What is Section 24?

Section 24 of the Finance Act 2015 might mean that over half of UK landlords will fall into a higher rate of tax.

Although their income might not have increased, some might end up renting at a loss.

Landlords interest relief system is changing. 

Until recently, landlords were able to deduct the full cost of their mortgage interest payments on their rental properties before they pay tax. Starting in April 2017, mortgage, loan and overdraft interest costs will not be considered in calculating taxable rental income.
The changes will be phased in gradually over 4 years, starting from 5th April 2017. By 2020, 100% of finance costs will be restricted to 20% tax relief only.

This change could see many landlords with interest costs affected and end up paying more tax on their property income. In addition, landlords could be pushed into higher tax brackets which in turn could affect child tax credit assessments and student loan repayments, leaving landlords even more out-of-pocket.

Read more on our article on Section 24 for landlords

Please call Pelin Martin for your 30-minute free property consultation on +0208 994 7327 – pm@bluecrystallondon.co.uk


HMO licensing legislation

An HMO, or “house of multiple occupation” is a property rented out by at least 3 people who are not from 1 ‘household’ (eg a family) but share facilities like the bathroom and kitchen. It’s sometimes called a ‘house share’. HMOs tend to provide a good return for landlords.

Let’s check all the necessary requirements of the HMO licensing legislation

You must have a licence if you’re renting out a large HMO. Your property is defined as a large HMO if all of the following apply:

  • it’s rented to 5 or more people who form more than 1 household
  • it’s at least 3 storeys high
  • tenants share toilet, bathroom or kitchen facilities

There are certain rules and regulations for landlords that must be followed.

Do you need an HMO licence?

You, as the landlord, must register your rental property as an HMO with your local authority if it has three (habitable) storeys or more and it is occupied by five or more people in two or more households.

A ‘habitable storey‘ is any storey that is in residential occupation (even if it’s self-contained). If you, and your family, are resident in the building, then where you live will be included as a storey. Basements and attics are considered a storey if they are occupied, or have been converted into accommodation, or are used in connection with the HMO’s occupation.

The term ‘household’ is defined as members of the same family who live together and couples who cohabit (whether or not they are married, including same-sex couples). A group of friends who are sharing is not termed as a single household.

For example, three friends sharing together will be viewed as three households. If a couple are sharing with a third person, this will be considered to be two households. A family renting a property are one household.

For flats, or part of a property, to be viewed as self-contained, they must have a kitchen, bathroom and toilet, and only those living in the self-contained flat can use these facilities. If the tenants have to leave the flat to use any of these facilities, it’s not a ‘self-contained’ flat.

Once you have notified your local authority, they will assess the property to see if there is enough space for all of the tenants and will check to see if you are managing the property properly. If they consider that you, and the property, meet these requirements, they will grant you an HMO licence.

But note that councils do have the right to introduce licensing for individual, smaller HMOs and they can ask all rental properties be licensed if they want to improve the local area. Therefore, whatever your circumstances, it’s always wise to check with your local authority to find out their HMO rules.

The three questions you should ask yourself to find out if you need an HMO licence are:

  1. Does your rental property have three or more storeys?
  2. Do you let your property to five or more unrelated tenants?
  3. Do your tenants share facilities?

If you answer ‘yes’ to all three questions, then you may need an HMO licence, but if you answer ‘yes’ to any of the questions, it’s still wise to contact your council to find out if you need one.

There are exceptions to who needs an HMO licence and these are as follows:

  • You are living in your property with up to two lodgers
  • The rental property is a flat share, which is let out to two unrelated tenants
  • All occupants who live in the property are freeholders (or long leaseholders)
  • The property is a bail hostel or a care home

Purpose-built blocks of flats are not considered to be HMOs, but if any of the individual flats are shared by more than two tenants in two or more households, they will be viewed as HMOs.

Fire safety

It’s important that you find out if your premises is an HMO because an HMO landlord has additional responsibilities under the fire safety regulations. Under the Regulatory Reform (Fire Safety) Order 2005 (FSO) common areas of HMOs, blocks of flats and maisonettes must be assessed for fire risk.

As an HMO landlord, you must:

  • Complete a fire risk assessment and consider the fire precautions in the common areas of the HMO property
  • Consider escape routes which may include creating a fire barrier between the common areas and the living accommodation
  • Consider the need for a fire detection and warning system, emergency escape lighting and firefighting equipment and facilities
  • Consider the need for signs and notices
  • Consider recording, planning, informing, instructing and training which will require producing a fire action plan

Please contact Pelin Martin to claim you 30 minute free property consultation on

+0208 994 7327



The importance of HMOs in todays market as investment

HMOs, House of multiple occupancy are generally defined as properties with a minimum of three individual tenants sharing kitchen, bathroom and toilet facilities. Tenants renting the rooms separately and not being connected.

Depending on the type of HMO and its location, 5 or more rooms rented out in a single dwelling is classified as a HMO that needs licensing, rooms may be subject to minimum size guidelines or additional fire safety measures put in place.

Residents living near HMOs often complain about higher levels of noise, overflowing bins and parking requirements of multiple tenants. But occupants of HMOs also complain about substandard living conditions, unkempt communal areas and unresponsive landlords.

HMOs have taken a different level, it is getting harder to get on the property ladder and most professionals rent for many years and try to raise a deposit for their fist home. Therefore HMOs has emerged as the demand for affordable, yet high quality, shared housing increases. HMO landlords have been increasing the quality of the rooms accommodation and adding a wow factor to attract higher quality tenants and achieve the highest rent.

HMOs as investments

HMOs are easier to manage than several single-occupancy buy-to-let properties and provide landlords with the opportunity to maximise rental income from multiple rooms, while minimising the impact of voids and non-payment.

If you’re considering investing in HMOs, then it is important to commit yourself to producing high quality, fully compliant accommodation that attracts professional tenants who enjoy living in your properties.

Your priorities must be how to achieve buy to let success

  • Location – Most importantly, you’ll need to find out what legislation your local authority has in place for HMOs. It is also crucial to invest in a location that your ideal tenants would want to live in. Access to good transport links and local amenities will probably be important to them. You need to decide if you need a property manager to manage your HMO
  • Type of property – If you’re not buying an existing HMO, you will need to look for properties that have the potential to be cost-effectively converted and accommodate the right amount of rooms and bathrooms at the right size. There are different advantages to being on the smaller and larger ends of the HMO scale, you can read about them here. Having local planning knowledge prior to a purchase is also essential, so do your research.
  • Management – You should decide whether you would like to manage your HMO(s) yourself or employ an agent to do so. If it’s the former, you need to think about what kind of landlord you want to be, how much time you have and whether it is enough to effectively manage the property(ies). This can be the difference between you having loyal, long-term tenants and unhappy ones.

However, HMOs are very complex and there are many risks involved. Without the right guidance and knowledge, you could easily purchase the wrong property for the wrong price, attract undesirable tenants and face fines if the right licensing isn’t in place. There is also limited advice available for inexperienced HMO investors.

If you are thinking about investing in HMOs or already have HMOs and having trouble managing them please call Pelin Martin on

+0208 994 7327


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Capital gains tax on investment properties…

The rules on capital gains tax on your home can be quite complicated. Essentially, if you’re selling your main home that you live in you are very unlikely to need to pay capital gains tax at all, because of a tax relief called private residence relief.

Capital gains tax is generally not payable on gains you make on the sale of your only or main home. But if you own more than one, there possibly would be a bill to pay.

By law as of April 2019, tax digital is mandatory for landlords and the interest relief system is being changed over a period of 4 years.

If you’re selling a second home, or selling a home that you rent out to generate an income, you might have to pay, although there are ways you might be able to reduce your tax bill through letting relief or nominating which of your homes you want to be tax-free.

When you pay capital gains tax on property

You may have a capital gains tax bill to pay if you:

  • develop your home – for example, by converting part of it into flats
  • sell part of your garden or land, if the area is more than 1.2 acres
  • use part of your home exclusively for business
  • let out all or part of your home – this doesn’t include having a lodger in your residential home
  • moved out of your property 18 months or more ago
  • bought a home for the purpose of renovating it and selling it on.

What is the capital gains tax rates for property 2017-18

In the 2017/18 tax year, a profit of £11,300 canbe made before you pay capital gains tax.

If you’re a basic rate taxpayer, the tax you pay will be 18% on the profit you made on the property. Higher-rate and additional-rate taxpayers will pay 28%. You will not be paying capital gains tax when you sell your residential home.

When you sell a property, a proportion of the profits you make can be earned tax-free, which is called capital gains tax allowance.

Second property tax

If you use more than one home at the same time, you can nominate which one will be tax-free. It can be any of the two.

It makes sense to select the one expected to make the largest gain when you come to sell it. You have two years from when you get a new home to make the nomination.

Married couples and civil partners can have only one main home between them, but unmarried couples can each nominate two separate homes.

Letting relief and capital gains tax

If you have let out either part or all of your home, a proportion of any gain when you sell it will relate to the letting and could be taxable.

However, provided the home genuinely has been your main home at some point, you can claim tax relief in the form of private residence relief for the time it was your main residence and the past 18 months of ownership, even if you weren’t living in the property during those 18 months.

You may also be able to claim letting relief, which will reduce your capital gains tax bill.

The amount of letting relief you can claim will be either: You can claim the lowest of the 3 options below.

  • The gain you receive from the letting proportion of the home
  • The amount of private residence relief you get
  • £40,000

Remember, you can not claim private residence relief and letting relief for the same period on the same property. This means if you are letting the property out when you come to sell, the past 18 months qualify for private residence relief rather than letting relief.

The exact amount of private residence relief and letting relief you can get depends on the amount you sell the home for.

You need to follow the tax guidelines and the rules for becoming a landlord. 

If you have any questions regarding property management of your home please contact Pelin Martin on

+0208 994 7327


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Why does a landlord need a property inventory?

A property inventory ensures the landlord doesn’t have to pay for the damages or loss made to their property during their tenants’ residency.

Floors can be scuffed, carpets stained and furniture may be missing. Actually, a number of unexpected damages could take place, including vandalising a kitchen or a bathroom!

When it is time to return a tenant’s deposit, it is not as simple as taking out the cost of damages from the deposit. Eventually, a landlord needs to be able to prove both a court and a tenant that the property suffered damage or loss.

A property inventory also protects the tenant from having to pay for damages that were already in place before they took up their residency.

The system ensures that landlords do not charge the unnecessary cost to tenants when actually the damage takes place by a former tenant. Sufficient damage refers to damage that a tenant caused unfairly. It is opposed to the Fair Wear and Tear.

This is a delicate area because wear and tear can be a subjective matter.

A landlord should at the very least use a property inventory template. In fact, a property inventory can save them a lot of unnecessary, and often unfair, expenses.

However, an experienced inventory clerk can compose a detailed property inventory. This professional works independently to the property manager or the landlord and defines the appropriate standards of wear and tear.

Every landlord in the UK, who secured a tenancy after April 2007 are subjected to the Tenancy Deposit Scheme (TDS).

Under the scheme, landlords have to place their tenant’s deposit into either a Custodial or Insurance scheme run by an independent provider. Therefore, when there is a dispute regarding the return of the deposit with regards to damage to property.

Then, you need to produce a detailed property inventory form to prove exactly what damage did your tenant cause. It will take into consideration the condition of the premises prior to their arrival.

A property inventory is a legally binding document. It provides an accurate and detailed review of the conditions and contents of a property at the start of a tenancy. If you are working with a property management company, this is their responsibility to arrange an inventory clerk.

If you are considering dealing with a property management company Click on our link to check whether you should be dealing with a property management company.

In a property inventory, it’s not enough to list an array of items that belong to the property. Likewise, it’s not sufficient to simply say where a scratch or crack lies.

The property inventory is part of the tenancy agreement between the landlord and the tenant. As such, you need to carefully note all defects in the property inventory. Consequently, you will ensure that the landlord can prove a tenant caused harm to the property. This subsequently led to refurbishment, repair and/or cleaning costs.

A detailed account of a property will include:

  • the condition of fixtures, fittings and decorations, including walls, carpets and equipment.
  • It will also feature a full list of furniture and accessories,
  • as well as an overview of the garden and outdoor vicinities.

It is less likely that the property inventory needs to cover areas like lofts and cellars unless expressly requested.

In fact, it gives landlords a level of security when claiming a fee from a tenant’s deposit.

It also ensures tenants are not held responsible for loss or damage they did not cause, which helps promote a healthy relationship between them and the landlord. Click to find out our tips on keeping your tenants longer.

A detailed property inventory will help speed up negotiations regarding deposits and makes the process easier.

A property inventory will ensure that tenants realise that the landlord values their property. This should go towards encouraging them to take greater care of their accommodation.

Read more: The importance of a tenancy inventory check-in for your rental property

If you have any questions regarding property inventories, please contact Pelin Martin on

+0208 994 7327


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