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Registration shifts the onus of responsibility for unruly tenants squarely onto landlords’ shoulders, with serious penalties for landlords who do not deal effectively with problem tenants. In such circumstances, a local authority can order that no rent is payable by the (antisocial) tenant, or can seize management of the property from the landlord. Authorities will also be entitled to enforce antisocial behaviour orders against tenants at the landlord’s expense.To avoid such scenarios, landlords must demonstrate their ability to tackle antisocial behaviour. My company is developing an antisocial behaviour policy for landlords to ensure a watertight procedure is in place to deal with complaints of alleged antisocial behaviour by tenants.The thrust of any such policy should be to diffuse any problems at an early stage. Of course, there will be occasions where the only remaining option is to terminate the tenancy.Where the tenancy is a short assured tenancy (SAT) under the Housing (Scotland) Act 1988, the strongest device in the landlord’s armoury is a validly executed notice to quit and section 33 notice. It has been common practice for tenancy agreements to permit the month-tomonth extension of a tenancy; however by allowing such an extension, the landlord is unable to serve notice to quit and section 33 notice within the requisite two month notice period. As these notices represent the most straightforward way of ending a SAT, landlords would be well www.journalonline.co.uk advised to set up a SAT for a fixed period (minimum six months) and always to make sure the correct notices are served to ensure termination at the ish. Landlords must take care to ensure that the criteria for establishing a SAT are followed to the letter, in order to make use of these valuable tools. It has been recognised that local authorities will accept a landlord’s intention to terminate a SAT at the ish as an appropriate response to antisocial behaviour on the part of the tenant. Without a tenancy expert to guide landlords through this legal quagmire, landlords could face a potentially very expensive, very nasty catch-22 where they have no power to evict the tenants and yet are held accountable for their bad behaviour in the eyes of the law. Landlord accreditation Registration will undoubtedly be seen as another layer of bureaucracy facing landlords. However, landlords with HMO licences and members of voluntary accreditation schemes such as the Edinburgh Landlord Accreditation (ELA) scheme will automatically be fast tracked onto the register. A joint initiative between City of Edinburgh Council and the Scottish Landlords Association, ELA is a pilot scheme to set industry standards and recognise good practice in the private market, for those agents and landlords achieving the standards in terms of safety, tenancy management, and presentation, and will set those property agents apart with a badge of excellence. Other schemes due to be piloted are South Ayrshire, Dundee and Dumfries & Galloway. It seems likely that accreditation schemes will go nationwide. Council tax discounts Another significant issue affecting landlords is the introduction of the Council Tax (Discount for Unoccupied Dwellings) (Scotland) Regulations 2005, which poses financial ramifications to landlords nationwide.This change, which came into force on 1 April 2005, handed discretionary powers to local councils to reduce tax discounts from 50% to 10% on all second properties which are not the title holder’s primary place of residence, including holiday homes and rental properties. Originally it was understood this amendment would affect holiday homes only. However, practitioners should be aware that several local councils such as Aberdeen, Argyll and Bute and Edinburgh have already extended the parameters of “second home” to incorporate rental properties when furnished but unoccupied. For example, a landlord with a furnished rental property which is unoccupied for as little as 24 hours, sees the previous council tax discount reduced from 50% to 10% – representing a marked increase in costs. As the changes may be backdated to 1 July 2005, this could translate into significantly larger council tax bills per annum for landlords. A loophole allows an overseas resident who owns property in Scotland still to ELA is a private scheme to set industry standards and recognise good practice qualify for 50% tax reduction, if the rental property is considered the principal place of residence in the UK. Exceptions apply where the property is undergoing or requires major repair work to render it habitable, is undergoing structural alteration, or is unfurnished, in which cases complete exemption from council tax may be granted. It has been speculated that participating councils have earmarked the extra revenue to fund affordable housing schemes, which must be applauded. However, with favourable council tax discounts on rental properties looking like a thing of the past, landlords must be made aware of the new council tax charges and must minimise any void periods to reduce council tax overheads. Self-invested personal pensions The introduction of self-invested personal pensions (SIPPs), scheduled for April 2006, is being heralded as big news for prospective landlords. For the first time, personal pension funds can invest in residential property. In a nutshell, investors will be able to purchase an investment property via their pension and enjoy tax relief (40% for higher rate taxpayers and 22% for standard rate taxpayers) plus tax-free rental income into their SIPPs.The rules are still to be ironed out; however practitioners should be prepared for the property market to re-ignite as a new wave of investors enter the property market. As the borrowing capacity of a SIPP is limited to 50% of the pension fund, early investments may be targeted towards smaller properties. For example, a SIPP with £100,000 of assets could borrow £50,000, creating purchasing power of £150,000. It could therefore be expected that SIPP investing will impact the first time buyer market initially, before rippling out to the wider market over the next few years. All other things being equal, property prices are bound to increase as a result. The letting industry has come of age as it has adapted to legislation already imposed. I am confident that it will cope equally well with the new challenges posed by the Antisocial Behaviour Act and SIPPs.There are now several intertwining strands of legislation, through which a landlord must tread carefully. It has therefore never been more essential to put property investment into the hands of an expert.This is no longer a game – the letting industry just got serious. Emma Fursman LLB, DipLP, MBA, DipCIM is managing director of Dunpark Property, management agency and buy to let consultancy The Journal: December 2005 : 21
PENSIONS As pensions “A-Day” approaches, IAIN TALMAN explains how the statutory regime is taking shape and the actions advisers should be taking between now and 1 April PUZZLES and PARADOXES Q When can you simplify law and make it more complicated at the same time? A When it is pensions law. Q How can you make pensions more secure, less complicated, cost less but better funded? A Become a Government Minister and say so. Last year the Pensions Act 2004 attempted to deregulate some parts of pensions law and make pensions safer. It also sought to introduce a new funding requirement to make them more secure. Some but not all of its provisions have come into force. The Finance Act 2004 (now amended by the Finance Act 2005) will introduce from April 2006 a simplified Revenue and Customs regime. These two measures were examined in the article “Securing the future” in April’s Journal (page 19).This article is an update on where we have got to now. Simplification It may be recalled that at present we have a complicated approval system to enable a pension scheme to gain the tax exempt advantages. This involves keeping benefits provided within the permitted types and keeping those within the permitted level of benefit. From 6 April 2006 (“A-Day”) this is to be 22 : The Journal: December 2005 swept away by a “simplified” system, based on a lifetime allowance of £1.5m for the individual’s pension fund and annual contribution limits. Most of the statutory instruments under this legislation have now been made. Revenue & Customs have begun (without wide consultation) to issue the “simplified” manual but by the internet.The format and content are equally baffling. There are opportunities here which solicitors must seize both personally and as advisers.Whether employees or, more particularly, self-employed, solicitors should be examining their pension plans and advising clients to do likewise. This considerable liberalisation of rules in 2006 should be taken advantage of and planning begun now. Self-employed The self-employed may privately provide for pensions through a personal pension scheme, which will attract tax advantages. Rather than investing through a provider such as the insurance company, the individual also has the option of a SIPP or self-invested personal pension scheme.This was examined in David Canning’s article in the September Journal (page 30). Employed (including directors) In addition to use of the personal pension scheme and SIPPs, the employed may also use a group or occupational pension scheme. Again this may take the form of an arrangement which is fully insured and no doubt insurers will be continuing their executive pension plans as before within the context of the new rules. There is also the option of selfadministering the assets, which became familiar as a small selfadministered scheme (or SSAS). From April 2006 essentially these will continue to be available, but on a much simplified basis – without many of the restrictions which had accresced to them previously.The rules will now be similar to those for a SIPP but with some differences, such as the power to lend to the sponsoring employer. The SSAS may come back into its own and will have some attractive features including, perhaps more readily, the ability to shift the value between generations who are members of the scheme.They should certainly not be overlooked in planning. Group schemes Those advising employers with or trustees of group pension schemes should also be suggesting a number of areas for review, some of which relate to higher level policy decisions and some of which relate to administrative issues. At the higher level the following require examination: ■ benefit design issues.There are several changes, particularly in relation to benefits which can be provided, perhaps most strikingly in relation to death benefits.These should be reviewed. ■ potential flexibilities at retirement. Although minimum retirement age www.journalonline.co.uk
Page 1 and 2: THE ournal OF THE LAW SOCIETY OF SC
Page 3 and 4: editorial The Society’s call on t
Page 5 and 6: FORTHCOMING EVENTS (CPD Hours in Br
Page 7 and 8: letters Send your letters to The Ed
Page 9 and 10: CIVIL JUSTICE Last month the workin
Page 11 and 12: CIVIL JUSTICE The real access to ju
Page 13 and 14: CIVIL JUSTICE “The adversarial sy
Page 15 and 16: WITNESSES Minister: Continued effor
Page 17: LETTING LETTING in the LAW EMMA FUR
Page 21 and 22: PENSIONS In addition there are a se
Page 23 and 24: CHARITIES How the profession can he
Page 25 and 26: professional practice New deal for
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Page 37 and 38: IN-COURT ADVICE ACCESS ROUTE Curren
Page 39 and 40: SOCIETY INBRIEF COST OF TIME SURVEY
Page 41 and 42: SOCIETY Stirling celebrates LLB lau
Page 43 and 44: SOCIETY The UK’s term at the helm
Page 45 and 46: people AITKEN NAIRN,WS, Edinburgh,
Page 47 and 48: professional briefing 50 : CRIMINAL
Page 49 and 50: professional briefing 52 : AGRICULT
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Page 53 and 54: professional briefing 56 : The Jour
Page 55 and 56: property lawyer UNVEILING THE ISLAM
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