Welcome to our monthly newsletter for property landlords. We hope you find this informative and please contact us to discuss any matters further.
£6,000 Covid grants and SSP Rebate Scheme
The UK government has announced grants of up to £6,000 to support hotels, restaurants and other hospitality & leisure businesses in England that have been negatively impacted by the Omicron variant.
The grant is per premises, so if you run more than one property business, you can claim the grant multiple times. The size of the grant is based on the rateable value (RV) of the premises. This can be found on your business rates bill. If the RV is:
- £0 – £15k, you will receive a grant of £2,700.
- £15k – £51k, you will receive a grant of £4,000.
- over £51k, you will receive the full £6,000 grant.
In addition to the grant, the government is providing a Statutory Sick Pay (SSP) Rebate Scheme, since small businesses are at a disadvantage when it comes to providing paid sick leave due to Covid-19.
If your business is an SME (less than 250 employees), and you have paid SSP to employees for covid-related absences, then you can claim back the costs. You can claim up to 2 weeks of SSP per employee who took leave after 21 December 2021 due to having the virus or being required to self-isolate. You can also make claims retrospectively – more guidance will be published shortly.
Updated guidance on property disposal CGT liability
Since the beginning of the 2020/2021 tax year, any UK resident who sold a UK residential property was required to report the gain to HMRC via their Capital Gains Tax on UK property account.
However, there were issues with this service and the guidance that was provided by HMRC was not very clear.
The government has now published additional guidance which covers a variety of situations and provides step-by-step instructions on how to complete the return.
It covers topics such as:
- How non-UK residents report gains
- How to calculate the gain or loss
- How to calculate reliefs
- How to submit the return
- How to authorise an agent to report disposals
- How to amend a return
There are several other topics covered. You can view the full HMRC guidance here.
Cladding removal for smaller buildings
Cladding is a type of exterior building material. It’s usually made from metals and plastics, but it can also be made from recycled materials such as salvaged wood or old newspapers. It was not until the Grenfell Tower disaster in 2017 that it was noticed that cladding is extremely flammable and dangerous.
The government imposed rules for buildings 18 metres (5 storeys) high, in which unsafe cladding must be removed in order to sell the property. The government provided financial assistance for cladding removal for high buildings.
Cladding can be very expensive to remove and for smaller buildings, no support was provided by the government. Some tenants paid the cost of removal out of pocket.
In January 2022, the Housing Secretary, Michael Gove, announced that they are attempting to pass a fully-funded plan of action in which developers would be responsible for removal. If implemented, tenants in buildings between 11 – 18 metres high will not bear the costs of cladding removal. It is not yet clear if retrospective refunds will be possible.
New mortgage regulations – the 3% rule
In a recent report, the central bank said it has two methods to regulate the mortgage market.
The first measure puts a limit on the amount of “high loan-to-income mortgages” that a bank can issue. The second measure requires lenders to test whether the borrower could keep paying their mortgage if rates were to go up 3% above the standard variable rate.
The bank has now suggested that they will remove the second method to make the mortgage rules simpler and fairer for all involved.
The bank explained that the 3% rule often excluded groups from obtaining a mortgage – especially first-time home buyers. They also noted that the probability of a 3% rate increase would be highly improbable, making this rule unrealistic.
Some mortgage experts claim that removing this rule could have a negative impact on first-time home buyers.
As house prices continue to rise, salaries fail to keep up. This makes saving for a house deposit increasingly difficult. In addition, if banks are able to lend more to borrowers, this could also drive up property prices.
To sum up, although relaxing the mortgage rules could help first-time buyers obtain a mortgage, experts fear that it could also create a high demand and low supply situation which will ultimately inflate prices.