Open Letter To Grant Shapps and the BBC – Clause 24

Open Letter To Grant Shapps and the BBC – Clause 24

22:17 PM, 22nd January 2016, About 6 years ago 66

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I’ve shared this email to my MP, Grant Shapps, on another thread where a prominent poster has suggested that I post it on a new discussion. Open Letter To Grant Shapps and the BBC - Clause 24

I emailed Grant Shapps on 7th January 2016. He acknowledged, but I received no further reply. I emailed him yesterday morning giving him the chance to reply, and informed him that I would be sending it to the BBC today (22/01/16).

“Dear Grant

I voted Tory at the last election. I’ve always considered myself a classic Tory voter, although I have voted for other parties in two elections: Blair, unfortunately wooed me first time round, and the coalition was partly down to me. Other than that, I’ve always voted Tory.

I’ve always found politics a pretty frustrating field where anyone can promise what they want and do something else and not be held to account. A manifesto can only be relied upon as a hugely inflated list of things a party will dream up in order to attract voters. Why on earth we haven’t a system in place which renders a manifesto something like a contractual offer where there are penalties if promises are broken is beyond me. It’s no wonder the electorate is so utterly fed-up with politicians and all parties. Nothing a politician or party says can be relied upon, which makes a mockery of democracy. I choose who to vote for based on what they tell me they stand for and what is written in their manifesto.

Since the last election, I have regretted my vote more than at any other time in my life, for both local and national elections. I took time to read the summary manifestos for the three parties I would consider voting for so that I could make the best choice for me, my family and the nation. No one party was going to offer everything to suit me, but as usual, the Tories were going to allow me to continue to work hard, invest in property for my future pension provisions as a sideline, and would probably handle the economy better than any other party.

The first decision George Osborne made which angered me was the abolition of tax credits for working people. I don’t get tax credits, despite being a single parent due to me just about breaking into the 40% tax bracket, but one thing I’m very happy for my taxes to be spent on is help for those who strive to work to make ends meet rather than staying on full welfare. I cannot for the life of me work out how this was ever considered by the Tory party. Aren’t you supposed to be encouraging people back to work? The most sickening part was the disingenuous clap-trap being spouted by GO and the party of how this would be set-off against increases in minimum wage. Many of these people were struggling anyway, how one earth would an immediate cut in tax credits be alleviated by increase in minimum wage in a few years? How many people on tax credits are above the minimum wage anyway?

The welfare slashes to the Disabled and Elderly are sickening. I don’t know enough about these to comment.

As mentioned, I’m a single parent with a job. Since I don’t have a pension, 4 years ago I entered into property investment via let-to-buy and downgrading my living arrangements. The following year I moved again, and let out a second home. This has stretched me financially, but no more than I had planned and it is all part of my strategy to provide for myself in the future, and my son through university.

I have excellent tenants in both properties. One family have been with me for just over two years. They are in their 50s and their grown up son lives with them. They have good jobs – she is a nurse, he is a plumber. I believe the son is an electrician. They moved into my house after having their home repossessed. I was extremely nervous about taking them on, but luckily, it has proved to be a very good decision. They love their home, and I’m very happy to have them looking after it. I have not increased their rent since they’ve been here as I had no reason to do so. My costs hadn’t increased significantly, and a good tenant is worth looking after and hanging on to. Unfortunately, due to the tax changes being brought in, I will be notifying them of a rent rise this month, which will reflect rent rises by corporate LLs in the area, approximately 10% for the period. In the notice of rent rise, I will be explaining exactly why I’m doing this. Every single LL I know will be doing the same. With just two properties, since I am in the 40% tax band, and I will now be paying tax on £19K on mortgages per year, I will have to keep rents bang up to the maximum the market permits. Since demand for rental is so high, and my properties are lovely, I foresee no problems with retaining or replacing tenants if they chose to move due to rent rises.

My second tenants are new to me since August. They seem lovely, and were desperate to move into my home and I was delighted they cleared all the checks and referencing. They were worried as they had some concern about their credit history due to some missed CC payments. I don’t know why they choose to rent, but they were at their last rented property for 23 years, and only chose to move as the LL was selling. They have good jobs – she works in a hospice, and he is a football scout. I had no intention of increasing their rent as I want them to stay with me as long as possible, but I will now be increasing rents annually in accordance with the Housing Act.

Do you think either of my tenants could secure mortgages if they wanted to?

I hope I will be able to make the finances work after clause 24 through rent increases, and possible remortgaging (I certainly can’t work any harder), but if not then I will need to evict my tenants and sell my properties. That’s two families evicted and me with no pension provision for the future. That really was not what I expected as the outcome of me voting Tory.

I know directly, and indirectly through social media, hundreds of LLs, and we are all good LLs, intent on looking after our tenants, complying with continual changes in legislation, and paying our taxes on income (profit) fairly.

No LL I know understands the logic behind C24. What particularly puzzles me is that Tories traditionally support those who want to work hard and provide for themselves, as well as encouraging entrepreneurialism. After all, we all know that stimulating the micro economy boosts the macro economy.

But what sickens me (and I’m not overemphasising that) is the absolute discrimination in favour of the wealthy elite and large corporations. This is what the Tories now stand for! Corporations are exempt from the policy as are those with more than 15 properties! I’m speechless! What formula was used to calculate the 15 property exemption number? Is that the minimum number of properties the average Tory MP owns? Certainly Osborne and his family who have benefitted very well in their property investments from some Maverick tax avoidance.

In summary, I’d like to point out, through my experience and knowledge of the sector, the effects of c24:

  1. Rents WILL rise. The RICS estimates by 25% by 2020. I think that’s a fair average. Many LLs like myself with good tenants may introduce higher rent rises than that to catch up with the market.
  2. Tenants will be evicted as some LLs will sell some properties. This may be simply because they choose to get out of the game since it is no longer profitable, or because being taxed on turnover will actually push them into a deficit. These LLs were operating on tight margins anyway, and interest rises may have eventually hit them, but it’s still stress and upheaval for tenants.
  3. Corporations will buy up rental stock sold off from the PRS. Corporate LLs will absolutely maximise profits and increase rents as much as the market permits.
  4. Hundreds of thousands of PAYE workers like me will chose to opt out of the market as it is no longer a viable pension investment option. That means hundreds of thousands of people without pension provisions in the future. Further pressure on that deafeningly loud tick of the pension time bomb that this country will very soon be unable to ignore, like your government is doing.
  5.  There will be NO increase in housing stock. But there will be a further shortage of housing for families like my tenants who cannot buy as they are unable to secure mortgages. What is to happen to them? Temporary accommodation or LA social housing? We don’t have enough of that, and the council certainly couldn’t afford it. There will be a catastrophic effect on the social housing sector directly as a result of this policy and its decimation of the private rental sector. 
  6. The loss of the next election for Tories. Unless there are fundamental changes, and a return to the core values and policies of the Tory party, I will not be voting for you again. Of the estimated 3m LLs in this country, I’d say a good 50% of them must be straight forward Tory voters. Not anymore. The LL community it absolutely outraged at clause 24. Many many have said that they will never vote Tory again. I chose Tory last time as they offered the best for me and the nation; now you attack everyone including the poor, the sick, the elderly and middle income core Tories like me. The only people the Tories look after are the extremely wealthy and big business. The Bullingdon Club Party.

I understand the need to steady the housing market, and make it easier, or even possible for first time buyers to get onto the housing ladder, but clause 24 is not going to do either. It’s so badly thought out, in fact, I struggle to believe it was thought through at all. The only benefit it will bring is to the wealthy elite and big corporations due to the competitive advantage it will give them through tax advantages over the little players like me.

Yours sincerely,

Rachel Hodge
ex-Tory voter”



Comments

by Dr Rosalind Beck

23:59 PM, 31st January 2016, About 6 years ago

Reply to the comment left by "Simon Salter" at "31/01/2016 - 23:44":

Out of my initial 15 rent increases I have lost one tenant - had a void for a month or two, but now a higher rent. You don't 'lose a tenant' when you increase the rent - especially a modest increase, which is why it is important to start it now in increments.

by Simon Griffith

8:10 AM, 1st February 2016, About 6 years ago

I believe another reason to review all rents now is that given the current strength of anti-landlord sentiment across the political spectrum rent controls at some point cannot be ruled out. Maybe this will be Gideon's next step....Clause 24, Stamp duty hike lead to rent increases. Tenants up in arms. Gideon to the rescue 'don't worry everyone I'll sort those nasty landlords out for you - rent controls - now please make sure I'm the next PM !' Landlords have offered below market rents for years to decent tenants - this is a luxury we can all no longer afford. Rents need to be at market level now and in the future as a precaution if nothing else. Ironically the only reason he will possibly not introduce rent controls is this would upset his Corporate buddies - Jeremy won't worry about that though ! Reasonable rent increases sooner rather than later will soften the blow for quality tenants and hopefully encourage greater retention. There will inevitably be some fall out but then higher rentals still can be achieved from new tenants.

by Jonathan Clarke

9:30 AM, 1st February 2016, About 6 years ago

I will be introducing rent rises above average on an incremental basis starting this year for the reasons outlined by Rachel. If I lose some tenants along the way it is very unfortunate as they have been good tenants and i will let them know its the governments fault and outside my control .

There are about 10 in the queue who would jump in the next day such is the demand.

At the end of the day tenants like everyone cut their cloth accordingly. A roof over their head is far more important than that extra takeaway per month. They will take a 2K holiday not a 3K one to pay the extra rent . They will repair the 5 year old car rather than trading it in for a new model. The 10K wedding for their daughter will become a 7K one etc etc .

Staying the right side of their double glazing in the cold winter is the priority.
.

by Dave Baker

21:47 PM, 1st February 2016, About 6 years ago

I have a dozen properties, all mortgaged.
I keep reading that Landlords will simply sell up and move on.
Not true.
Once the mortgage is repaid and then the CGT there is nothing left, apart from debt. I will also be losing my living.
12 years building this up and then the rug gets pulled.
Those of us outside the bubble are not laughing all the way.
I earn late 20s for looking after better than average homes for nearly 30 people. Some have been with me for 5 years or more.
His one size fits all is does not work.. To sum up, mortgage plus CGT = bankruptcy, but not for the wealthy.
So the only viable option is an increase in rent. 25% over three years should do it.
Better start now.

by Rachel Hodge

22:11 PM, 1st February 2016, About 6 years ago

Yes, what they said would not happen is exactly happening. Rents will rise. That's the one thing we can control for now.

I issued my tenant with a section 13 this evening saying I'd be very sorry to see them leave. She replied quite quickly saying her and her husband had talked about it, they love the house and the area, and will try to make it work financially.

Perhaps rents will rise and maybe the good LLs will hang onto some of their tenants who do decide they'd rather stay (after looking at market rates for similar). It's as if we all know what we're talking about and the government doesn't!

by Chris Byways

0:37 AM, 2nd February 2016, About 6 years ago

Reply to the comment left by "Jonathan Clarke" at "01/02/2016 - 09:30":

The anarchists on the other side of the fence try to dismiss the challenge - as always.

I sometimes wonder if they realise the legal challenge is being done for THEIR BENEFIT, as well as those providing their homes.

It really does seem they are in denial still that rents are bound to rise. But of course those making most noise don't seem to actually be affected, they are buying, living abroad or in council social housing or living at home.......

Agreed they can not rise to counteract the bizarre full effects of C24, but 25% over 5 years regrettably possible.

Downward pressure on prices seem improbable to exceed about 1%, masked by the 5-10% over the 5 years of H2B.

by Ray Konijn

13:10 PM, 6th February 2016, About 6 years ago

Excellent letter Rachel.

Last week I wrote a more simplistic letter to my M.P. on the same tack. No acknowledgement received so far.....

Dear Mr Merriman,

Re. LANDLORD TAX AND QUESTIONABLE LEGALITY OF ENFORCING SECTION 24 OF THE FINANCE ACT:

I am writing to let you know that for over 40 years I have been a loyal and dedicated Conservative voter and supporter of your own excellent work in your constituency, and the reason why I shall regrettably no longer.

Clause 24 prevents landlords from claiming tax relief on mortgages which should be a legitimate business expense. The impact of the unfair Landlord stealth tax has not been properly researched and has been driven through by George Osborne without prior consultation. The consequence of this lunacy will mean that Landlords will inevitably be forced to either sell or more likely to raise rents substantially so the real victims will be the poor rather than cash-rich mortgage-free landlords or property companies with large portfolios. George Osborn is arrogantly targeting the wrong people to claw in funds to swell the empty coffers misguidedly thinking that landlords are an easy soft option who will offer up little resistance. The legality of this stealth tax is in question and shortly to be challenged at judicial review under the Human Rights International Laws.

I realise that I am but a single voice - but please be aware that there is a growing sea of irate single voices out there who will not forget Mr Osborne's stubborn refusal to reverse his mistake who will not hesitate to cancel their next Conservative vote next time you need it - just like me.

Before you respond and try to recover my vote (which you won't - unless this tax is reversed), you may like to grasp the growing feeling of resentment by listening to these two short radio interviews and one short TV interview:

http://www.property118.com/landlord-tax-bbc-radio-interview-2/84031/

http://www.bbc.co.uk/iplayer/episode/b06z8hgd/inside-out-south-east-01022016

Thanking you for your attention,

Yours Sincerely,

xxxx

p.s. You have my permission to publish this letter on your website excluding personal contact details.

by Rachel Hodge

13:22 PM, 6th February 2016, About 6 years ago

Reply to the comment left by "Ray Konijn" at "06/02/2016 - 13:10":

Excellent letter, Ray. Not sure about the kisses at the end though 🙂

Let's hope the majority of MPs have had contact from LLs explaining the actual impact the tenant tax is likely to have.

It certainly looks like more and more LLs are becoming aware of the implications and contacting their MPs.

It's very important we all do as the idiots in charge may be able to ignore one voice, or even a handful, but they cannot ignore a ground swell of action (LL contact, Judicial Review, media coverage).

by Ethical Man

23:24 PM, 7th February 2016, About 6 years ago

May I correct another couple of errors in your original letter? First, the changes to tax credits were abandoned in the autumn. This was widely reported.

Second, you write 'The welfare slashes to the Disabled and Elderly are sickening. I don’t know enough about these to comment.'

Yet there is no reduction in welfare to the elderly - I thought everyone knew this. And with regard to the disabled there is much dispute. We certainly still have a comprehensive welfare state for the disabled. However the government has tried to make the help more targeted, and to weed out malingerers etc. Inevitably there are people who complain about changes, but what the truth is is unclear - so without proper research one is not in a position to complain.

by Rachel Hodge

15:39 PM, 12th February 2016, About 6 years ago

Received a reply, which ignores most of the points made in my letter, and especially ignores the differential treatment of individual and corporate LLs.

Dear Rachel,

Many thanks for getting in touch with Grant and for letting him know your feelings. After speaking to Grant about this, he has asked me to reply on his behalf. I’m really very sorry for the delay in replying.

Grant was very sorry to hear your comments. The Conservative Manifesto pledged to help all working people. Through social reform as well as economic reform, the Government is committed to providing opportunity for working people through higher wages, lower taxes, reducing bills for households and support for first time buyers, yet continuing to protect the poorest and most vulnerable in society.

Grant appreciates your point about tax credits. The Chancellor, however, did in fact listen to concerns about this. Some argued that the changes should be phased in, and the Chancellor heard and understood these concerns. But rather than phase them in, he is able to avoid the changes altogether. This has been possible because the forecasts for the public finances have improved substantially since the Summer Budget, because our strong economy means tax receipts are higher than expected and we are able to pay lower interest on our debts.

Regarding changes to the taxation of landlords; Grant does understand your concerns. The Government is committed to a fair tax system, so is restricting tax relief landlords can claim on property finance costs to the basic rate of income tax. By unifying the treatment of finance costs for all individual landlords, the Government is reducing the distortion between property investment and investment in other assets, and reducing the advantage landlords may have in the property market over ordinary homebuyers.

Grant knows that for decades, there has not been enough homes to meet the needs of our growing population. This is why the Department for Communities and Local Government have introduced a number of schemes to increase the supply of affordable housing- which includes affordable rent. The Mayor of London and the Greater London Authority (GLA) have set out a housing strategy to prioritise affordable living and the Mayor's aim is to deliver a balanced programme that supports low paid working households who would otherwise face punitive costs in the private rented sector.

Grant is confident that under this Government, all will benefit from the proceeds of growth. Grant is proud that the Government is tackling the economic failures it inherited and continues to deliver its manifesto promises by reducing the deficit, creating jobs, building homes and protecting our much valued public services.

With kind regards

Nicholas

Nicholas Langley
Office of The Rt Hon Grant Shapps MP
Welwyn Hatfield


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