HOUSE & HOME
43
ENVIRONMENT
WORDS: RACHEL DIMOND
E FOR ENERGY EFFICIENCY Make sure you are up to speed on the new rules coming into force next year
F
rom April 2018 the Government is introducing new energy efficiency requirements for new tenancies and renewals of existing tenancies in the private rented sector. From 2020 this will apply to all existing tenancies, fixed term or periodic. The rating has to be E or above, so ratings of F and G will mean the property is being let illegally. Local Authorities will be enforcing the new rules from April 2018 and penalties include fines of up to £5,000 per property.
EXCEPTIONS
1
If you are a social landlord, or let properties on residential licenses you don’t need to worry. (Although if you let on residential licenses - you need to make sure they really are residential licenses - they may not be). If your property doesn’t require an EPC ( Energy Performance Certificate) this will not affect you. Most will, but some (including some HMOs) will not. If you have done all the upgrade work you can but this is not enough to take the property above band F - you can claim an exemption. If you cannot get full funding for the upgrade work you may also be able to claim an exemption. There are a few other exceptions. For example, some listed buildings may be exempt.
2 3 4
BE PREPARED!
1 2
Check the energy efficiency rating your property currently has. If it is E or above you are compliant. Check what work needs to be done, whether you can get funding and if so get the work done before next April if possible.
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ASIAN HOUSE & HOME I WINTER 2017
3 4
If you can’t get funding - or if there is some reason why you can claim an exemption - get confirmation of this. Register your exemption on the National PRS Exemptions Register, along with your supporting documentation.
WHY MORE REGULATIONS? Carbon emissions create the greenhouse effect, which leads to global warming. The EPC was created in 2008 to gather information on energy use and has been a useful yardstick and is being used to raise standards.
WHAT IS THE GREEN DEAL? This is a government initiative to fund required work. To quote the official Government website: The “pay-as-yousave” principle underpinning Green Deal finance creates a win-win opportunity for both landlords and tenants; the electricity bill payer, normally the tenant, meets the cost of improvements through savings on their electricity bill whilst they are in occupation and benefiting from the improvements. Landlords gain improvements to their property without compromising their income.
WHAT IF…? There are many who question the regulations, global warming itself and the accuracy of the EPCs. You might ask about tenancies in a listed building where external cladding is not feasible; or how to respond to the tenant who doesn’t want central heating or double-glazing; or properties that are energy efficient but do not for various reasons meet the required standards. All new regulations provoke discussion, but the bottom line is the government is concerned to raise the standards in the private rented sector and tenants now have a right to know how much energy it will take to heat their home. Broadly speaking, energy efficiency makes sense for financial and environmental reasons so it will help to get up to speed on the issues, but whatever you think, don’t miss the April deadline and risk a fine!
USEFUL LINKS
www.landlordlawservices.co .uk www.ria.org.uk
Page 45.qxp_A4 Temp 29/11/2017 16:32 Page 1
AGONY ‘UNCLE-JI’
WORDS: YOGESH PATEL
Q &A Buy-to-let tax
In this edition, we’ve launched a new column dealing with property tax, given the myriad of issues facing BTL investors…so send through your problems and Uncle-Ji will try and solve them!
I am a non-UK resident thinking of selling my UK residential properties. What capital gains tax implications does this have? How does the renewals basis work, given the 10% wear & tear allowance has been abolished and replaced by this new relief?
The renewals basis, also known as “replacement of domestic items relief”, will allow landlords of all residential properties, whether furnished or unfurnished, to claim tax relief on the replacement of domestic items. Domestic items include furniture, furnishings, appliances and kitchenware (but not fixtures, where the replacement is treated as a repair). Relief is also not available in any of the following scenarios: the original cost of buying the first item; the property is a furnished holiday letting; if capital allowances are claimed in respect of the expenditure or where rent-a-room relief is claimed.
46
ASIAN HOUSE & HOME I WINTER 2017
It was announced in 2015 that all non-UK residents will be liable to a non-resident Capital Gains Tax charge (NRCGT). Currently, this can be at a rate of 18% or 28%. Any gain arising after 5 April 2015 is chargeable, so it is worth obtaining a retrospective valuation on the property if you haven’t done so already. The actual capital gain is calculated using one of three methods. It is worth reviewing which method provides the most tax efficient option. From a tax compliance perspective, you have only 30 days following the conveyance (generally completion date) of your property to: i) submit a NRCGT return to HMRC and ii) pay the tax liability to HMRC (unless you file under SelfAssessment then the tax is due by 31 January following the tax year of disposal). Any delays may result in interest and penalties.
Page 47.qxp_A4 Temp 29/11/2017 16:34 Page 1
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AGONY ‘UNCLE-JI’
WORDS: YOGESH PATEL
What is ATED and does it apply to my BTL portfolio?
ATED stands for ‘Annual Tax on Enveloped Dwellings’. It was introduced by David Cameron to stop mainly non-UK nationals buying UK residential properties via corporate entities and leaving them unoccupied. ATED is payable by onshore and offshore corporate entities on an annual basis and will apply if the entity holds at least one residential property with a value more than £500,000 from 1 April 2016. There are various exemptions, with one of the main exemptions being nil ATED liability due if the property i s rented out on a commercial basis. However, an ATED return will still need to be submitted otherwise penalties will arise. Note there are also ATED rules for selling a property which need to be considered.
I am renting a property that I have owned and lived in but I now want to sell it. Am I able to benefit from i) Principal Private Residence (PPR) relief and/or ii) Letting relief?
Principal private residence relief (PPR) will be available from the period you lived in the property as your main residence to the date it was let out and is calculated by multiplying the gain on disposal by the periods of occupation divided by the total period of ownership. In any event, the last 18 months of ownership will always be treated as a period of deemed occupation, regardless of whether you occupied the property or not in that period. The only condition here is that you must have occupied the property at some stage. In your case you will qualify for the PPR relief. If the property has been your only or main residence at some point and you let out the property for some of the period of ownership, lettings relief can also be used as an additional relief to reduce any taxable gain. The amount of the relief is the lower of the following: gain • The same amount of relief obtained in the PPR; • The amount of the £40,000. • and ; property the letting of period the to ble attributa For a worked example on this have a look at HMRC guidance - goo.gl/ JJ3f5M
48
ASIAN HOUSE & HOME I WINTER 2017
ANNUAL TAX ON ENVELOPED DWELLI NGS
introduced by David Cam eron to stop mainly non-UK natio nals buying UK residential propert ies via corporate entities and lea ving them unoccupied.
DISCLAIMER THIS ARTICLE IS INTENDED TO BE A GENERAL GUIDE AND CANNOT BE A SUBSTITUTE FOR PROFESSIONAL ADVICE. NEITHER THE AUTHOR(S) OR GODLEY & CO LTD ACCEPT ANY RESPONSIBILITY FOR ANY LOSS OCCASIONED TO ANY PERSON ACTING OR REFRAINING FROM ACTING AS A RESULT OF MATERIAL CONTAINED IN THIS PUBLICATION.
Page 49.qxp_A4 Temp 29/11/2017 16:44 Page 1
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VIEWPOINT
WORDS: RACHEL DIMOND
COFFEEAkshay WITH ... Ruparelia Believe in the young - we obsess with their smart phone usage but they may shock us with their smart values!
Q
So tell me about your background. How did this happen? Well, at a young age my parents decided to move into London and I became concerned about how much the estate agents charged. It was at a time when we really needed to maximise profit and it seemed we were paying over the odds. This played on my mind. However, at that time I was more concerned with smaller money making schemes - buying and selling sweets and bits at school - so I kept it at the back of my mind. But during my AS levels I decided to design an app that challenged this system and continued to do this through my A levels. It was selling my first 2 houses that made me realise how this could be a reality, a business that worked! Was it hard balancing school and this new business? I often get questioned on how I managed everything, but to be honest it was all very natural to me. I was a young carer, as my parents are both deaf, so I found it quite natural to manage my time and focus well. I would say everything that happened to me in life just helped me progress. Circumstances have caused me to be more thoughtful and settled than some other people. Is there anything specific that motivates you? Watching my parents work two
Q
Q 50
ASIAN HOUSE & HOME I WINTER 2017
jobs to provide a decent life for me and my sibling, despite their disabilities, made me realise that resilience and hard work really pay off. If they can do it, anyone can. It made me really proud at my sisters wedding that I could splash out and get her a lovely gift. Another great moment was when the first press coverage came out about my work. From that perspective I could see how my parents actually now understood what I had achieved. Most of the time I was just working away in front of them at home, and didn’t know what they thought about it. Tell me about your network of mums I’ve developed a trusty band of mothers right across the UK who work as selfemployed agents, telling prospective buyers the truth about any property they want to view. I know these women can be relied on not to fake it when it comes to selling a home! I really enjoy seeing the way this is working for them and for our customers. How do you see your business progressing? I find that being straightforward and getting the job done effectively has put me ahead of most of my competition. In an industry that is pretty greedy and can be short lived, I am steadily using a transparent, honest and hassle free way to grow my customer base. As I
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continue to take more of the lion’s share of the market I’ll create an extremely effective business. My business plan is to continue delivering a cost effective way of selling property and to change the industry. I want the outdated greedy way that most estate agents use, charging thousands of pounds for simply being the middlemen, to soon become non-existent. Do you ever take time off and recharge? I love taking time to switch off from communication, even for 30 minutes, and do this as I cycle to and fro to work. I listen to music. Reconnecting with my school hobbies such as tennis also helps. These moments out from work give me time to think where to take the business next. Is your age an asset to you in the industry? Yes. I feel I don’t come with the previous baggage of most estate agents. I can do something different, and something that is more logical for the market today. The days of the fat cat bankers and greedy estate agents are over! Hopefully we can run a successful and effective business with great integrity. What advice would you like to give our readers? My passion is what I do, and you’ve heard about this from me today. However, property is a really incredible and solid way to come together as friends and family. It uses your creativity and business knowledge. If you do it thoughtfully, it can be profitable and a lot of fun. If you can, I would say team up and buy a house, sell it on, or work together to change and improve it, or search out bargains. Done carefully and in the right company I truly believe there is something out there for everyone. Plus it’s a hobby that can help your bank account! It’s also great to be part of a magazine, inspiring those in all the different property areas to come together. I appreciate how this can help and inspire us all, as a community! Thank you!
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AKSHAY RUPARELIA FROM WWW.DOORSTEPS.CO.UK
It is a shock to meet Akshay Ruparelia, or maybe I should say an unexpected but welcome gust of fresh air. At just 19 years old, this incredibly astute, up and coming businessman runs the UK’s 18th largest estate agents (and that’s out of over 17,000). His business is currently valued at £12 million. From his initial business idea, aged 17, during his AS levels, to barely a year after achieving 5 A levels (at straight A*/A grades), he is taking on an industry known to be quite short lived or somewhat fogged with greed and corruption. Think DOORSTEPS think Amazon, Uber or even the Tinder of estate agents. From his early questioning of why should it cost thousands of pounds to sell your house, Akshay has established a nationwide online concept that charges the vendor just £99 (or £199 premium) all in, for a full service. In a dog eat dog industry he is establishing a simple, yet long term business model that is going forward with obvious success . How often do you meet a young property millionaire with a business based on high morals and integrity? He is one of the most genuinely ethical entrepreneurs I’ve met in a long time. And so easy to be with, too.
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