Covid-19 Bounce Back loans for property businesses16:06 PM, 5th May 2020
About 4 weeks ago 47
We are pleased to report that week, a member of the House of Lords had the intelligence and nerve to speak out against the anti-landlord ‘tax grab.’ Property118 landlord, Dr Rosalind Beck, has written to him to express our thanks. The extract and letter are below:
In the Lords debate on the Finance Bill, Lord Flight said:
“I have some criticisms of this Bill. To me, there is too much stealth tax in it, and I feel that Gordon Brown would have been rather proud of it. Indeed, it rather smacks of quite a lot of the type of thing that he used to get up to. Hidden within it, the middle classes, whom I still stand up for, are having their tax bills increased by something approaching £20 billion, but in a way that the Government hope they will not realise………………….”
“Even on buy to let there is a misunderstanding. Before pensions, people used to buy one or two houses, if they could, and let them out. That was their source of income in old age. Those were the people who owned and financed a lot of the Victorian terraces all over south Wales, as well as London. The generation now in their 40s has often gone down the route of buying houses to let rather than using pension schemes—for rather good reasons, because as an asset, houses have performed better. The only tax incentive for that has been the ability to off-set interest. I am not sure how wise these measures will be. Without buy to let, lots of people would have had nowhere to live in the past few years. I certainly do not agree with retrospective taxation. We can change the tax laws for new purchases, but it is unwise to change tax arrangements retrospectively. I can just see what will happen: a time will come when inflation and interest rates rise, and the housing market goes down. Then there will be problems.”
The letter sent to him:
‘Dear Lord Flight.
I would like to express my appreciation to you for the comments you made with reference to Clause 24 of the Finance Bill this week. You are that rare person in Parliament who has seen this abhorrent measure for what it is.
As a private landlord I have been in a state of shock since the announcement, as have all landlords with mortgages who have realised the significance of this. As you say, it is going through Parliament as a kind of stealth tax, with most people speaking nonsense about it; your colleague, Lord Davies of Oldham being a case in point. Because of their constant and fallacious repetition that it will only affect ‘the wealthiest landlords’ an incredible number of landlords whose businesses may be decimated by the measure remain in a state of blissful ignorance about it.
I shall put the link to my open letter to Lord Davies at the bottom of this email, for your information.
As you say, many of us have chosen buy-to-let as an alternative to a pension, and also some of us as the primary, even sole, source of our income. For those of us with portfolios which we run full-time as businesses, and for which we have utilised BTL mortgages to finance the business, to suddenly have our main cost redefined as profit upon which we are to be taxed, is a devastating blow.
As you also point out, it is retrospective and/or retroactive. It is also retrograde; at a time when private rented housing is in massive demand. This will stop new development by private landlords who rely on finance in their tracks.
You also point out how without buy-to-let many people would have had nowhere to live. This is true, with many of us specialising in renovating decrepit housing and old buildings – properties which are often unmortgageable, and also in commissioning new-builds. We now stand accused of somehow stealing these properties from first time buyers, even though many of them would not have existed if we hadn’t created them. The fact that we have done all of this work has massively expanded and improved the private rented sector. It has added to the economy, not taken from it.
You mention making Clause 24 applicable to new purchases only. That of course will still mean a halt to any further expansion; but at least we would not be penalised for all of our hard work over years and sometimes decades, during which we have saved, purchased, developed and maintained critical housing stock for the country and provided an invaluable service to millions of tenants. As you will be aware we can’t just sell up tenanted and mortgaged houses like one would buy and sell shares. Often we are tied in for many years and the financial costs of now trying to extricate ourselves from this as a direct consequence of Government policy will be ruinous for many.
Anyway, I realise I am preaching to the converted, so I shall close by thanking you once more for speaking up against a shameful piece of legislation. If there is any way you can influence others to support any attempt to have this apply to new purchases only we would be forever in your debt.
I shall also post my letter to you as an open letter so that more people will be made aware of your positive contribution to this debate.
Dr Rosalind Beck
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