An ARMY within our midst – Fight against Section24

by Readers Question

11:32 AM, 11th July 2017
About A year ago

An ARMY within our midst – Fight against Section24

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An ARMY within our midst – Fight against Section24

I am sure others have thought of this, I did ages ago, that is; if Tenants were to write and make their concerns of the affect that Section 24 will have upon them, it will amount to MILLIONS of letters (voters) showing in our favour.

My first concerns against this, were that by alerting tenants to the reality that I may be forced to sell, that they may act by moving. I also had in the back of my mind that Section 24 will have been eradicated or changed by now, so I did not want to alarm or lose my tenant unnecessarily.

However, with the slim election win by the Conservatives still fresh, and with Section 24 still in play, I believe it’s now time for landlords across the country to bear the brunt of any negative effects of formally alerting tenants and write to each of our tenants requesting action from them in the form of a letter to both their Conservative MP, and that of the party they vote for, stating the drastic effects that Section 24 is set to have upon them and their respective family.

I believe as Landlords we will need to make it very easy for tenants to do this, I suggest we use this forum and spread to other forums to get as many tenant to write to their MPs as possible, if we managed 1 in 4 it should be over a million, surely this much mail will open the ears of those MPs who simply fall back on party policy blindness.

I suggest we compile a letter for landlords to give tenants and for tenants to give their MPs, or maybe we would secure a better response if we personally delivered and collected from our tenants and we took responsibility of forwarding them by post. It is after all very much to our benefit and we are near enough under legislation to wipe the arses of tenants so this should be of little effort.

To follow are rough drafts of a “Landlord to Tenant”, and “Tenant to MPs” letter, please edit it, scrap it, or make a new one and if you think it’s better add it here, perhaps a tick list for tenants.

“Landlord to Tenant”
Dear Tenant,

You may be aware the Government has imposed Tax changes to private Landlords across the country.
This is in the form of Section 24. The implications to myself and many others are extreme.

The government is bringing section 24 in under the guise of helping first time buyers, Section 24 does very little to help first time buyers, it will potentially release rental stock to them, but this will certainly be at the cost of Tenants, the government talks about fair play, nothing about Section 24 really brings fair play to any party.

The huge taxes to landlords are only part of the issues, basically if Section 24 continues both I and other landlords like me will be forced to act against the risk of being made bankrupt.

There are some options open to me, none are easy or without massive costs and changes.

Landlords have been fighting against Section 24 for a long time, some prominent government members are now listening and stating its wrong. With the help of tenants this should really cause the government to act to make changes.

As a rule, (and as with your rent to date) I do NOT put rents up while a tenant remains with me.

The situation I face with Section 24 gives me very limited options, it maybe that I will have to sell all but a few.

Putting rents up will initially help however; there is a limit to both your affordability and the current market rent value, any increase in rents by myself will be purely because of Section 24.

The effect of section 24 will mean if the bank base interest rate goes up the bankruptcy factor comes back into play. This was not the case before Section 24,

Section 24 means high rate Taxes are due even upon losses, this was not a factor under the old tax rules. Section 24 has created a high risk factor to what was otherwise a well-managed format.

The government has so far ignored that a single tenant will be effected by Section 24.
They also claim only 100,000 landlords will be effected, Both their calculations are easily proved vastly incorrect.

You stand to be effected whether you stay with me or find another landlord, many landlords are still oblivious that they will be affected by Section 24, the effects will be nationwide.

I call upon you to help yourself, it will cost you a little time.

I ask each adult member of your household to write to your MP, your MP is ( ___ @ ________ ) (Landlords see houses of parliament site for current MPs contact email or address and provide details to tenant)
Alternatively, I will pick up the letter from you and post it on.

Let your Mp’s know that you stand to be effected by Section 24, either by rent increases or by having to find somewhere else to live, affectively being made homeless by the effects that Section 24 has to your landlord.

Insist that your MP fight your case and forward your communication to those with the power to make changes. Ask to be kept up-dated with progress.

The current government is not in the best of positions to risk losing the votes of millions of tenants that will be effected by section 24. Make it known to your MP that you will not vote for them while Section 24 exists.

I would appreciate being copied in on your communications.

Regards
C. J. B. Landlord

 

“Tenant to MPs”
Tenants Name
Address
Postcode
Email
Phone
Date

Dear MP
DON’T MAKE ME HOMELESS

SECTION 24 stands to put the needs of first time buyer’s above mine.

My landlords will be adversely affected by Section 24, this will lead to my home becoming highest market rent value or worst still, sold.

My household is made up of _____ adults and _____ children

I have been with my private Landlord for _____ years

My rent is fair

My rent has not been increased since I commenced my tenancy. (edit as necessary)

Repairs and maintenance issues are dealt with swiftly when reported.

I am happy with the service I receive from my landlord; I am dealt with fairly.

This is my home I am happy to call it my home.

+ I would be interested in becoming a Co-owner with my current landlord if the opportunity was given and viable, I understand this will need government backing, please informed of this.

+ I am happy with renting and wish to continue, however Section 24 risks my being able to afford continuing my tenancy, it affects me and others like me nationwide, why are you letting this happen?

I ask you to put an end to Section 24, there are better ways to help first time buyers, work on them.

If you want my vote section 24 has to go.

Your sincerely

Tenants Name
Ps kindly ensure my details are only used for this correspondence and not passed to third parties or use for any other purpose.

 

Chris



Comments

Gary Dully

23:56 PM, 11th July 2017
About A year ago

Attacking Section 24 through your tenants is the only way it will ever work.

May I suggest a slightly modified strategy?

In the letter to your tenants, place a figure of how much extra rent you will be having to charge them at a stress rate of 6% interest rates as required by your bank.
(Blame them)

The more expensive the property mortgage the worse the increase will be.

For example:

Jeremy Corbyns constituency has an average price of £450,000 with a LTV of 70% @ 6% that's £18,900 interest a year taxed @ the difference between higher and lower rate tax of 20% is a rent rise of £3780 per year for each household.

Now ask them to write to their MP, so that they can avoid paying the extra tax.

************************************************
Note to all you that suffer from 'Detalitus',
************************************************
The exact figure is irrelevant, what counts is the trouser movement in your tenant!

If your landlord asked you to send a letter to your MP at the prospective rent rise looming, would you consider it?

On the assumption that you sell, tell them their next landlord will be raising rents to offset the same costs imposed by the Government also.

Ascot Landlord

11:11 AM, 12th July 2017
About A year ago

I think we're missing something here. We need to explain simply what Section 24 is - i.e. a tax on rental income that ignores mortgage outgoings. We can't expect tenants to look this up. For the record, I've found many estate agents don't know what Section 24 is - they know about the extra stamp duty for 2nd homes but that's about it!

Barbara Gwyer

11:34 AM, 12th July 2017
About A year ago

Ultimately, it's a case of supply and demand. I'm a professional landlord in SW London and yes I could write such a letter to all my tenants and put my rents up to cover my increased costs but unless all landlords do this all that will happen is that my tenants will leave and move in elsewhere. Sadly there's a lot of rental property in my patch owned by accidental landlords who I suspect will use their earned income to absorb their losses, with the expectation of equity growth, rather than become proactive for our long term cause. Rents around here are currently falling rather than going north as it is

Appalled Landlord

13:10 PM, 12th July 2017
About A year ago

Reply to the comment left by "Gary Dully" at "11/07/2017 - 23:56":

Hi Gary

If you only put your rent up by the amount of your levy you will be worse off. This is because you will pay tax on the increase (at 40% in your example). So you have to gross it up.

Furthermore, it is the increase in profit before finance costs that matters, not just the increase in rent. So if you pay commission to an agent for managing the property you need to gross that up first. For example, if the commission is 10% you would divide the £3,780 by 90 and multiply by 100, making £4,200.

Then you would gross this up for taxation by dividing by 60 and multiplying by 100, making £7,000.

But someone who is paying tax at 45% would pay a levy of 25%, or £4,725. Grossing this up for 10% commission would make £5,250. To gross this up for taxation at 45% you would divide by 55 and multiply by 100, making £9,545.

If you pay commission for finding a tenant you would need to take account of that as well. How much depends on how frequently tenancies change in a given portfolio.

Because of the loss of the personal allowance when total income exceeds £100,000, someone with a total income of £120,000 would pay a levy of well over 25%. Even a levy of 40% is possible at this amount of total income.

Landlords can find out what their real levy will be.from the spreadsheet offered by Property118. Details of how to find and use the spreadsheet were posted on page 9 of the IDS thread on 4 July at 23.56:

https://www.property118.com/iain-duncan-smith-spoken-landlords/100314/comment-page-9/#comment-92545

Whiteskifreak Surrey

13:46 PM, 12th July 2017
About A year ago

I have been saying that for months on this forum, if not longer - LLS must get tenants on their side. So I am very glad that subject somehow resurfaced.
We have already served Section 13 after the Spring Budget (in April), when S24 was not revoked. We have attached the below letter to our tenants and at the same time informed our MP that we did it and that the conservatives are risking losing votes in the next election.
You are welcome to use or adapt it as dictated by your circumstances. We will be writing to the tenants again, reminding them about S24 and necessity to write to their MP.
IMHO it would greatly help if Shelter was on our side (I know I am living in a La la Land)
==quote==
Dear ......
You are undoubtedly aware that the previous Conservative Government started so called “War on Private Renting Sector (PRS)” – more commonly known as “Tenant Tax” (Section 24). PRs has been hit with 6 new taxes. Despite all actions taken by Landlords (LLs), Landlord Associations and some esteemed economists the present Government did not repel that tax.
As of 6 April 2017 all private LLs are no longer able to class their mortgage - their biggest running cost - as a business expense & instead this will be taxed as if it was their profit. This is the only business in U.K. that now gets taxed on turnover rather than a profit. In some cases it will mean landlords have to pay tax on a loss. Effective tax rate for LLs will raise to 70%-80% and in some cases to over 100%. What is even worse – this tax will be applied retroactively!
Sadly the knock-on effect is that most private LLs (with mortgages) across the country are going to be forced to either sell up (as their business is no longer financially viable) or to increase the rent. The bigger the mortgage the more tax is due. The lenders (banks) are also writing to LLs urging them to apply a substantial increase to the rent charged.
We have been waiting for a long time with the decision what to do – we were hoping beyond hope that in the recent Spring Budget the Conservative Chancellor will come to his senses and will revoke that extremely unfair tax.
Unfortunately that has not happened and - to avoid putting the property on the market and evict tenants – we are forced (by the Government) to increase the rent. That has been a very difficult decision for us, as generally (despite a rent increase clause in your AST) we tend not to change the rent for the long-term existing tenants. Nevertheless we still remain very competitive on price.
Majority of LLs already increased taxes in a region of 10%, often more. For the current financial year we decided on a very modest increase of 5%, because we consider you as excellent tenants. We will then see what happens, but if the Government still carries on with “Tenant Tax”, we will be forced to execute further yearly increases just to cover that tax grab.
Please find attached “Section 13 Notice” advising the new proposed rent details in full – if you are in agreement please sign it, scan and email back to us (or post to our home address).
Please bear in mind that we will not receive a single penny from that increase – we will merely act as a tax collector for the Government. We will cover the other taxes from our own funds.
What you can do? – Quite a lot, actually!
Please write a message to your PM – xxxxxx (xxx@parliament.uk ), Minister of Housing Gavin Barwell ( gavin.barwell.mp@parliament.uk ), the Chancellor Philip Hammond (hammondp@parliament.uk), the PM Teresa May (mayt@parliament.uk) and Shelter (http://england.shelter.org.uk/get_advice/how_we_can_help/advice_by_email), stating that you received rent increase and you were informed that it was SOLELY DUE to Section 24 of the Finance Act (Tenant Tax) introduced by the Conservative Government.
If the government receives a huge number of complains it just might force them to re-think.

Please check the below websites with details of the Tenant Tax. https://media.property118.com/wp-content/uploads/2016/10/6G0YKMd1Wf.pdf - this is a famous Ros Report.
https://www.facebook.com/pg/clause24/posts/?ref=page_internal
https://www.landlordtoday.co.uk/breaking-news/2017/3/the-government-is-wiping-out-the-buy-to-let-economy
https://www.tenanttax.co.uk/tenants
https://www.landlordtoday.co.uk/breaking-news/2017/3/uk-rents-to-rocket-20-in-the-next-five-years?source=newsticker
https://www.property118.com/spring-budget-2017-landlords-reactions/95299/comment-page-3/#comment-88511
==unquote==

Gary Dully

2:07 AM, 13th July 2017
About A year ago

Reply to the comment left by "Appalled Landlord" at "12/07/2017 - 13:10":

Hello Apalled,

Your absolutely right in what you say, but please read my note for those that have 'Detailitus'

Keep It Simple!

Dear tenant,

Since to the Government introduced Section 24 of the Finance Act 2015, we are now obliged to assume a finance charge on your property of 6% and pay the additional tax on it.

That will require a rent increase of £3280 per year, should it not be abolished!

With that in mind, we would like you to consider contacting your local MP and ask them to abolish the so called 'Tenant Tax',

For more information go to http://www.tenanttax.co.uk.

Kind regards

Mr Landlord

Whiteskifreak Surrey

9:15 AM, 13th July 2017
About A year ago

Reply to the comment left by "Gary Dully" at "13/07/2017 - 02:07":

Hi Gary - I like it!
If you do not mind I will use that as a reminder email to ask tenants to write to their MPs!
Thanks!
WSF

Appalled Landlord

10:32 AM, 13th July 2017
About A year ago

Reply to the comment left by "Gary Dully" at "13/07/2017 - 02:07":

Hi Gary

Your letter informs the tenants that their rent will go up by the amount of the S 24 levy. If implemented, this would still leave the landlord with less net income than now.

Even if no agent commission is paid, a 40% taxpayer would need to uplift the levy by 67% (40/60) and 45% taxpayer would need to uplift the levy by 82% (45/55).

The difference between the levy and the increase in rent that is required to give the landlord the same net income is not a detail - it is of fundamental importance. It is the difference between bearing part of the extra tax yourself and passing all of it on to your tenant.

Gary Dully

2:30 AM, 14th July 2017
About A year ago

Dear Appalled,

You are absolutely right, concerning the accuracy of the figures, but I have found that my tenants don't give a pigs turd about my situation, or the exact figure.

They only register is in £thousands that is of any concern to them.

E.g.: let's get emotional, shall we?

(Not suitable for snowflakes)
Example 1
Dear Mr MP,
My rent is going up £2000 a year because of your new f*cking tenant tax!
Example 2.
You stupid f**king Tory twats will cause my rent to go up another £4000!
Example 3.
Why is Labour supporting a rent rise of £2000 a year on my house, because of a policy that was invented by the Green Party?
Example 4
Im now going to be a higher rate taxpayer for my Landlord, you moronic Tory sh*it munchers!
That should startle a couple of marginal MP's

Have you ever gone duck hunting?

If you throw a brick in the water, you never catch any, you just get wet, but if you throw a bit of bread in, they get to trust you, before you smash their heads in with a baseball bat. (Just kidding, I prefer poison, no just kidding again it's just an analogy)

No matter where my tenants are, the rent increase required sort of matches the local housing market.

I have property in Liverpool, Birkenhead, Pendle, Lincoln, Warrington and Mold and the prices and affects of S24 are different in each area.

We are asking the tenant to get emotional, so having a figure based on the average price in the area should do the trick.

I have not suggested a section 13 is issued, where a very accurate figure is needed, we want the tenant to be on your side, when sending their letter to their MP.

We are priming the pump, so to speak, not creating a mass loss of tenants for anyone who issues the letters.

When I use my calculator it causes instant disbelief in certain situations, so I would suggest that you consider easing your rent rises in, so as not to frighten the horses.

Where property is cheap, they hold the threat of voids occurring, if your tenant gets too scared and moves.
In the South East, voids are quite scarce, but the prices are high.

There is another 3 years of this yet, but a looming election is brewing and we can cause a bit of a stir I reckon.

Get your letting agents to calculate a few rises required.

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