The freelance population of Great Britain has increased dramatically over the past 10 years. Figures published by ONS (Office for National Statistics) claim that 4.2 million of the working population are self-employed, that’s 14% of us answering only to ourselves!
One of the biggest concerns we face when we go it alone is ‘financial security’. It is worryingly apparent to all except our blinkered government that the basic state pension we are entitled to when we reach retirement age is simply not sufficient to maintain the lifestyle we have chosen and have become accustomed to. Can we really survive on £110.15 per week?
The answer, I’m certain, is a resounding NO! So, as is part and parcel of being a freelancer, we must seek out some form of personal investment, and one of the most popular and lucrative is brick and mortar – property! And why not! The odds look pretty good with minimal interest rates and with the sharp rise in rental and property value, could there possibly be a better investment or solution to safeguard one’s future?
But wait! Before you dive in, read on and potentially save yourself thousands in rental income! Watch out for this little land mine!
In December 2011, a brand new law was introduced by the Government and enforced by local council authorities, which drastically affects the freedom you would ordinarily have had over the use of your own personal property. Before you buy ask yourself a few crucial questions:
- What do you intend to do with the property!
- Are you planning to rent it out?
- If so, are you renting to a family or students?
- And if students – how many?
Whatever your intention, any would-be property owner must be aware of the “Article 4 Direction” as it will seriously effect your rental expectations, particularly if you intend to let as an HMO (house in multiple occupation). At present an HMO is letting to anymore than 2 unrelated people, however, prior to “Article 4” an HMO meant 5+. Of course this change has caused some confusion, particularly as Local Authorities had only publicised the pending law in the HMO category of their site. So if you were intending to let to, say 4 students, you wouldn’t necessarily have come across this information! If your property is located in an area affected by the “Article 4 direction”, and you intend to let to more than 2 unrelated people, you will now need to submit a planning application to apply for a ‘change of use’ from residential (C3) to HMO (C4) and if you do not, and are caught, you could be fined up to £20,000! Unless, of course, the property is already let as an HMO, then you have the option to let to whomever you choose!
But still be aware! The Local Authority also exercises a “lean period”. This means that if the property was an HMO but had been left untenanted for a period of time (Local Authorities will not confirm the lapse period) then it reverts back to a basic residential property (C3).
My advice is to insist that your solicitor carries out a full Local Authority search and be sure it’s a CON29. Any pending planning application, whether it’s a new developments or a change in the law, will be documented there. Do not rely on the vendor’s basic offerings; insist on your own searches!
If you need further information, or if you have been affected by any such ruling, it would be great to hear from you!