10% Wear & Tear Allowance

10% Wear & Tear Allowance

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We know that for the purposes of calculating the 10% deduction, you deduct from the rents the expenses paid by the landlord which would normally been borne by the tenant - historically council tax, water, gas/electric etc

However, with an HMO, it is often the case that the landlord will not just bear these costs, but also be responsible for them (not just as a matter of ease but for practicality)  - so could one argue that in these types of letting they are not costs normally borne by the tenant, and thus do not form part of the net rent calculation?

In other words is it simply down to the type of expenditure regardless of situation (so the above are always deducted), or does one have to look at the nature of the letting when deciding, in that particular situation, whether it is a cost normally borne by a tenant?

Replies (4)

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By TaxAngel
07th Jul 2014 22:01

No deduction for costs borne by a typical tenant

My view is that the phrase refers to costs borne by a typical tenant rather than costs borne by this particular tenant in the situation for the letting in question and therefore utilities, council tax, etc should be deducted before 10% W&T is calculated.  This seems a logical outcome because, presumably, the rent will be higher if utilities etc are included as part of the rent and the element of the rent relating to the utilities etc dos not also relate to upkeep of the dwelling so no wear and tear should be due on that element.

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By Steve Kesby
07th Jul 2014 23:09

I imagine...

... when the property is marketed it says "all bills included", because it includes all bills that tenants usually have to pay on top of their rent. For that reason, I agree with the previous respondent.

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By Swedish Chef
08th Jul 2014 09:28

Thanks, so......

... when working out the net rent, I should be deducting:

Council Tax

Water Rates

Gas / electric

Broadband

Telephone

TV Licence

Sky TV

I suppose one can view it not as "costs normally borne by the tenant", but more one of "all costs except those normally borne by a landlord".

 

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By Steve Kesby
08th Jul 2014 11:35

Sounds about right

I think that essentially with an HMO the landlord is letting the whole of the property to a collection of tenants and is just playing "banker" in relation to the costs that you refer to.

The legislation refers to "utilities, council tax or anything else the cost of which is, in relation to a furnished letting, normally borne by the tenant", which does seem to cover everything on your list.

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