Clause 24 response from Tim Loughton MP

Reply to the comment left by "Jonathan Clarke" at "28/09/2016 - 13:13":

Hi Jonathan

Does your MP believe you?

The nearby MPs Stewart Jackson and Shailesh Vara refuse to believe:

http://www.peterboroughtoday.co.uk/our-region/peterborough/government-hits-back-at-misleading-claims-over-1m-peterborough-city-council-hotel-bill-for-homeless-families-1-7594514

and

http://www.peterboroughtoday.co.uk/ourregion/peterborough/accept-that-your-government-is-responsible-council-leader-fires-back-at-peterborough-mp-over-1m-hotel-bill-for-homeless-families-1-7597920

Reply to the comment left by "Chris Clare" at "28/09/2016 - 15:18":

Hi Chris

The word pragmatic might give the impression that HMRC were not following strict rules. In fact they have always followed what they call Generally Accepted Accounting Practice.

HMRC will continue to follow GAAP for every type of enterprise in the country - with the exception, as from next April, of renting out residential property which was bought by individuals in their own names and which does not qualify as furnished holiday accommodation.

The suffering caused to tenants is very unpleasant to see.

I do see the need to rein in btl in its most extreme form due to the risks outlined by the BoE, but I do wonder if the government considered and accepted that some PRS tenant families would end up living in a travelodge room for a prolonged period as part of the fallout of the policies it is implementing?

I predict the impact on tenants of LLs affected by S24, PRA, Basel III etc. will get worse before it gets better, both in terms of number of people affected and the severity of the conditions some of them end up suffering as the result.

It took 20 years from btl being enabled to get to the point where the government acted to reverse the direction of travel. It has done so with a policy that is taking 5 years to fully implement, but that is already, just 1 year in, seeing some families kicked out of their homes with nowhere to go except a travelodge room.

My own view is that if skint banks had been forced to fail in 08, the problems that high leverage io btl was contributing to in the housing market would have been solved more quickly & without the need for the government to intervene in the ways it has decided are necessary and at far less cost to the taxpayer. That wouldn't have been pretty for some LLs, but it is fair enough if the market giveth & the market taketh away.

However, we are where we are and I don't see a good ending coming quickly enough to prevent the lives of a lot of people being very adversely affected for some years. LLs that suffer as a result of the changes being imposed do have a small sliver of sympathy from me. Not much, but a sliver. The great majority of my sympathy is reserved for Families that end up being forced to live in a travelodge room through no fault of their own.

Whilst something needed to be done and the objective the government is pursuing - a better functioning housing market - is a worthy one, I hope that the price those families end up paying is worth it. However, I can't shake the thought that a market getting so much government interference (Htb, fls mmr etc as well as the policies mentioned previously) can only end up being distorted by the combination of these numerous policies in ways that the architects of those individual policies never even imagined was possible.

Reversing S24 wouldn't fix it now, save for helping those LLs affected in the short term. There are too many other things at work. Ultimately the housing market has / had / will reach an extreme & will correct itself as markets do. The more the government interferes the worse it will be for more market participants. I wish Conservatives would let the market work.

Housing generally is going to be a rough ride for a few years

/end late night musings

Reply to the comment left by "Chris Clare" at "28/09/2016 - 15:18":

Hi Chris. You have summed things up very eloquently. Do you mind if I use your wording in a report I am writing?

Reply to the comment left by "Jon Pipllman" at "28/09/2016 - 23:01":

Agree many of your "late night musings" but really all that was needed was to stop interest-only lending and if that had been applied to new btl lending at the same time as it was applied to o/occupier lending, a soft landing would have resulted instead of the carnage we are beginning to see now. Certainly agree government tinkering with the market has been the cause of far more problems than it has solved. FFL has led to higher property prices and near-zero interest rates on savings, Pension changes and pathetic returns on annuities have tempted too many into unsuitable btl investments. HTB has also caused house price rises and increased debt levels which leave first time buyers vulnerable when property prices fall. Meanwhile, BoE actions in keeping interest rates at rock bottom while printing money to inflate away debt have only made matters worse.
However, whether it's families ending up in Travelodges or landlords being bankrupted, it is in the main innocent individuals who are bearing the brunt of banker irresponsibility and greed while the fat cat perpetrators have got off scot free. (Any moment now I shall break into song with "It's the same the whole world over, it's the poor wot gets the blame..." and yes, it is a bloomin' shame! Clearly it's time I went to bed.)

Reply to the comment left by "Jon Pipllman" at "28/09/2016 - 23:01":

As Jon perfectly pointed out suddenly the whole western world have started on high prices and investment money and more likely than not this will go on for a quite long time.

The chance of further capital gains and policies supporting io landlords is very low, the only thing future will bring is more tightening. I wouldn't be surprised if BoE would now think about how to phase out interest only mortgages over a few years time and force everyone on repayment mortgages.

Yes, evictions might hurt, but for every tenant evicted there is going to be an empty house with a mortgage needing another tenant. As most landlords are not affected that much by the changes they are not forced to raise rents. If you raise rents too aggressively you might find no takers or - what is even worse - overextended tenants might just show their middle fingers, default on rent and wait for the bailiffs.

Also a LOT of the tenants in SE and London are immigrants from Europe with zero chance of buying here + plans of going back at some point, so they are prepared to move back to their countries on a short notice. A lot of them will do this anyway when GBP goes south after triggering article 50.

The game is over.

Reply to the comment left by "Joe Galvin" at "29/09/2016 - 00:03":

Interesting to hear your comments about Eastern Europeans in London area. Our properties are in the Bristol commuter belt and last spring the property section of the local paper carried a report from a mortgage broker allied to an estate agency stating that most of the first-time buyers were EEs who made lifestyle sacrifices and worked long hours to save for a deposit. This chimed with our experience when we were interviewing prospective tenants at the time. One Polish single mother working two jobs as a cleaner told us she was was saving to buy and her15 year old daughter also worked as a waitress at weekends and after school. Of course, she also claimed working and child tax credits but you can't blame her for taking common sense advantage of the system any more than you can blame mortgaged btl landlords from their entirely rational responses to the tax system in operation at the time. When the Chancellor (acting in what he perceives as the national interest) moves the goalposts with almost no warning obviously people adjust their behaviour accordingly and there are winners and losers. Often, though not invariably, the losers are those who took the biggest risk.

Reply to the comment left by "Appalled Landlord" at "28/09/2016 - 16:47":

Hi

Unfortunately those links appear not working for me at this time.
Coincidentally though yesterday i received a response from my MP. Iain Stewart
I had written to him asking him if he was planning to attend the Homelessness Reduction Bill on 28th October
He replied - he doesn't know yet.
His letter was a typically bland response which didn't tackle the issues I raised

I mentioned the crippling unfair and legally questionable Sec 24 twice in my letter ................. He completely bypassed that headache
I mentioned my tax bill would rise 5 times.................................................................................. He completely bypassed that headache
I mentioned LHA is now frozen for 4 years.............................................................................. ...He completely bypassed that headache
I mentioned my LHA business provides a very cost effective service to the taxpayer.............. He completely bypassed that positive
I mentioned about 45 of mine and my client`s LHA tenants maybe now liable for eviction.........He completely bypassed that headache

Politicians as we know are trained to avoid the question and give bland responses. He shone and scored 10 /10

If the Judicial Review fails or the Autumn Statement does not see a U turn then I advocate Direct Action as the only way to significantly raise our plight. As others have said. E mails have limited impact . Many big corporates will scan read and give a bland response to buy them time if a giving a proper response would be too involved and potentially controversial. They then hope the writer will go away having vented their anger.

Effective Direct action needs thought and planning. Engage the services of someone who is good at this kind of stuff
Fathers for Justice /Greenpeace etc have existing models . Learn from them
To do it well we will need the tenants and the public on board . Don`t want to alienate them or we lose

Co ordinated same day Sec 21 action in a targeted area where LHA tenants want to leave the LHA sector anyway to get a council house
Swamp that town with 100 Sec 21`s so the council foyer is overwhelmed on the effective notice date and they cant supply enough B&B`s
Fighting fund which goes to the tenants as sweetners for their cooperation for the 6 weeks they are in B&B

Short term pain yes but long term gain for the sector.
Direct action is not always easy to achieve a goal. Ask Greenpeace when they put themselves in harms way. Small boat trying to block massive boat. Must be scary.

Then the councils will routinely break the 6 week limit allowed in a B&B. Tons of evidence that they do that now anyway
Class action against the council for breaking the 6 week rule . Press are all over it . A lot cheaper I`m guessing than the Sec 24 action?
100 homeless in the council foyer at 9am one day would get Sky reporter over there doing a live running commentary. Pressure would build throughout the day . If needed a second wave of the next 100 in maybe in 2 weeks time

We protest saying we are simply providing a public service to save taxpayers money but S24 is taxing us out of existence with a potentially illegal tax . We don`t want to evict but we are forced to . By freezing LHA rents they are also effectively and deliberately manipulating private market rents and are therefore discriminating against this very vulnerable sector of society
In the commodities market this would be a criminal offence . Why not in the housing market .

Mark If you are not too busy today - Over to you!

Reply to the comment left by "Appalled Landlord" at "28/09/2016 - 17:17":

When I say the revenue takes a pragmatic approach I don't mean them literally, I mean the system and the rules surrounding that system. They are designed in such a way as to encourage spending and investment to generate income which can be in turned taxed.

If a tax system taxed without paying credence to the expenses that where necessary to generate the income, no one would ever set up in business as it would rarely generate any surplus revenue, especially in the early years. However that is essentially what clause 24 proposes.

Most importantly do you really think if they get away with this they will stop there? If they get a smooth ride with these changes they will remove any borrowing relief altogether even for basic rate tax payers. Be warned it may not affect you now but it sure could do in the future .

Reply to the comment left by "Jonathan Clarke" at "29/09/2016 - 08:58":

Hi Jonathan

I do not have the resources or experience to organise something at this level but I do agree that something along the lines of what you have suggested is required.

As I have been saying for months now, if just 10% of all landlords were to contribute £10 a month to Property118 Action Group there would be plenty of funds available to procure the necessary resource. I don't think very many landlords are very bothered, or perhaps they just think this problem will go away.

Meanwhile, I am helping those who are bothered sufficiently to pay to professional advice to restructure their businesses and their lives. It's only a handful of people every month but even that is keeping me busy, especially as Property118 and all the other campaign work we we are doing doesn't just happen by magic either,
.