A Clearer View

Lisa Simon, Partner and Head of Residential Division, offers a practical update on residential letting issues currently in the news.

Non-Resident Landlords Scheme: a reminder for lettings agents 

The HMRC has issued a reminder to lettings agents in relation to their responsibilities within the Non-Resident Landlords Scheme (NRLS). 

The Non-resident Landlord Scheme (NRLS) taxes the UK rental income of people who usually reside outside the UK. 

Carter Jonas is registered under the NRLS scheme and obliged to deduct tax from the landlord’s UK rental income and pay the tax to HMRC each quarter, less deductible expenses paid. We provide an annual report and tax certificate (NRL6), and records are maintained demonstrating that the requirements of the Scheme have been complied with.

If a landlord wishes to receive their rental income with no tax deducted, they should apply for approval to HMRC by completing form NRL1. While rental income will be paid with no tax deducted, it is still liable to UK tax and the non-resident landlord must include it on completion of any self-assessment tax return.

If a letting agent is not managing a property and the non-resident landlord does not have HMRC approval, the tenant may have to operate the NRLS if the rent paid on average is more than £100.00 per week.

HMRC publishes detailed guidance notes and the relevant forms are available at Gov.uk.

selective licensing

A city-wide selective licensing scheme came into force in Oxford on 1 September and a new landlord licensing scheme in north London has recently been approved by the Secretary of State. So are we likely to see an increase in landlord licensing schemes across the country, and what does selective licensing mean for landlords? 

Oxford now has a city-wide Selective Licensing Scheme. Previously only HMOs in Oxford were licenced, but this is now extended to the entire private rented sector (PRS), which accounts for approximately half of all homes in Oxford. A five-year licence from Oxford City Council costs £480 although landlords who apply before 30 November 2022 can qualify for the ‘early-bird discount’ and there is a discount for accredited landlords.

A similar scheme is to be launched in Haringey, north London, which will cover specific homes within the east of the borough. Costs will be £600, or £350 with an ‘early-bird discount’.

Selective licensing was legislated for in the 2004 Housing Act, allowing local authorities to require all, or parts, of the area to be subject licensing controls (‘selection’ refers to the precise areas, rather than the landlord, tenant or property involved). The schemes are intended to protect tenants by ensuring that landlords take maximum responsibility for property management.

In Haringey, the selective licensing scheme is being implemented partially in relation to fuel poverty: its purpose is to enable the local authority to identify properties with the worst energy efficiency ratings and provide landlords with the relevant support and education to adapt their properties and effectively measure their carbon emissions.

Selective licensing appears to be increasing in use. Leeds, for example, has had a landlord licensing scheme for Harehills and Beeston since 2019 but recently there have been calls for Leeds City Council to introduce a city-wide licensing scheme to improve housing standards. Liverpool has operated a controversial licensing scheme for the PRS since April. Currently covering 45,000 homes, this is likely to be extend following the Government’s interventions in Liverpool City Council.

So, it would seem that such schemes are on the rise, and therefore landlords and agents should be mindful of the potential introduction of new schemes in their area.

Smoke and Carbon Monoxide Alarm (Amendment) Regulations 2022

Earlier this year we advised on the introduction of the Smoke and Carbon Monoxide Alarm (Amendment) Regulations 2022. The new rules came into effect on 1 October 2022, and landlords are advised to check their obligations in relation to provision and maintenance of alarms.

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