Calling for a new tax regime that includes incentives

by Readers Question

9:28 AM, 1st April 2019
About 5 months ago

Calling for a new tax regime that includes incentives

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Calling for a new tax regime that includes incentives

If HM Government (HMG) wishes to halt the mass exodus by Private Sector Landlords then it must Organise the Tax System in a more Businesslike Fashion. The first thing it needs to do is to restore Tax Relief on BTL Mortgage Payments to the Headline Rate. In simple English whatever rate the Landlord pays that is applied to the entirety of the Mortgage Interest.

The next thing it needs to do is to have a level playing field so that Companies and Non Company Landlords pay the same rate of 10%. Entrepreneurs’ relief is currently 10%.

The 3% stamp duty for BTL properties should be scraped. If HMG wants more landlords they need to incentivise Landlords not dis-incentivise landlords.

The average landlord has slightly more than one BTL house. Under two. He is not going to set up a Company! It is pie in the sky from Whitehall Mandarins who do not understand the Letting Industry. Whatever HMG wants then it must give an incentive. For instance if three year shorthold tenancies are required then common sense must prevail.

Firstly, not all tenants what a three-year commitment. Most do not, but some do. These are particularly tenants with children. There must be a willing landlord and a willing tenant, but HMG must marry this up with a three year fixed term mortgage. The nuts and bolts are for later.

I suggest to HMG that to incentivise this any landlord taking tenants with children should be given a further 1% discount per tenancy year on his Capital Gains for that Specific House.

Secondly there is the issue of Domestic Abuse. If a landlord takes a Domestic Abuse victim he has to pay out the mortgage, but receives no income from Housing Benefit for months. Again there should be a 1% discount on GCT as above.

However, HMG must provide a “Guarantee” from day one which pays in advance like a normal tenant. The day the tenant moves in then HMG pays the rent for that month. The tenant then repays the Guarantor. Whether this is via a contra credit of Housing Benefit or of Universal Credit is not a matter for the landlord. HMG must underwrite the payment delay problem. If HMG wishes to prevent further Domestic Abuse then it is within its gift! Man landed on the moon in 1969! It is not beyond the wit of man to dream up an acceptable mechanism for resolving the problem of Domestic Abuse!

Thirdly the problem of Zero Hours Contracts. It is a matter for HMG. If it were to make Zero Hours contracts unlawful then how many workers would lose their jobs! It is a balancing Act for HMG not for the Private Sector Landlord.

If HMG wants PLSs to take them then incentivise and provide a payment from day one guarantee.

Fergus Wilson



Comments

Coastal

13:11 PM, 1st April 2019
About 5 months ago

We can hope the government actually listens to these common sense proposals and wakes up to the damage George Osbourne's policies are now causing with higher required rents for landlords to sustain their businesses, plus in turn less choice in rental stock for tenants.

Gromit

14:27 PM, 1st April 2019
About 5 months ago

Reply to the comment left by Coastal at 01/04/2019 - 13:11
I wouldn't holding my breath on that happening. Governments (of any persuasion) will not proactively do anything unless it is vot winning or raises revenue (without jeopardising votes). Helping Landlords directly is not a vote winner - bashing small Landlords though does help their big corporate BTR friends aka big Tory donors, like L&G; and it keeps the likes of Shelter, Generation Rent, et al. off their backs.

The Government will only do something when matters reach crisis point, then they'll launch a consultation into the causes, and then eventually pass Laws to help the situation (assuming they got it right of course).S.24 hasn't fully kicked in yet, and its effects are only just starting to be felt. So we are 1-2 years from the effects reaching its peak, 1-2 years for the Government to realise there's a problem, 1-2 years for consultation, and 1 year for changes in legislation. As I say don't hold your breath.

Rob Crawford

15:49 PM, 1st April 2019
About 5 months ago

Seriously, if anyone thinks the Gov't are going to move away from high earning tax streams such as CGT, Stamp Duty or Section 24, then I feel they are somewhat disillusioned! The doubt associated with the UK's future alone, will ensure that these cash-cow taxes remain for some time yet. If the Gov't won't increase funding to the NHS or Police, despite the obvious need - then what chance do landlords stand!?

Neil Patterson

15:59 PM, 1st April 2019
About 5 months ago

From Fergus:

"We have passed Crisis Point

However, the point is well made. Action this day!

Most tenants I speak to are more concerned with a Roof Over Their Heads than Brexit!"

Gromit

16:09 PM, 1st April 2019
About 5 months ago

Reply to the comment left by Neil Patterson at 01/04/2019 - 15:59
We might be passed the crisis point but it going to get a lot worse yet.
The super-tanker is accelerating still fuelled by new Government policies and the Government can't/won't see the iceberg ahead, let alone put the engines into reverse.

Coastal

16:43 PM, 1st April 2019
About 5 months ago

Mr Hammond may well be currently basking in the credit of high tax receipts, along with supporting first time buyers with ex rental properties - sold by landlords exiting the business. However, the super-tanker may well hit the iceberg before it can accelerate much more, which is the cost of housing those on benefits. In my area, there are many HB tenants being evicted to enable the sales of their property (to sell to the first time buyers) and or due to arrears caused by tenants being unable to afford to top up their benefit housing caps, which have not increased for years. Our local Council currently have a massive problem in trying to rehouse families, with many going into B&B's and or local Hotels at huge cost! Councils are also offering large cash incentive payments to landlords in order to provide accommodation. Whats urgently needed is some joined up thinking between Government, local Councils and reality.

Gromit

17:37 PM, 1st April 2019
About 5 months ago

Reply to the comment left by Coastal at 01/04/2019 - 16:43
You've hit the nail on the head. It's Local Councils bearing the cost not central Government who pockets the CGT, s.24 tax, 3% SDLT surcharge, etc.

H B

8:00 AM, 5th April 2019
About 5 months ago

An clear and sensible set of demands. Only one "but"...

"Man landed on the moon in 1969! It is not beyond the wit of man to dream up an acceptable mechanism for resolving the problem of Domestic Abuse!"

Landing on the moon is a piece of cake compared to ending domestic abuse. This sort of comment, particularly in light of Fergus Wilson''s ban on battered women, will come across as insensitive.


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