Monday, 26 September 2016

Liverpool Council: Business Rates For Student Landlords

A Liverpool council led initiative to introduce business rates for student landlords could create a disastrous situation for both students and landlords.

liverpool council student tax increase

Will Liverpool be the first city in the UK to bill council tax to student landlords?

As it stands right now, local councils receive funds from the government that. This, in effect, covers for all students (who do not pay council tax). In Liverpool this is just under 9,000 homes.

This is calculated through a formula grant called the Revenue Support Grant (RSG), but is to be phased out by 2020. It will then be incumbent on councils across the country to fill this funding gap. It is inevitable that should Liverpool Council succeed with this, other councils will likely follow suit.

Will it affect all student tenancies?

As far as we can tell from the proposals from Liverpool City Council it is targetting all landlords involved in letting to students. Should it go through, we don’t see any reason why councils up and down the country would not adopt it.

As at December 2015 there were 8,827 properties in Liverpool exempt from council tax as student households with a relief value of £10.6m and that halls of residence had a relief value of a further £0.28m, giving a total relief value of £10.88m. After 2020 when the RSG is phased out, this amount will effectively be cut from the city.Liverpool City Council

This means that it will affect all student landlords including:

  • HMO student properties in Liverpool
  • Corporate investors
  • Investors of student rooms

The £0.28m relief for those in halls of residence could be protected if it is University owned stock.

But there is no reason as to why investors in private halls of residences will be exempted. This also includes student pod investments, of which there are many in Liverpool.

It is clear from the council brief that the onus is being put on student landlords to pay more while the students are recognised as a ‘welcome part… of our local economy’. Naturally, the temptation from landlords would be to increase the rent.

Grouping student landlords in with business rates is unfair

For most of us involved in property in one way or another, it is fair to suggest that uncollected council tax for student properties is an obvious area to target for councils across the country that are struggling with government cuts. It may have been reasonable to argue that council tax in line with current banding rates are to be introduced. This alone would have been unwelcome news for property landlords.

But to suggest bringing “student landlords within the scope of business rates” is a recipe for disaster. It is simply unfair to align business rates with residential dwelling. Liverpool council have tried to compare student lets with “hotels, self-catering and holiday lets” but the categorisation is unfounded. What next? Assured Shorthold Tenancies (AST) to be grouped in with commercial leases?

With clause 24 and the change in stamp duty, landlords must rightly be feeling that they are a soft target with very little representation.

The post Liverpool Council: Business Rates For Student Landlords appeared first on Aston Eaves.

Will Brexit affect student numbers in the UK?

Brexit will affect the numbers of students coming to the UK. This will be evident in the decreasing numbers over the next few years and beyond.

Let us not shy away from reality.

To be perceived to be inward looking and closed for business is not a good position to hold. Like it or not, that is the impression we gave when we opted to leave the EU.

Some might call that continuing the fear-mongering. But if we take into consideration the Erasmus programme alone, we can see the direct impact of Brexit. Should we actually leave the EU, British students will no longer be able to be part of Erasmus. This international student exchange programme gives our students the freedom to study in the other member states. That is to say, without going through several hurdles that a student from Moldova say would have to undertake. Or Serbia. or Macedonia. Ad verbatim.

Example of how Brexit will affect student numbers

Up until a few years ago, the Nordic countries such as Sweden, Finland and Denmark enabled all students from all over the world to apply and study at their universities for free. As long as you had the grades and could pass the English language tests, then tuiton was free for all.

This changed in 2013 with the restriction placed on non-EU students. That is to say, from that period onwards, only EU residents could still get free tuition. Obviously, once Brexit comes into play, we’re lumped into the non-EU group. We will have this access to free education removed.

Now, we’re not advocates of taking things for free and not contributing to society, so we’d anticipate that some British students that went to live in Sweden for example, taking advantage of the generous free tuition, would then seek to contribute to Swedish society by working or starting a business there for example. Now that we’ve decided to leave, all those good things will come to a grinding halt.
Brexit will shape how we interact with our European partners. The example of education will swing both ways. It has already been noted by media commentators that Brexit will have a severely limiting impact on foreign students wanting to come and study in the UK.

Any effect on property investors in the student market?

As most of our subscribers now well know, we’ve had a bug bear with student pods for a couple of years now and stopped selling units to investors. However, we still have colleagues and friends that are still involved in the industry.

We think they will be affected by Brexit. Even before the referendum, the last few years already highlighted the reduced numbers of students coming to the UK. In fact, just last week, we received an email of an article detailing how a student pod development that was on the verge of collapse due to nervousness of Brexit. Fortunately for the developer, they hastily managed to arrange alternative financing. But these kind of articles show that all is not well for financing large projects i.e. nervousness feeds off instability. Projects will be affected due to the UK leaving the European Union.
International student numbers have been plummeting for years anyway, so what is our answer? If we want to encourage a diverse number of students coming to live and study in the UK, we need a bold vision of post-Brexit student programmes. We need to encourage the brightest minds from all over the world to contribute to the UK.

The Tier 4 Visa, launched by the Home Office in July 2016 is one such initiative, but is focussed on just Oxbridge, Imperial College and Bath University. It’s a start, but it needs to be developed to other universities and student types.

The post Will Brexit affect student numbers in the UK? appeared first on Aston Eaves on the 23rd of August 2016.