Summer Budget 2015 – Landlords Reactions

Just saw the BBC Press Preview – front page of the Times tomorrow about ‘rogue landlords.’ It’s apparently about councils not sorting out the ‘rogue’ ones – but all anyone will see will be the message ‘landlords bad.’

And now I just listened to the discussion – the reviewers repeated platitudes about awful private rentals – ‘Dickensian, even,’ said the one, in a posh voice, trying to make up for the fact that she obviously has no expertise in the area; but she spoke with authority, trying to make it sound like she ‘cares.’ It’s more about how they want to appear on the telly to their friends and to the public – narcissism in other words – and they use us as their material – ‘aren’t we wonderful and caring – and look, aren’t those other people (the landlords) truly awful?’
They went on to say that they felt sorry for the poor councils – how can they be expected to prosecute these landlords as they have so much on their plate? Uh, they could start by laying off the good landlords and forcing us to pay exorbitant licence fees and spending all their time on this decent, regulated part of the sector, raising money from us to pay their wages, and they could get off their arses and find the bad guys and sort them out. But that wouldn’t pay their wages.
Wherever these ‘rogues’ are and however many there are. Where’s the evidence about them? I don’t know any. Okay – there are bound to be some, but where is the evidence? There is plenty of evidence of the good guys, that’s for sure – but no-one wants to hear about that.And there is plenty of evidence of the awful tenants, but they very rarely cover that angle. I bumped into one of my ex tenants today – she owes me £2,500 and I have a court order for her to pay it. I’ve never received a penny. I paid £350 a month on the mortgage, her rent was £450 and she stayed there for more than 5 months. Where’s the story on the front page of these con artists? (she comes across as sweet and reasonable, and it’s easy to trust her)
The presenter on the programme actually began by trying to steer the reviewers in the right direction, by saying something like ‘it must be very difficult to be a landlord with all the regulations,’ but then she submitted to the pathetic all-party line of slagging off landlords. A missed opportunity for her, actually, to stand out as someone with a bit of nous.

It’s clear that C24 is a (v short term) tax grab on the minority of residential landlords (many LLs are actually likely to benefit as a direct result of C24). However longer term it will obviously reduce HMRC revenues wrt income & capital gains taxes as leveraged non incorporated LLs will become leveraged incorporated LLs where they can. More BTLs will then be passed on from one generation to the next and the next etc as shares in a business possibly held as a trust, largely avoiding much of the CGT, SDLT & IHT that HMRC would otherwise generate if their supposed allies HMT hadn’t conjured up C24.

I assume HMT realise this, so am still wondering what the actual bottom line rationale for C24 is:

I wonder is C24 simple economic incompetency or was it actually more underhand & calculated than that? In a few years time (when much of the tax revenue from the PRS has heavily reduced as a direct result) will C24 be seen as (1) the biggest con / mug off in recent history by manipulating the voting public & the anti landlord brigade whose bleatings suggest they have lapped up the devious rhetoric or (2) will they all just say ‘OK the govt messed up and were incompetent, let’s hope the next gov do a bit better’?

Reply to the comment left by “Mark Shine” at “17/10/2015 – 01:28“:

Economic incompetency is my preferred explanation. No one in government circles had properly considered the unintended consequences of clause 24 and now when the experts, for instance The Institute of Chartered Accountants in England and Wales, enumerate these unintended consequences finance bill committee choose to ignore the evidence. Similarly they apparently chose to ignore all the submissions.

One only has to listen to the debate of the finance bill committee (http://www.parliamentlive.tv/Event/Index/3d8b1335-1eda-4e8d-8323-3cdd64569d09 starting at approx 10:05) to realise that in a very unscientific manner they seem to have made up most of the facts and conclusions with no real data to hand.

Reply to the comment left by “David Price” at “17/10/2015 – 08:54“:

Yes, David. I favour incompetence. I also think it was a very political move – with GO’s favoured tactic of stealing other parties’ ideas in order to eviscerate them. Also, that there would be a short term grab for the coffers. In terms of interpreting MPs’ reactions to it, I can also see that many are plain thick (as well as C24 being ‘plain wrong’).

Reply to the comment left by “Ros .” at “17/10/2015 – 09:01“:

Politicians thick – unthinkable!

The short term grab is a recurring characteristic in all the present governments fiscal thinking. Prematurely selling RBS shares, remember the promise that the taxpayer would not suffer as a consequence of the bailout? Selling all the remaining family silver, substantially increasing licence fees for mobile operators. What will happen when there is nothing left to sell and even HMG run out of ideas for stealth taxes?

Governmernt say

ncreases in private sector rents in recent years have
been modest, and below inflation.

Recommendation 30
Problems with the affordability of rents are particularly acute in London and
the South East. Although in other parts of the country average rents and
yields are relatively stable, we are still concerned that some families are
struggling to meet the costs of their rent. We do not, however, support rent
control which would serve only to reduce investment in the sector at a time
when it is most needed. We agree that the most effective way to make rents
more affordable would be to increase supply, particularly in those areas
where demand is highest.
We welcome the Committee’s agreement that the most effective way to control
rents is to increase supply.
The Government is determined to build a bigger and better private rented sector
that gives greater choice and quality of homes for tenants, which is why it has put
in place a £1 billion Build to Rent fund and £10 billion in loan guarantees to build
new homes specifically for private rent. The clear message is that wherever
people are in the housing market, there is Government help available.
Government is investing £19.5billion public and private investment in an affordable
homes programme set to deliver 170,000 homes by 2015 and committing
£3.3billion we should add after the £3.3 billion, levering in a further £20 billion of
private investment, delivering a further 165,000 homes in three years, the fastest
rate of housebuilding for two decades. The Government has also introduced the
Help to Buy scheme so people can buy newly-built homes with a fraction of the
deposit they would normally require.
Across England as a whole, increases in private sector rents in recent years have
been modest, and below inflation. The Office of National Statistics reported in
September 2013, that in the 12 months to August 2013 private rental prices paid
by tenants rose by 1.1 % in England, and 1.9% in London. Consumer Price Index
inflation in the same period was 2.5% so therefore, rents fell in real terms

Government says

The standard of accommodation in the sector and the stability it offers to tenants
are high in the majority of cases

Placement of homeless households in the private rented
sector
Recommendation 32
We welcome the Government’s use of secondary legislation to clarify when
accommodation is unsuitable for homeless households. We expect councils
to pay full regard to this order and to ensure that homeless households are
only placed in suitable accommodation. Given that many of these
households will be vulnerable, councils have a particular responsibility to
ensure that the properties they are placed in are free from serious health and
safety hazards. We recommend that, as a matter of good practice, local
authorities should inspect properties before using them for the placement of
homeless households.
The Government has empowered local authorities to fulfil their duties to homeless
households through the offer of suitable accommodation in the private rented
sector.
Homelessness statutory guidance states that local authorities should ensure that
properties have been visited by either a local authority officer or someone acting
on their behalf to determine its suitability before an applicant moves in.
In 2012 the Government set down further legislation on what a local authority must
take into account when determining the suitability of accommodation.
The standard of accommodation in the sector and the stability it offers to tenants
are high in the majority of cases and the law is clear that suitable accommodation
must be free from health and safety hazards.

All agree that, wherever possible, councils should be placing homeless
households within their local area (unless there are particular circumstances
that mean it is not in the households’ interests). It nevertheless appears
inevitable that councils in areas with high rents, London in particular, will
place homeless households outside the area, including in coastal towns.
Before any placement, there should be a full discussion with the receiving
authority and the prospective tenant and information about the household
and its ongoing needs should be shared. The Government should consider
making this a statutory duty.
The Government is clear that local authorities must secure accommodation within
their own district so far as reasonably practicable. Where a local authority secures
accommodation for an applicant outside of their district, Section 208(2) of the 1996
Housing Act provides that the placing authority give notice to the local authority in
whose district the accommodation is situated.
Secondary legislation requires local authorities to take into account the
significance of any disruption with specific regard to employment, caring
responsibilities or education of the applicant or members of their household.
Where possible the authority should seek to retain established links with schools,
doctors, social workers and other key services and support.
Statutory guidance further reinforces this point and states that the Secretary of
State considers that applicants whose household has a need for social services
support or a need to maintain links with other essential services within the district,
for example specialist medical services or special schools, should be given priority
for accommodation within the housing authority’s own district. In particular, careful
consideration should be given to applicants with a mental illness or learning
disability who may have a particular need to remain in a specific area, for example
to maintain links with health service professionals and/or a reliance on existing
informal support networks and community links. Such applicants may be less able
than others to adapt to any disruption caused by being placed in accommodation
in another district.
We therefore do not believe that there needs to be a further statutory

Recommendation 41
We welcome the establishment of the task force to promote and broker
investment in build-to-let development, and are pleased that the task force is
already in operation. It is important that this task force does not become
another quango but quickly delivers on its objectives. We invite the
Government, in its response, to set out the progress made by the task force
in its first few months of operation. This update should quantify the amount
of additional investment brokered, and the number of additional homes it
would deliver.
The Government has underlined its determination to build a bigger and better
Private Rented Sector. The core mission of the Taskforce is to kick-start the new
private rented sector in the UK. This will provide an abundance of good, smallscale
private landlords but it will be characterised by a growing number of largescale,
professionally managed developments, owned and managed by institutional
investors and private sector organisations.
We share the concerns of the committee about the dangers of the Taskforce
becoming just another quango, that’s why we under the terms of reference the
work of Taskforce will be reviewed in March 2014 to ensure that they still add
value and plan to close to the Taskforce in March 2015.