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 Gareth Wilson

15:46 PM, 12th February 2016, About 6 years ago

They are lying about unifying tax treatment for property investors.

The reference to the Affordable Rent scheme is particularly vacuous in light of the mathematical inevitability of Clause 24 forcing landlords to raise rents.

Their expressed concern for potential owner-occupiers is also totally undermined by the permissiveness of corporate letting in the tax system.

by James Fraser

15:55 PM, 12th February 2016, About 6 years ago

I would go back to them straight away with a sterner reply repeating your questions they have missed, demanding answers to those precise points and requesting that they do NOT reply by repeating the same old pre-printed Treasury guff that they've sent you this time!

by Alison King

18:23 PM, 12th February 2016, About 6 years ago

I find this bit "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" somewhat disingenuous. Of course less well off families need support, but depersonalising private landlords and implying they are a root cause is to deflect responsibility and yet again fails to acknowledge that private rental is a partnership between one party who seeks to rent and another who wishes to provide a decent home. Surveys repeatedly show that tenants prefer dealing with people not corporations and private landlords are better able to control costs as they don't have to employ staff. The authorities need to wake up to the idea that working with private landlords to provide solutions is far more positive than creating conflict. If people should have a right to buy; so too should they have a right to rent.

by Andy Beach

18:25 PM, 12th February 2016, About 6 years ago

I assume you have all see this already? https://www.crowdjustice.co.uk/case/clause24/

If not they are currently asking for landlords to send in the examples of how it would effect them.

by Mark Alexander

18:39 PM, 12th February 2016, About 6 years ago

Reply to the comment left by "Andy Beach" at "12/02/2016 - 18:25":

LOL - we started the campaign and secured most of the funding Andy.

Much of the background research work is being completed by our volunteer research team.

You can see a LOT more of what we've been up to via this link >>> http://www.property118.com/category/budget-2015-campaign/
.

by Andy Beach

19:01 PM, 12th February 2016, About 6 years ago

Thanks for the info Mark Alexander that is good to know.

by Rachel Hodge

20:45 PM, 12th February 2016, About 6 years ago

Reply sent:

Dear Nicholas

Thank you for your email.

I’m sorry, but this response fluffs over the carefully considered points and questions raised in my email, and quotes disingenuous party rhetoric which has been sent in reply to many LLs in response to queries they have sent to their MPs.

I apologise, I’m going to sound rude, but it’s important I make clear points here.

I’m afraid it has become apparent that it’s very hard for MPs to understand and acknowledge the social and economic effects Clause 24 is going to have as they have virtually no experience in the private commercial business sector and economy. I do however caveat this by the fact that Clause 24 is discriminatory in its exclusion of corporations and big business from its effects, as one thing the Tories are very influenced by is the macro economy, big business and the Bullingdon Club. I will, as time goes on, research how many of George, David and the Bullingdon Club Tory Party’s friends are going to directly benefit from Clause 24 in its attempt to expel private, small time LLs from the market. I will start this by looking into Legal & General, and other funds who’ve, in an enormously suspicious coincidence, announced super plans for build to rent developments over the next few years.

Is part of the decision behind Clause 24 an attempt to clear the competition from the market nicely to make the big corporations’ build to rent schemes more feasible? I request you to directly answer this question. I am convinced with all the evidence I have seen, that the Tory government’s aim with Clause 24 is primarily to set the market up for corporate LL institutions. That is, it is introducing a pecuniary tax specifically on private LLs, whilst specifically and pointedly excluding corporate LLs from that tax. And you state that this tax is levelling the playing field for private LLs and home owners? Sure, it is crippling a small time LL like me who may have invested in 1 or 2 more houses over the next few years to further boost my future planning, but the corporate LL will be able to purchase 100s and 100s of houses with no increase in stamp duty and exemption from Clause 24 whereby they are still able to omit finance costs from their income to calculate profit before tax. Like all business do. Like I do for my rental business. I request that you SPECIFICALLY answer my question as to why, if you are trying to level the market to assist first time buyers, you are excluding corporations and business from this significant change in tax regime.

Please could you tell me whether you and your party believes that the majority of tenants would rather deal with a corporate institution or a LL. I know the answer from my two tenants, but I’m interested in your believe and research. I know the government, when it suits current policy, and the tabloid media when they have nothing else to print are intent on creating the impression that all LLs are rogue LLs, but that is not true. My tenants are your constituents. Lets go and see them together and ask them what they think about me, and whether they’d be happy to be with an institutional, corporate LL. Let’s do that so you can form a considered opinion.

If you refer back to my email to Grant, I outline my tenants' circumstances, how happy I am to have them, how happy they are with their homes, and how my strategy involved not raising their rents unless my costs increased significantly. I have now completed an emotional process whereby I’ve raised the rent of my longest staying tenant for the first time. I explained exactly why I was doing this (Tory policy Clause 24), and explained how I would not have been doing this if it wasn’t for Clause 24. I also explained the Judicial Review challenge currently in action through Omnia, and my tenants wished me luck with the campaign, and asked that I keep them updated.

Please can you confirm to me that you agree that the introduction of Clause 24 will mean that rents will rise (additional costs in business, such as tax increases on petrol, increases in labour costs, or materials costs are always passed on to the consumer - that is pure and simple economics, especially where demand exceeds supply). If you believe rents will not rise, please give me your factual evidence based research for this belief. I am experienced in the rental market and, through social media, am in contact with 100s of LLs, and have access to information from 1000s of LLs, and I can tell you, for a fact, rents are rising as a result of Clause 24.

My tenants, as outlined in my email to Grant, are unlikely to be able to secure funding for purchasing a home. Certainly not the type of homes they are living in now. Can you please specifically tell me what considerations you’ve made for people who would not be in a position to buy (i.e. those unable to secure lending) or those who prefer renting - there are people like this!

I will be sharing this email on social media, and with the press who are becoming increasingly aware of, and are beginning to understand and publicise the ACTUAL affects of clause 24, despite MPs’ incredible lack of understanding of the points being clearly represented to them (or the deliberate cover up). I don’t think MPs are all thick, I just think there’s an agenda which they think we’re too stupid to be able to spot. That assumption is wrong, and we will carry on lobbying and campaigning so that media and the public understand the effects clause 24 is going to have, and why the Bullingdon Tory Club is pushing it through. Big Business and the Wealthy Elite. That’s what Tories stand for.

I am fully backing, financially and patriotically, the Clause 24 Judicial Challenge, through which I hope it will be proven that Clause 24 is discriminatory, as it obviously is. I will keep you posted.

I look forward to receiving a better reply from you addressing my actual queries, and preferably I will not have to wait 6 weeks for the next reply.

Yours sincerely
Rachel Hodge
Ex-Tory Voter

by Gareth Wilson

20:59 PM, 12th February 2016, About 6 years ago

Now Mr Shapps...

ANSWER

THE

QUESTIONS

by Paul Mahoney

13:52 PM, 20th February 2016, About 6 years ago

One of our clients wrote a similar letter and got a very disappointing response that not essentially said "go away" but was also downright wrong in its explanation of who the changes would affect.
Paul Mahoney recently posted...What does Buy to Let Property Investment and A Big Juicy Orange have in common?

by Rachel Hodge

15:22 PM, 20th February 2016, About 6 years ago

Reply to the comment left by "Paul Mahoney" at "20/02/2016 - 13:52":

I have received a reply to my rebuttal above.

Dear Rachel,

Thank you for your further email on this. I’m sorry that you found my initial reply disappointing.

Grant has written on your behalf to the minister responsible regarding Clause 24 to raise the points you’ve mentioned below and to address in detail your specific questions.

As soon as Grant receives a reply, we’ll certainly be in touch again.

Best wishes
Nicholas

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

House of Commons, London, SW1A 0AA

nicholasj.langley@parliament.uk

I have a funny feeling I will now receive the standard reply many others have received.


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