HMRC have launched 12 task forces aimed at targeting landlords with 3 or more properties in 2011/12 and more in 2012/13.
The buy-to-let taskforce will specifically target tax evasion among buy-to-let landlords who own or rent out more than three properties. HMRC taskforces form part of the government’s aim to raise an additional £7bn a year by 2014/15 through tacklingtax evasion, avoidance and fraud.
Mike Wells director of risk and intelligenceat HM Revenue and Customs (HMRC), is quite clear –“ if you deliberately seek to evade tax we can and will track you down and you’ll face not only a heavy fine, but possibly a criminal prosecution as well.”
The Task forces will gain information from;
Banks Mortgage applications
Land registry Electoral rolls
Council tax records Letting agents
It is thought the HMRC have identified 80,000 landlords who may have claimed too much tax relief or who have failed todeclare all the rent received.
Property investors who sold homes several years ago have also been pinpointed as well as overseas landlords.
Of course, if you keep accurate records and declare everything you have nothing to worry about.
A recent survey conducted by mortgage organisation ‘Paragon Group’ reports an ongoing growth in demand for rental properties, with demand being at its highest for two years in the last quarter of 2010.
First time buyers have always struggled to get access to mortgage finance from lenders however it appears that now more than ever tenants are struggling to get onto the property ladder. This suggests a correlation between the increase in demand for rental properties and the decrease in the number of mortgages being accepted.
With the increase in demand for landlords, confidence should be booming yet not all buy to let property owners have this attitude. The monthly Upad Landlord Confidence survey recently found that confidence in the buy to let property market fell from 63% in January to 61% in February.
It appears to be the rising rent rates that are giving the 61% of landlord’s confidence in the market, and these rates won’t begin to fall until the banks relax their mortgage lending criteria. For the remaining landlords, it’s the worry of insufficient funds from the tenants and their reluctance to commit that is causing their lack in confidence.
Whatever landlords are feeling over the current buy to let market, according to Upad’s CEO James Davis, letting a property isn’t just about finding a tenant and raking in the rent; it’s about finding the right tenant and being as sure as you can be that they’ll look after both your property and your income.
The third quarter in 2010 saw the development of new homes at its lowest in 5 years, the second lowest of the past 19 quarters and the lowest since 1923. The country has an estimated one million housing shortage and the New Housing Pipeline shows there was a steady fall in planning permission being granted.
Although property prices are predicted to fall again in 2011, London and the South are expected to remain resilient. This coupled with the housing shortage does make buying Buy To Let (BTL) properties still a positive return and current yields are still bringing in a more favourable return than savings accounts. New BTL mortgages are starting to slowly come back, Coventry recently released a 3 years deal at 4.99%.
Good news for Landlords – because of the housing shortage, we will see a rise in rental prices, however due to the economic climate a rent guarantee insurance of some kind will be advisable. 2009 saw a 50% increase in rent arrears nationally and although this decreased slightly in 2010, there is concern we will see this coming back again in 2011. This makes it more vital to use a good reputable agent who can limit this with good referencing techniques.
