Streetwise Property Alert 17th December 2013

Welcome to today’s UK property-related news and views…

Identity Theft Reminder

We have, from time to time, reminded BTL investors about the dangers of identity theft, i.e. a tenant using your identity at the address. According to the Balgores Property Group, an estate and lettings agency group in Essex, identity fraud can be very serious. They give an example of a case in Newton Abbot in Devon where a property was sold in the landlord’s name and the money stolen. The tenant was eventually caught and ‘jailed for six years after admitting nine offences of fraud, theft and the dishonest use of a passport.’

‘This is an extreme and rare case. However, there are a lot of professional fraudsters out there that want to rent a property purely to secure an address from which they can carry out finance fraud. Often, they may be pay a few months’ rent in advance, with no intention of paying all the rent due during their tenancy. Many use the property as a PO box for the delivery of goods they have bought on stolen credit cards. They are very savvy and know they can live in a property for up to six months before a landlord possession order is enforced. In that time, they can run up thousands of pounds in credit card debt and of course rental arrears.’

‘These fraudulent tenants can provide authentic looking passports and utility bills. They are also very difficult to evict as they seem to know their way round the legal system. The only way landlords can protect themselves is by carrying out thorough tenant references including ID validation checks and taking out rent guarantee insurance, which will pay the rent in the event that the tenant defaults. All professional letting agents will be able to do this on a landlord’s behalf.’ We will update our ‘ID Protection’ article and let you have it shortly.

New-Build London News

According to Knight Frank, foreign investors buy about 70 per cent of new-build properties in central London. Will that change with the CGT changes announced in the autumn statement and due to come into force from April 2015?

The consensus view is ‘no, the market will continue to be driven by overseas investors’. Knight Frank’s Liam Bailey says, ‘Tax is not the primary driver for the majority of international buyers of residential property in London. The change to CGT rules brings the UK in line with other key investor markets, such as New York and Paris, where equivalent taxes can approach 35 to 50 per cent depending on the owner’s residency status.’

We note one article that states, ‘Developers that have benefited (from the foreign buyers) include Berkeley and Barratt Developments as well as British Land and Land Securities.’ If I might blow our own trumpet, not so loudly that Joe Public investors hear, we do have access to just about all off-plan deals in London for HNW & S investors. Food for thought?

Warning! Undeclared Income

Accountancy Live issues a warning we made a while ago – it bears repeating. ‘Buy-to-let and residential landlords who have avoided paying tax over the last few years have been given a final chance to disclose unpaid tax liabilities under the HMRC’s let property campaign. HMRC has published guidance for making a disclosure under the Let Property scheme which is open to all residential property landlords with undeclared tax liabilities.’

‘Landlords who wish to take part in the campaign have to notify HMRC and make a full disclosure including a formal offer of how much tax they intend to pay. This can be done online. Landlords taking part in the campaign can expect to pay less in penalties than would otherwise have been the case. The campaign is open to all residential landlords.’ Time to Google ‘Let Property Scheme’?

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