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

Mandy Thomson

7:13 AM, 4th March 2016, About 7 years ago

I have just left the following complaint:

"At about 1 minute, 37 seconds into the Buy-to-let investors 'could face losses' web excerpt, Joe Lynam describes how landlords will lose a "tax advantage" which I do not understand, as landlords have never been given any such advantage.

HMRC currently treats private landlords as investors, but in fact landlords are running a business, which is far from hands off and free from responsibility. All other self employed business people are allowed to offset the costs of their business borrowing against their income tax, regardless of turnover, why should landlords be treated differently?

As for the assertion that with less property owned and bought by private landlords there will be more for first time buyers, FTBs have several advantages nowadays that previous generations did not, namely low interest rates, Help to Buy and 5% deposits, and yet many are still unable or unwilling to buy. It is not so much the PRICE of property that determines entry onto the property ladder, it is other barriers. For example, when I first started working, although I could have easily paid a mortgage, the cheapest property was still out of my reach as your salary had to be at least a third of the total borrowed. Very high interest rates also meant the total borrowed and monthly repayments were higher, keeping mortgages out of reach.

Although property was very cheap in the 1970s, my parents were unable to get a mortgage as there were many more barriers to borrowing. They started married life, with a small baby in one grotty room where they cooked, ate, washed and slept. My father had always worked long hours in a good job.

Almost everyone I know who owns property did not get on the ladder without some sacrifice and/or difficulty regardless of when they bought.."

Appalled Landlord

11:46 AM, 4th March 2016, About 7 years ago

I thought rogue landlords were in the minority, but at 10.52 today on Sky News, Richard Meier, chairman of the grandly named Urban Land Institute Residential Council, alluded to the majority of landlords as rogues.

Meier was on the air to announce the publication of its guide. He described how the rental accommodation that will be provided by institutions will be purpose-built for long-term rental, providing professional service.

He continued, with a grin, “It’s a very different piece to your rogue landlord, your buy-to-let landlord, who owns one or two properties”.

The interviewer, Samantha Washington said “It sounds good.”

The vast majority of landlords own one or two properties - and have just been slandered.

It may be repeated during the rest of the day.

This is the second TV broadcast in a week that was biased against BTL landlords, and propagated misinformation about them, featuring someone with a vested interest in an alternative to them.

I wonder if Osborne and Gauke’s Treasury of Misinformation is co-ordinating this campaign against us

Gareth Wilson

12:07 PM, 4th March 2016, About 7 years ago

Reply to the comment left by "Appalled Landlord" at "04/03/2016 - 11:46":

http://news.sky.com/info/contact-us

This would not surprise me one bit: demonising the competition through the media as a means to seize the market themselves.

Their uncompromising, bureaucratic oligopolies will set rents to achieve maximum profit and be the biggest rip-off artists in the private rental sector.

Appalled Landlord

12:23 PM, 4th March 2016, About 7 years ago

Reply to the comment left by "Gareth Wilson" at "04/03/2016 - 12:07":

Hi Gareth

Sky do not seem to have a procedure for complaints. I suppose it would just encourage people to complain. Be quiet and believe in better.

Transcripts of broadcasts are available – to journalists only.

Mark Shine

15:11 PM, 4th March 2016, About 7 years ago

Reply to the comment left by "Appalled Landlord" at "04/03/2016 - 11:46":

Looks like someone’s put it on You Tube.
http://www.youtube.com/channel/UCvrS0QHZuq-h_ZSknXq33ew

Mandy Thomson

15:44 PM, 4th March 2016, About 7 years ago

I've just left a comment on You Tube. Mark (Alexander) has close ties with some really good barristers - perhaps it's time we landlords start taking some class actions for defamation?

Dr Rosalind Beck

16:19 PM, 4th March 2016, About 7 years ago

Reply to the comment left by "Mandy Thomson" at "04/03/2016 - 15:44":

Yes, we could get Devine for his 'snivelling parasites' comment as well. There will also be loads of examples in Parliament, but I think they're allowed to say what they like - parliamentary privilege. But maybe we could get the bastards when they make the comments outside of those hallowed walls. Journalists as well could be in for it.

Appalled Landlord

17:05 PM, 4th March 2016, About 7 years ago

Reply to the comment left by "Mandy Thomson" at "04/03/2016 - 15:44":

Hi Mandy

Richard Meier is a partner in Argent (Property Development) Services LLP: http://www.argentllp.co.uk/the-partners

They are “People who make places for people.”

Gareth Wilson

17:18 PM, 4th March 2016, About 7 years ago

It gets better my friends...

"Michael and Clara Freeman: Mr Freeman is the co-founder of property developers Argent Group plc, while Mrs Freeman is a former director of Marks and Spencer. Both have their own charitable trust. Mr Freeman has donated £457,900 to the [Conservative] party since June 2006."
(http://www.bbc.co.uk/news/uk-politics-17512814)

Mandy Thomson

21:45 PM, 4th March 2016, About 7 years ago

We small landlords really are sitting ducks. Most of us are just ordinary people on low - medium incomes, working in isolation, with no union (not that I'm pro union, but they have their place) and only a few industry bodies such as the NLA and RLA who represent just a small proportion of landlords and as such have little influence on those outside the industry.

For this reason, the media and politicians are free to simply invent their own narrative and use us as a convenient scapegoat for the housing crisis.

I don't think Devine's remarks could be said to be defamatory, as the remarks weren't made publicly, but maybe bullying, depending on the full context, but Meier's remark, or more likely, the TV channel that broadcast the footage with that remark left unedited, could well be slanderous, though I'm no expert.

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