HMO Licensing Changes, Landlords Be Aware

HMO - licensing of Houses in Multiple Occupation Changes to HMO licensing have been unveiled in the Government’s consultation paper titled: Houses in Multiple Occupation and residential property licensing reforms published today.

The Government’s main focus seems to be raising standards and protecting vulnerable people in our society. The cynic in me can’t help a great way to raise extra revenue as they remove the 3 storey rule. Now all shared homes with 5 or more people from 2 or more household fall under mandatory licensing rules.

Key Points in the Houses in Multiple Occupation and residential property licensing reforms consultation paper.

  1. The Government intends to remove the existing “three storey” rule so that buildings with 5 or more people from 2 or more households, regardless of the number of floors, will fall within the scope of mandatory licensing.
  2. Minimum room sizes occupied for sleeping in licensed HMO’s – 6.52 sq. m for one person and 10.23 sq. m for two persons.
  3. It’s important to note that “semi-commercial” flats above commercial properties and converted properties that contain 5 or more people from 2 or more households will require a licence.
  4. HMO’s will need to provide adequate rubbish disposal and storage facilities. These facilities will need to be suitable for the number of occupants.
  5. Financial penalties; failure to obtain a licence or a breach can carry a maximum fine of £30,000. However, for any person contravening an overcrowding notice this, these fines can now be unlimited.

The government’s estimate that the proposals will make around 174,000 additional HMOs (including flats in multiple occupation) subject to mandatory licensing.

The order is expected to come into force during 2017, subject to parliamentary approval. A 6 month grace period will be afforded to landlords to get used to the new legislation.

Enable Finance provide HMO mortgages up to 85% loan to valuation happily consider more than 8 letting rooms.

To read the full consultation paper written by the Department for Communities and Local Government click here

Why I Started Enable Finance For Business Owners

After 20 years in financial services industry, I was asked why I started Enable Finance all those years ago? So I thought why not make a quick video, I hope it makes sense to you?

I should also add that with the demise of relationship banking, in the SME sector, from our high street banks. I and Enable Finance want to be on your mobile phone as the first port of call for all commercial finance requirements in your business.

As a regulated commercial finance broker headquartered in Sheffield we are perfectly positioned to assist our clients North, South, East or West and only a quick flight to our clients in Northern Ireland.

If you’re looking for a commercial finance expert to go into your mobile phone, please add me Phillip Evans 07970 0500425 or visit our contact us page.

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Has Brexit Affected Business Lending?

Whilst Brexit has created market volatility, Enable Finance and our lending partners are still very much lending… It’s business as usual. 

  • Commercial Mortgages & Property Finance – Brexit has made no impact on Rates or Lending.
  • Asset Finance – Brexit has made no changes, in fact some of our lenders have lowered rates.
  • Cashflow Facilities – Brexit has made no changes to fund working capital.

Brexit or Remain Currency Markets Are Volatile – Enjoy Better For Your Business

With the Brexit polls narrowing it seems like the referendum results are too close to call, which in turn is driving volatility in the currency markets as different polling results are released.

Polls from both ICM and YouGov, showed that the campaign for Britain to leave the European Union has taken a 4-5% lead in the lead up to the June 23 Referendum, which sent sterling towards three-week lows against the US dollar. Of the eight most recently published surveys, one opinion poll was tied, two showed the ‘Remain’ camp ahead and five have showed the ‘Leave’ camp in the lead, including a TNS online poll published on Monday and two previous ICM polls published last Tuesday.

Euro:GBP Brexit Remain

Enjoy Better Corporate Currency Rates Below

GBP:Dollar Brexit Remain

Access Our Specially Negotiated Corporate Foreign Currency Rates

Below are some opinions of 5 top financial institutions on the potential impact of a Brexit on sterling.

  • Goldman Sachs: Estimates drop in the trade-weighted GBP of 15-20%. If the move was uniform across currency pairs, this would take GBP/USD to around 1.15-1.20 and GBP/EUR to around 1.05-1.10
  • Reuters: none of the 45 strategists polled by Reuters said the economy would benefit if the “Out” campaign wins.
  • UBS: Swiss bank UBS say Sterling could fall to parity with the euro if Britain votes to leave the European Union. UBS states the chance that the UK will leave the EU stands at around 40 per cent.
  • HSBC: GBP could lose 20 per cent of its value against the US dollar, the bank believes, sending it towards $1.10 – a level not seen since 1985, when the UK was contending with issues including the miners’ strike.
  • Deutsche: forecasts in a “benign” environment that GBP/USD of $1.28 by the end of 2016 and $1.15 by the end of 2017. In a “non-benign” or “worst-case scenario”, sterling may depreciate an additional 10 per cent.

Images reflect current banks forecasts for currency into early next year. These predications fluctuate regularly based on various data releases. The below strongly suggests the major banks are working on baseline scenario that we will remain in the EU.

Buy To Let Landlords Be Aware Of The Following Income Tax Changes This April 2016

HMRC Tax Changes For Landlords 2016

Novice property investors brace yourself, HMRC could easily trip you up.

I am making you aware of changes affecting landlords of residential property. The last year has seen a significant shift in the landscape for property investors, with the government announcing a number of measures seeking to make “buy-to-let” a less attractive opportunity for the novice investor. I have outlined the key changes below.

Restriction of tax relief on interest costs (residential property)

The most significant change is the restriction of higher-rate interest relief on residential properties. Currently, the full additional costs of financing the property (usually mortgage interest payments) can be deducted when calculating the profits of the rental business. From April 2017, tax relief on interest will be restricted so that taxpayers will only be able to claim tax relief at 20% by April 2020 (rather than the 40% or 45% relief currently available to higher-rate taxpayers).

The restriction of tax relief will have the most significant impact on higher-rate taxpayers who have large mortgages or those with interest-only mortgages. In addition, rather than finance costs being deducted from rental profits (as they currently are), the tax liability in respect of rental profits will be reduced by 20% of the finance costs. The lack of deduction of interest costs at net income level may mean that some landlords find that HMRC’s calculation of their income for the tax year increases and they could find themselves liable for repayment of child tax credits or may have their personal allowance reduced in certain cases.

Removal of the Wear and Tear Allowance

From 6 April 2016, the Wear and Tear Allowance on furnished properties will be replaced by a new deduction for actual replacement expenditure. The new relief will be available to all residential landlords (including landlords of partly furnished or unfurnished properties) and will essentially allow relief for “like-for-like” replacements. This will negatively impact landlords of fully-furnished properties as the replacement relief is likely to be much less generous than the wear and tear allowance. However, it will be of benefit to landlords of unfurnished and partly furnished properties, who currently cannot claim any relief. In practical terms, it may be worth delaying any significantly expenditure on replacement items until after 6 April 2016 and make sure to retain all of your receipts

Rise in stamp duty for Buy To Let & Second Homes 2016

From 1 April 2016, there will be a surcharge of 3% on the stamp duty payable when purchasing a buy-to-let property or second/subsequent home in England and Wales. This represents a significant additional cost when purchasing a new property. The legislation is widely drawn, so it affects those buying a property to live in themselves but who are renting out their previous home. Overseas properties are also taken into account, so holiday home owners will be affected when buying a new house in the UK. In general, the climate is getting more difficult for buy-to-let investors, with the Bank of England now consulting on whether to set limits on buy-to-let loan-to-value ratios and the ratio of rental income to mortgage interest payments.

Brackets Standard rate Buy-to-let/second home rate (April 2016)
Up to £125,000 0% 3%
£125,001 – £250,000 2% 5%
£250,001 – £925,000 5% 8%
£925,001 – £1.5m 10% 13%
over £1.5m 12% 15%

Source: HMRC

Tax commentary provided by Gillian Dudson, Director of Tax at Knowles Warwick Chartered Accountants.

For more information about tax matters and how this affects you please contact Gillian Dudson on 0114 2747576. or visit

For Buy To Let Mortgages please call 0114 294 5046

Gillian Dudson, Director of Tax at Knowles Warwick