Labour’s tax raid on landlords: A recipe for higher rents and housing chaos

Back in the nineties I had a nice family run residential care home. When Labour got in under Tony Blair it was gone a few years later due to Labours nutcase policies on running care homes, another industry ruined.

I’ve been a residential property landlord for a few years, the business was ticking along nicely until the Soviet Socialist Labour Party came to power. It now looks like Deja Vu all over again.

The moral of the story, if your in business do not vote Labour, they are no friend to business achievers in life. Socialism is a terrible disease and this government is the worst we’ve ever had.

I repeat the point below — and would add that the so-called pain experienced by tenants is both deliberate and temporary. It serves a political purpose.

Every financial attack on land and property owners ultimately suppresses capital values, setting the stage for ideological reform.

The tenants’ frustration is political camouflage, paving the way for the return of rent control — timed, no doubt, to coincide with the next general election. That’s when Labour will claim it has met its 1.5 million homes pledge, not just through construction, but by using state regulation to effectively nationalise the private rented sector.

Private landlords will be rebranded as extensions of the state — compelled to maintain their properties to state-mandated standards, while rents are dictated under a regime of affordable and social benchmarks. And they won’t need to build new machinery to do it. The old Rent Officer Service, quietly preserved in the background, is ready to be reactivated to enforce it all.

Earlier comment:

You seem to forget that property ownership in the UK is only ever notional. You don’t physically hold it, store it, or move it. Your proof of ownership is a digital entry at HM Land Registry — and with the stroke of a civil servant’s pen, that can be altered or removed.

Unlike gold, currency, art, crypto, shares or any other portable asset, you cannot wrap up your property and put it in a suitcase. You are chained to the government until the end of time. The state knows this — and exploits it.

The attack on property owners is no longer a warning — it’s a sustained, multi-pronged offensive. First came taxation. Then layers of regulation. Now we’re seeing the rise of punitive enforcement through arbitrary fines enabled by local bylaws. The latest absurdity? Landlords are being made responsible for their tenants’ recycling habits.

Debt is being weaponised. The government saddles property owners with unaffordable financial burdens — and when payments lapse, it moves in. You either pay to stay on the title register or you’re forced to sell. The next owner is no freer; they just step onto the same loaded merry-go-round. All the while, the government holds de facto security over your asset while pretending you’re in control.

And don’t think this is accidental. You are being compelled to maintain the property, compelled to keep it occupied, and if you don’t comply? Double, triple, even quadruple council tax is the punishment. The value transfer is silent but effective — from you to them — via a civil service paper trail that costs them nothing but could cost you your life’s work.

This isn’t reform. It’s expropriation by stealth. In Labour circles, it’s already been given a name: “Intelligent Nationalisation.” Their KPI? The number of landlord insolvencies registered.

And don’t think they’ll stop before they’ve broken the industry. They operate on the belief that they can do it better — as most spectators do. Once enough damage is done, they’ll either relax the taxes, regulations and fines to salvage what’s left of the existing operators — or they’ll hand it off to more compliant entities: institutional portfolios or local councils.

This mindset is no longer hidden. A Labour MP was recently overheard justifying planned inheritance tax changes affecting farmers with the words: “It’s only the land returning to the state.”

If that’s what they’ll say in public, what do you think is said behind closed doors?

And now comes the next phase: redistribution by carbon budget. Under cover of climate policy, your home will be judged not only on its energy rating, but on how many people should live in it. Space standards, EPC certificates, voter rolls, NHS registrations — all will be cross-referenced. A “carbon occupancy budget” will be assigned. Any “under-occupied” home that doesn’t qualify for exemption will attract penalties. Those who can’t pay will see debt pile up — and when it reaches critical mass, the state will take control.

These mechanisms already exist. All they need is the political pretext to activate them.

This is not new. It happened before — in the housing legislation leading up to the Rent Act 1977, which decimated the private rental market. It took over a decade, until the Housing Act 1988 and the introduction of assured shortholds, to even begin to repair the damage.

A housing crisis is the trigger — and you can be certain it will be manufactured just in time for the next election. That’s when the government will promise the ‘entitled majority’ its share of redistributed homes, wrapped up in the promise of reaching its 1.5 million homes target.

This is not the time for silence. Property owners must unify, speak up, and push back — or watch an entire sector be quietly dismantled and handed over to state-friendly operators. The moment to act is now, before your deeds become just another line of code in the government’s property ledger.

You gotta know when to hold ’em, know when to fold ’em, know when to walk away and know when to run! It’s a game of poker now, don’t get caught in a sunk cost fallacy folks!

Lloyds shares are slowly rising as they boast of multi billion pound investments in social housing.

Reply to the comment left by Suicide Jockey at 23/05/2025 – 09:41

Surely you mean the Soviet Socialist Conservative & Unionist Party ?

The Conservatives started it in 2016 with Section 24. Labour will finish the job with their RRB and further punitive tax changes. Looking at last years manifestos, it was only Reform who had anywhere near anything positive in there for Landlords. But we got Labour and will now suffer as a consequence.

Winston Churchill said it best:

“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up.”

In a further act of cynicism, the younger generation is now being promoted into the hands of the new co-living residential accommodation providers where single-person dwelling sizes are being reduced by up to 52.6% to accommodation units measuring 18/27m2 under the Greater London Authority’s co-living regulations from the 38/40m2 mandated for buy-to-let landlords. Unit sizes are being squeezed by regulations to avoid them becoming self-contained residential dwellings. It is reported that in a Ryanair strategy, co-living providers are charging extra to store personal possessions in overflow facilities.

Monthly rents can exceed £2,000. Investors like Legal & General and the giant US private equity and asset manager, Blackstone, are capturing the younger generation’s income streams to support mortgages on vast projects designed to capture current and future equity value increases for their offshore hedge and pension funds investors. Equity that historically remained in the hands of the home buyer. Instead, they’ll live without any equity stake in society and retire with none. While they may have funded a pension their returns will be after the hedge and pension funds have extracted their 2 plus 20 percent and at retirement they will be reliant on the state for accommodation.

These concerns were raised in a 2023 report compiled by the evidence-based Policy Exchange. Rt Hon Kemi Badenoch MP our former Secretary of State for Business and Trade then commented: ‘The Property Owning Democracy [report] is a clear sighted elucidation of the fundamental links between capitalism, ownership and democracy. Ownership not only brings material benefits, but imbues a sense of responsibility, of care and stewardship in those who possess it.’

If the real cause of the housing crisis and the inadequacies of governments are exposed in a ‘Change The Way You Change Things Way’ the public will rightly point the finger of blame where it deserves to be pointed and that will lead to positive change.

Hobson’s choice – sell up and pay some nice juicy CGT now or pay general taxes as you go on. Simple !

Putting VAT on residential property is an interesting concept. One that I hope will never come to fruition as the unintended consequences will be catastrophic.

For a commercial property electing to charge VAT is an option, not a certainty. If the option to charge VAT is taken up then not only is VAT charged on rents but there is also VAT charged on the sale of the property.

Now imagine if the rules were transferred to residential property.

If it were optional to charge rent on residential property some landlords would and others would not. This would cause massive distortion in the market as tenants, apart from company lets, would not be able to reclaim the VAT.

It would not be a decision any landlord would reasonably take to charge VAT so no additional tax would be raised. If VAT were to be charged on residential rents then it would have to be compulsory.

VAT on rents would either mean a landlord would have to charge VAT on existing rental amounts or reduce the net rent charged so that the gross amount would equate to the ongoing rental charge.

If VAT were to be levied at 20% this would mean a 20% rent increase over night or if rents were reduced then the landlords rent would reduce by 16.67%. With many landlords already struggling to pay mortgages and other costs this would cause a stampede out of the sector.

If VAT were to be levied I think it would far more likely to be at 5% which is the rate currently levied on gas and electric for domestic use.

Even then this would see a 5% rise in rents charged to tenants overnight or a reduction in landlords rent of 4.76%. Maybe this would also make many landlords think about whether they wished to stay or sell.

The current registration limit for VAT is taxable supplies of £90,000. If landlords do not need to register if there rents are below this level then this would again distort the market with some (smaller landlords) not charging VAT but larger landlords (those with more than, say, 5 properties, dependent on rental levels) having to register and charge VAT.

Maybe the government would use the MTD registration threshold for rental income as the determining factor as once a landlord has to use software to file for MTD filing for VAT becomes much simpler.

Whilst this may seem to be an option consider what happens when a residential property is sold. For the vast majority of properties the sales value will be over the £90,000 registration level for VAT. Registration is required if you anticipate that your turnover will exceed the threshold in the next 30 days. As almost every sale will be concluded in more than 30 days from the day an offer is accepted then every landlord making a sale who is not already registered will have to register for VAT.

The new purchaser will either be an end user (someone who will live in the property) in which case they will suffer the additional cost of the VAT as they could not claim it back or they will be a landlord who will have to register for VAT in order to recover the VAT.

In the commercial world where a property which can be considered to be an ongoing business there is no VAT charged if both vendor and purchaser are VAT as it is considered to be a transfer of a business as a going concern. (TOGC).

According to the HMRC VAT manuals (VATREG02000) “Taxable turnover is the total value of taxable supplies made by a person in the course or furtherance of business, excluding VAT (VAT Act 1994, section 19).”

VAT is charged on taxable supplies.

From this I take that if VAT is charged on residential properties then the rental of these properties will be “in the course or furtherance of business”.

Currently HMRC are adamant that property rental is not a business. By charging VAT on residential rents they would either have to change the legislation or accept that residential renting is now a business. This would be a fundamental change which would open up significant other tax planning opportunities.

From the above I hope that it can be seen that charging VAT on residential property rent is a total minefield and that it is most unlikely that the government will go down that route.

I have not expanded on a number of points as this post is getting far too long. The matters detailed are my opinions only based upon my understanding of the current tax law. Any points that I have raised can be legislated around but that would just add more complexity.

Is Two Tier St Kier-Hardy-Starmer renting his house commercially or free to a relly? Is he declaring any rental income to his ghastly sidekick the MP for a town near Leeds with closed High Street shops?