I was thinking about Section 24 and the news that Hammond recently commented that if we could replace the revenue expected from S24 he would consider its repeal. Revenue from S24 is due to be £665m/yr after the 4 year implementation, so I got my thinking cap on.
I came up with a 2% rental levy. Charged across the board on all revenue from residential property, it would have several advantages:
1. Could truly ‘level the playing field’ by being charged equally to mortgaged individuals, cash buyers, companies. Everyone would pay it equally and would know how much was expected of them in advance.
2. MUCH cheaper than S24 for mortgaged landlords, yet raises more money.
3. My calculations show that just over £803m would be raised – £150m+ MORE than S24.
4. Simple to calculate and without complications.
5. Does not increase rents by much if anything at all, and negates need for increased evictions, which saves public money elsewhere.
6. Shows we as landlords are willing to co-operate with govt aims if fair and proportionate.
My calculations are based on roughly 4.5m private rental properties generating an average of £744 a month. This figure goes up to £892 if you include London. The gross rental take is around £40.176bn a year (WITHOUT the extra from London!) so 2% is around £803m.
Can anyone spot the downsides? I’m sure cash landlords/foreigners/companies might moan, but if its applied to everyone there can be no claim of discrimination and everyone in property gets equally and proportionately targeted.
Please note I am NOT in favour of this, but as an alternative to S24 is it not worthy of consideration?
All comments welcome!