new inventory law for rental property?

searcher30

new inventory law for rental property?
we are told now that even if there is no furniture this needs to be done by an independent company (the estate agents is telling us). also we are told that the first month's rent is to be held by the inland revenue? is this definitely the case? any info appreciated. this is going to make it increasingly difficult to rent out . thanks in advance.

dougk_2

Not as far as I am aware and inland revenue do not hold any deposits!
take a look at https://www.lanlordzone.co.uk if letting out properties is of interest to you.

rosysparkle

Just because your agent uses an independent company to do the inventory, doens't mean that you have to accept this. You can do the inventory yourself but most landlords don't put enough detail IME. You need to note the colour and condition of every floor, wall, ceiling, window frame, window catch, pane of glass, windowsill, mantelpiece, door, door frame, door furniture, built in cupboard, worktop, lightswitch, light fitting etc as well as the make and model and condition of every inventory item (white goods in the kitchen). If the property is part or fully furnished, the inventory needs to state the make, model, colour and condition of every item right down to the last fork and wineglass.

Fortunately, you only need to do the hard work once, the inventory can then be upated regularly rather than completely redone.

The Revenue doesn't hold rents or deposits. The new housing act will be changing the legislation on deposits; landlords or agents will have to belong to a deposit scheme to hold a deposit and most agents have already set this up, but the agent will still hold the deposit and pass on a small cost to the landlord to cover the annual cost of the membership of the deposit scheme.

Some agents do hold the first month's rent until the end of the tenancy, separate from the deposit that they hold, but many make only a token retention of £100 or so, and some make no retention at all.

The only other way the Revenue might get involved directly is if you are going to be resident abroad for more than six months, in which case the agent(or tenant, if no agent) is obliged to deduct tax from the rental income at 22% and pass this to the Revenue, unless the landlord has a CNR number or is PD approved.

Obviously the agent is obliged to give the Revenue a full list of clients, I get a request for this every three years or so, but that's only to check that all the landlords are declaring their rental income on their tax return and no money changes hands between the agent and the Revenue!

Either your agent has not explained matters clearly or they are simply wrong. If you can't get a clear answer from them about this business of the IR holding the rent, and if you aren't happy with an outside company doing the invent, then my suggestion would be to appoint another agent if you can withdraw from the contract without penalty. If the agent have not yet secured a tenant there should be no penalty, though they might try and charge you for advertising depending on their T&C.

searcher30

Thank you both for your replies.

What does "CNR number or is PD approved" mean please?

could not access the website. is it working ? or is it my computer? if this is the correct address?

thanks

rosysparkle

I think the website address that dougk posted is spelled wrong, try http://www.landlordzone.co.uk/

CNR numbers and PD approval only need to concern you if you are going to be residing overseas for six months or more while your property is being let.

CNR is the Centre for Non Residents and if your tax affairs in the UK are up to date, you can get an exemption number from CNR (you need to fill in form NRL1, which your agent will have or you can get from the IR website at http://www.hmrc.gov.uk/nonresidents/fagnrl1_bw.shtml You will need to fill in your agents' reference number which will begin with NA or NT. If the property is owned jointly, both owners should apply to CNR .

PD approval is given for some crown servants, in practice it does the same thing as CNR approval, allows overseas residents to receive UK rental income without deduction of tax at source.

Having CNR or PD approval doesn't mean your rental income is not liable for tax, though. You will have to declare your rental income on your tax return and your tax liability will depend on what other income you have and what expenses.

Will you be residing abroad while your property is let?

babe_ruth_3

rosysparkle wrote:

The Revenue doesn't hold rents or deposits. The new housing act will be changing the legislation on deposits; landlords or agents will have to belong to a deposit scheme to hold a deposit and most agents have already set this up, but the agent will still hold the deposit and pass on a small cost to the landlord to cover the annual cost of the membership of the deposit scheme..

I thought I read somewhere (possibly on here) that the interest generated by the holding deposits would pay for the service? Anyone Know?

rosysparkle

Agents are charged quite high fees to belong to the deposit schemes. Most will charge those fees back to the landlord, but it's still very much cheaper than it would cost a landlord to join a deposit scheme for themselves.

I think there was some talk of the interest on deposits making the government scheme self-financing, but for some strange reason, none of our landlords seem interested in the government or the Office of the Deputy Prime Minister holding the deposits for their tenants. I can't understand why, you'd think that landlords and tenants would jump at the chance to have John Prescott holding deposits and making speedy decisions about whether a tenant should pay to have the carpets cleaned. :rotfl:

babe_ruth_3

Rosy,
Will landlords have to hand over existing deposits that they are holding before the commencement date of the scheme? And just when does the scheme start? Thanks Ruth

rosysparkle

The latest info I have is that there is no clear date for the scheme to start. The original target date was October 06 but for unexplained reasons there are delays and now the proposal is April 07.

There is some waffle useful info on the ODPM website here: http://www.communities.gov.uk/index.asp?id=1152038

I'm not yet clear whether landlords have to hand over existing deposits. It's something I've asked, but been given conflicting answers. If I can get a definitive answer, I'll let you know!

All the landlords with whom I deal have their deposits in our ARLA backed deposit scheme, which gives them access to arbitration as well.

babe_ruth_3

Thanks rosy, you seem to know your stuff, are you an agent then?

I have 4 btl at moment and another on the way. I have never used an agent (well, only for 1 year with my first btl around 10 years ago) so I was wondering if I will have to use one just for the deposits when the scheme comes in?

Do you think I should start asking the agents now for their charges etc?

Sorry to ask so many questions but I know I really should be finding out about this now and not leaving it to late. Having said that if I can hold on to my deposits it may not affect me as I'm not planning to get any more.

rosysparkle

I work for a lettings agent.

If you have new tenants in any of the properties after October (or is it April, who knows), you'll come under the legislation even if you don't have to hand over existing deposits.

I'll try and find out more for you, but I'm not at work today (yay!)