Complaint to the BBC on reports concerning tax changes for landlords

Complaint to the BBC on reports concerning tax changes for landlords

13:03 PM, 2nd March 2016, About 7 years ago 56

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Complaint to the BBC on reports concerning tax changes for landlordsThere was a piece on the BBC News channel last Sunday, 28 February, concerning the tax changes for landlords: http://www.bbc.com/news/business-35681874 It was shown at 07.28 and at 14.16, and presumably throughout the day.

It propagated misinformation about the tax change, was biased against BTL landlords, and promoted a commercial alternative.  My detailed complaints follow.

The news readers said that from next year “the generous tax allowances are being phased out”.

This was a reference to section 24 of the Finance (No. 2) Act 2015. Under this, landlords who bought property in their own names will have mortgage interest and other finance costs disallowed when the taxable profit is calculated.  A “relief” of 20% of these disallowed costs will be deducted from the tax calculated on the inflated profit.  The change will be phased in over four years, starting next April.  The result is that some landlords will pay a levy of up to 25% of their finance costs, and may lose the personal allowance.  The levy may exceed the real profit; it will be payable even when there is a real loss.  Individual landlords have already started to increase rents so that they will have enough money to pay the levy to HMRC.  Otherwise HMRC will bankrupt them.

My first complaint relates to the introduction of the piece.  Landlords do not receive generous tax allowances.  They receive exactly the same allowances as every other enterprise in the country. In paragraph 9 of its submission to the Public Bill Committee which scrutinised Clause 24 of the Finance Bill (as it then was), the Institute of Chartered Accountants in England and Wales stated:  “We can think of no other business where the cost of funding the capital of the business is not tax allowable”.  http://www.publications.parliament.uk/pa/cm201516/cmpublic/finance/memo/fb80c.pdf

In April 2017 individual landlords will start to be deprived of this hitherto universal allowance.  That is the very opposite of having “generous tax allowances phased out”.

It is the Treasury which has described this universal allowance as “generous” to individual landlords, and only to them. https://www.gov.uk/government/publications/restricting-finance-cost-relief-for-individual-landlords

This is typical of the misinformation that the Treasury has disseminated to MP’s and their constituents since the budget announcement last July.  It has made statements that are the opposite of the truth, which are then accepted by gullible MP’s.

There have been many articles in newspapers about how this measure will be bad for tenants – and ruinous for some landlords.  There were interviews on BBC South East’s Inside Out on 1 February, and two interviews on BBC local radio last month.  That is the real story that should have been reported.

Politicians are blaming landlords for the housing shortage in London and the South East, which is really due to politicians failing, over decades, to encourage enough new building.

Whoever included the word “generous” in the autocue either has an unquestioning mind, and therefore is not suitable for journalism, or has an axe to grind.

The introduction referred to a report, which was not named, that said 1 million properties could make losses from 2020.  That is when section 24 comes into full effect.

This introduced a piece by your business correspondent Joe Lynam.   He interviewed Jaye Cook, a landlord with 5 properties, who said he would have to sell them when the early repayment penalty period finishes.   Asked if he thought loads of other BTL “investors” would be replicating that idea, he said “Absolutely.  I think it’s become a much less attractive investment and people can’t afford a loss every month.”  He did not comment on section/clause 24, much less complain about it.

Then three banners came on the screen about the 2m landlords, their 5m properties and the 1m properties that could make a loss if [interest] rates rise in the coming years.  Below each the sources were shown as CML/Property Partner.

In the Telegraph that same day, Jaye Cook was quoted as planning to sell his properties.  This was in an article quoting data from Property Partner to the effect that “Buy-to-let could become unprofitable in seven out of 10 towns and cities by 2020”. http://www.telegraph.co.uk/personal-banking/mortgages/the-governments-buy-to-let-tax-changes-mean-i-will-have-to-sell/

The following day, Jaye Cook was quoted “Once my fixed rates on some of the properties come to an end, I’m thinking of selling and reinvesting in Property Partner. I’ve already remortgaged some of my properties and invested hundreds of thousands through the platform.”

http://www.propertyreporter.co.uk/landlords/rate-rise-could-force-landlords-into-debt-by-2020.html

Last November he was quoted as follows: “Mr Cook says he will put money in crowd-funded schemes such as Property Partner, in which he has invested £200,000.”  It is not clear from this whether this amount was invested in properties or in Property Partner itself.

http://www.dailymail.co.uk/news/article-3334304/Huge-stamp-duty-rises-rental-properties-second-homes-set-kill-booming-market.html

My second complaint is that the BBC has allowed itself to be used to promote a commercial enterprise: Property Partner.  The only landlord interviewed in the broadcast had a defeatist attitude to Buy-to-Let.  He also had invested large sums through, or possibly in, Property Partner, which is an alternative to BTL.  Why was someone with a vested interest in Property Partner selected as the only landlord to be interviewed about the tax changes?

Joe Lynam said that for renters keen to get on the housing ladder, the changes to BTL are welcome.  This is a non sequitur, and is my third complaint.  With all the subsidies available, a prospective buyer only needs a 5% deposit, and sufficient income to justify a mortgage.  Those are the obstacles which prevent first time buyers (FTB’s) from getting on the housing ladder.  Forcing landlords to sell properties will not change that situation, or help renters get on the housing ladder therefore.

Then Betsy Dillner, a director of Generation Rent, said to camera “These tax incentives have pushed a lot of amateur landlords into the market and removing these incentives will professionalise landlords and make way for FTB’s which may (sic) have been pushed out of the market because of these tax incentives pushing up prices.”

This is nonsense.  BTL landlords do not have tax incentives, they have the same allowances as every other enterprise.  These allowances did not push landlords into the market.  The allowances did not push up prices.  Ms Dillner is not even sure that FTB’s have been pushed out of the market.

In spite of all that, Joe Lynam’s said in a voice-over “And the Chancellor seems to agree.”

This is not true, and is my fourth complaint.  Neither the Chancellor nor anyone from the Treasury has claimed that removing the allowance will professionalise landlords.  Nor have they ever claimed that landlords have pushed up prices.

Mr Lynam’s then voiced the government’s spin: “The Treasury says that by restricting the mortgage tax relief it has addressed the unfair advantage enjoyed by BTL landlords.”  Unfortunately, it does not explain what advantage BTL landlords enjoy or how it is unfair, but that is typical of the Treasury.

Bizarrely, the Treasury was thus given the right to reply about section/clause 24, even though nobody on the programme had complained about it or criticised it in the first place.

Then Mr Lynam asserted that “BTL landlords have enjoyed tax advantages down the years, but those advantages could be coming to an end.”  This is not true, it is Treasury misinformation. BTL landlords have only enjoyed the same allowance for finance costs as every other enterprise.  It is my fifth complaint.



Comments

Mr Barua

15:26 PM, 3rd March 2016, About 7 years ago

I too have just lodged my complaint.

Dr Rosalind Beck

16:07 PM, 3rd March 2016, About 7 years ago

I just sent the following, calling the report biased, factually inaccurate and shoddy:

'The report mentioned a 'generous tax allowance' for landlords being phased out. This is both biased (anti-landlord) and inaccurate. As a landlord the Government has never given me any kind of allowance. Rather, like all other businesses I have been able to offset the finance costs of my business to arrive at profit. The tax change being reported on means that the Government will in future tax me also on the costs I have paid to the mortgage lender. Another way of putting it is that I will be taxed on profit, but not be able to offset the costs of producing that profit. I could have a real profit of £1 and be taxed £10,000 on that, meaning an effective tax rate of a million percent. Once I have a loss on my business (possible if interest rates rise at some point, which they are bound to do), I will face an 'infinite' rate of tax. It is completely bonkers. Instead of the BBC reflecting this it reported it like it was a normal measure and no alternative viewpoint was given. It is standard practice for the media to demonise landlords; that does not make it right. Please ensure that you produce some coverage of the real issues here. The report was as outrageous as the tax change.'

It only took a few minutes, using the link provided by AL in the 4th comment on this thread.

Appalled Landlord

16:39 PM, 3rd March 2016, About 7 years ago

Reply to the comment left by "Mick Roberts" at "03/03/2016 - 14:30":

Hi Mick

I couldn't believe my ears when I heard the news reader say it.

Have you lodged a complaint?

HilsGE

17:00 PM, 3rd March 2016, About 7 years ago

Complaint made

Mike T

19:47 PM, 3rd March 2016, About 7 years ago

Complaint submitted.

MoodyMolls

20:42 PM, 3rd March 2016, About 7 years ago

COMPLAINT DONE

Andy Loveday

21:33 PM, 3rd March 2016, About 7 years ago

Complaint on the way.

Gareth Wilson

22:20 PM, 3rd March 2016, About 7 years ago

I have sent them this...

"In blatant contradiction to its role as a public-service broadcaster, at 7:28 and 14:16 on 28th February, the BBC News channel chose to peddle non-substantiated and deliberate Treasury misinformation as established fact. I therefore wish to condemn this disgracefully concocted piece of anti-landlord propaganda in the fullest possible terms. (source: http://www.bbc.co.uk/news/business-35681874)

The reasons for my complaint are as follows:

1) Throughout the report Joe Lynam made repeated unqualified reference to landlords being in receipt of “generous tax allowances” from the Government, despite this claim being absolutely false.

Landlords do not receive any such generous tax allowances from the Government. They receive exactly the same allowances as every other enterprise in the country. As of April 2017 individual landlords will start to be deprived of this completely standard business allowance: that of deducting business expenses to be taxed on actual profits! This move will not constitute the phasing out of a generous tax allowance, as Mr Lynam fraudulently asserted on the Treasury’s behalf. It will in reality be an unprecedented levy upon business outgoings, as well as a completely unfair and discriminatory tax upon individual landlords.

2) The BBC provided a platform for a commercial associate of Property Partner, within a highly deceptive, yet license-fee-funded, News feature.

During the piece, Mr Lynam interviewed the landlord Jaye Cook, who said he would have to sell his entire portfolio when the early repayment penalty periods on his mortgages end. Upon being asked if he thought loads of other BTL “investors” would be doing the same, he said “Absolutely. I think it’s become a much less attractive investment and people can’t afford a loss every month.” Mr Cook did not pass comment on the tax change responsible for this situation, let alone complain about it.

INSTEAD, after making similar claims in an article for the Telegraph (http://www.telegraph.co.uk/personal-banking/mortgages/the-governments-buy-to-let-tax-changes-mean-i-will-have-to-sell/), Jaye Cook went on to reveal his real role in this sordid BBC News mummers’ farce. The day after the piece’s broadcast he publically promoted the property investment platform Property Partner, stating “Once my fixed rates on some of the properties come to an end, I’m thinking of selling and reinvesting in Property Partner. I’ve already remortgaged some of my properties and invested hundreds of thousands through the platform” (http://www.propertyreporter.co.uk/landlords/rate-rise-could-force-landlords-into-debt-by-2020.html). This echoed a similar statement made regarding himself by the Daily Mail that “Mr Cook says he will put money in crowd-funded schemes such as Property Partner, in which he has invested £200,000” (http://www.dailymail.co.uk/news/article-3334304/Huge-stamp-duty-rises-rental-properties-second-homes-set-kill-booming-market.html).

Evidently, the welfare of landlords and tenants were not Jaye Cook’s primary motivations for participating in this and numerous other media productions.

3) Baseless, non-substantiated claims by Generation Rent concerning the rental sector were presented within the report as factual rebuttals to the issues raised. Once again, the piece was actively propagating spin, misinformation and bias.

During the feature’s concluding stages Betsy Dillner, of Generation Rent, spun the following lies to camera “These tax incentives have pushed a lot of amateur landlords into the market and removing these incentives will professionalise landlords and make way for FTB’s which may have been pushed out of the market because of these tax incentives pushing up prices.”

Landlords have not been pushed into the market due to so-called “tax incentives” that the Treasury happen to also be targeting. Landlords, and rental supply as a whole, have increased in number due to market forces. Simply put, as the British workforce has become more transitory, as immigration has become more commonplace, as the affordability of buying a home has decreased, and therefore as DEMAND for rental accommodation has risen, so too has the supply of rental providers.

Equally ridiculous was Betsy Dillner’s explanation for rising house prices. House prices have not been pushed up by non-existent tax incentives: they too are the product of market forces. They are the outcome of housing supply increasing at a slower rate than population growth.

IN SHORT…

The BBC has acted as a mouthpiece for the Treasury and a promotional tool for Property Partner. In the course of doing so it has promulgated misinformation and distracted its viewers from an issue of dire consequence for millions of people.

The BBC must end this and all similar pro-Government PR with immediate effect. It needs to focus upon the very real and serious issues facing the United Kingdom private rented sector: that of millions of tenants throughout the country becoming subject to rent hikes and evictions as a direct result of Clause 24 – the change in tax policy which Joe Lynam’s report was supposed to be investigating!"

Dr Rosalind Beck

22:26 PM, 3rd March 2016, About 7 years ago

Reply to the comment left by "Gareth Wilson" at "03/03/2016 - 22:20":

Excellent, Gareth. Extremely well-written as usual. Let's see what kind of responses we get apart from the automated ones.

Mick Roberts View Profile

7:04 AM, 4th March 2016, About 7 years ago

Reply to the comment left by "Appalled Landlord" at "03/03/2016 - 16:39":

I haven't no, sorry. I do like a complain normally to get things changed, but got lots on elsewhere at moment that's taking my priorities.

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