<IMG SRC="../flash/press_animated_title.gif" WIDTH=250 HEIGHT=20 BORDER=0>

Property Square Magazine - August 2007

ALL CHANGE

This month Gerald Fitz-Gibbon, of Fitz-Gibbon, considers recent regulations and changes affecting the lettings industry.

The most recent and significant regulation to affect the letting of residential property is Statutory Instrument 2007 No 797 otherwise known as the Tenancy Deposit Protection scheme. The intention of this legislation, which became mandatory this Aril, is in itself honourable and considered so we're delighted that tenants are now protected from rogue landlords and agents who don't adopt the best practices of professional letting agents like Fitz-Gibbon.

The scheme provides that any deposit paid on an AST (assured shorthold tenancy) from that day be protected through (a) custodial scheme or (b) an insurance based scheme. The schemes allow tenants to get all or part of their deposit back when entitled to it, make disputes easier to resolve and encourage all parties to make a clear agreement on the condition of the property from the outset. Individual landlords and agents must subscribe to one or either or face severe penalties. Along with over 5,000 other letting agents to date, Fitz-Gibbon is a registered agent and unlike most has operated the scheme during the trial period.

Contrary to popular belief the much-publicised Deposit scheme is not applicable to all residential tenancies. Many London homes are let at annual rents exceeding £25,000 p.a. Others are let to corporate bodies and both these scenarios fall outside the regulations, which came into force on 6th April. In addition ASTs created prior to 6th April 2007 are exempt, including those that continue beyond this date as statutory periodic tenancies.

For the private landlord letting his or her property on an AST after 6th April 2007 and taking a deposit, non-compliance will be costly. Firstly, the landlord will be unable to gain possession of the property under the usual "section 21" route, and furthermore his tenant can apply to Court for an order requiring the deposit to be safeguarded. If ordered, the Court will additionally order the landlord to pay to the tenant a fine of three time the deposit within 14 days - this should represent sufficient encouragement for all parties to comply.

Meanwhile, HM Revenue and Customs have taken UK tax-payers by surprise and announced a form of amnesty for various forms of tax avoidance. Those who wish to avail themselves of the amnesty should notify HMRC of their intention to disclose irregularities connected with an offshore account or otherwise, and have until 26th November to quantify their disclosure. Many landlords presume that if they are overseas their tax status will alter but most landlords have to pay tax on income generated from letting a property in the UK. If you're absent from the UK for six months of the year or more, you should apply for non-resident Landlords status early on. Some 65% of our Landlords live overseas and rely heavily on our International Lettings expertise.

At the time of writing the first phase of the introduction of HIPS should be taking place on 1st August for all properties being marketed for sales with four bedrooms or more. Hopefully there will by then be a legal definition of what specifically constitutes a four bedroom house as without such definition they may well be an inordinate number of three bedroom properties hitting the market - with studies!.

Finally one amalgamation that has received little publicity is the joining of the NAEA and ARLA - the National Association of Estate Agents and Association of Residential Letting Agents. Both organisations have been independently leading the way promoting best practice within the Estate and Lettings industries and have now merged under the auspices of a larger umbrella organisation the NAOPP - National Association of Property Professionals.

Gerald Fitz-Gibbon, of Fitz-Gibbon (020 8892 8921), has been successfully sourcing investment properties for Fitz-Gibbon clients for almost twenty years.