Conservative peer speaks out against Tory tax grab

by Dr Rosalind Beck

10:47 AM, 12th November 2015
About 3 years ago

Conservative peer speaks out against Tory tax grab

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Conservative peer speaks out against Tory tax grab

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:Lord Flight

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.

Yours sincerely

Dr Rosalind Beck



Comments

eileen grace

19:29 PM, 12th November 2015
About 3 years ago

On a turnover of £82000 a landlord is expected to register for VAT. This does not seem to merit any attention.

I fully understand your deep frustration with these proposals and find that my accountant is not fully grasping the implications, so many people do not fully understand including MPs.

My experience of Siobhan Mc Donough is that she is committed and sincere. Meeting with her may be productive.

Dr Rosalind Beck

19:58 PM, 12th November 2015
About 3 years ago

Reply to the comment left by "eileen grace" at "12/11/2015 - 19:29":

But Eileen, Siobhain McDonagh believes we are immoral. And she used to 'argue with landlords' to get them to house the homeless and then when it went pear-shaped advise them to stick it out - this kind of advice from local authorities and charities costs landlords thousands and means we have to endure stressful court cases through having been kind enough to take a risk with people who do not have the credentials. In fact, I expect a lot of insurance companies wouldn't pay out if people without proper work references etc. set the house on fire or damaged it in any way. And yet she wants us to take those risks, whilst at the same time saying there is a 'moral' distinction between buying a house to live in and buying one to rent out. If someone wants to try and get her to change her mind, face-to-face that would be great. Someone on this site did say they were going to approach her as they are one of her constituents. I suppose I have a paradoxical view - I would like to think I could change someone's mind, but I am also sceptical about the power of people to change their mindsets.

Joe Bloggs

8:45 AM, 14th November 2015
About 3 years ago

EILEEN,

Please explain what you mean ideally with a link as a quick google states:

'If you are only letting out residential property and you only have PAYE income and or investment income you cannot register for VAT.'

Simon Lever

10:14 AM, 14th November 2015
About 3 years ago

Reply to the comment left by "eileen grace" at "12/11/2015 - 19:29":

"On a turnover of £82000 a landlord is expected to register for VAT."

Sorry but this is just plain wrong.

There is no VAT on the letting of land or property, it is exempt from VAT.

For commercial property the exemption for VAT can be waived but for residential property there is no waiving of this exemption.

If you wish to charge VAT on commercial property you do not need to wait for a turnover of £82,000. You can voluntarily register at any level of turnover. One reason for doing this is that the exemption has been waived by a previous owner and in order for you not to pay VAT on the purchase you elect to waive the exemption as well.

Advice should always be taken.

The details about VAT on property can be found in HMRC VAT notice 742

Paul Machin

10:32 AM, 14th November 2015
About 3 years ago

The government really do not see the ramifications of this immoral tax.

I have already started giving notice to some of my tenants as I will go bankrupt if I do not reduce the size of my portfolio by 2020.

It is breaking my heart that I am giving notice to single mums and small families that have made my small houses and flats their home for many years purely because of a nonsensical tax. They are devastated, upset and worried.They don't understand why I am selling their home if I don't want to. What do you say to them?

To make matters worse there are not replacement properties for them to rent on the market. Why because over the years countless governments have let the nation down by not ensuring more properties are built as we welcome inhabitants from overseas and our population grows.

Should any properties become available in my areas for rental they are available at £75-£100 per month more than I rent out my properties and they are snapped up.

Housing benefit will not cover the higher rental rates, which means my small families cannot take on these rarely available properties and no one knows where these families will be going when they have to leave.
I guess the local council will be picking up the tab somehow.

If other landlords are doing the same and I know those who are, this government is starting to build up a social catastrophe.

When will someone in the treasury see sense on this. It is going to cost our country a lot more by 2020 when all Landlords become aware of their tax position and rapidly leave the business and yes Mr Osborne it is a business.

I have voted conservative all my life. I trusted them to be business savvy. What a fool I have been.


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