End ‘Tax Breaks’ for landlords says Tory think-tank!

by Property 118

14:37 PM, 25th June 2018
About 3 months ago

End ‘Tax Breaks’ for landlords says Tory think-tank!

Make Text Bigger
End ‘Tax Breaks’ for landlords says Tory think-tank!

Tory MP Neil O’Brien, former aide to George Osborne and Theresa May at No. 10, has produced the first report for radical new Conservative think-tank ‘Onward’ called Green, Pleasant and Affordable. Click here to read the full report.

In this report O’Brien attacks landlords blaming them for pricing younger people out of the housing market. He calls for ending tax breaks for Buy to Let and private landlords with a stronger role for local councils  including reform of the planning system and powers to limit foreign ownership.

O’Brien goes on to claim that the UK is one of the cheapest countries to invest in residential property and draws the link of reduced supply to the home owner market and increasing prices.

O’Brien told the Guardian: ““We need to change the balance between the rented sector and home ownership. We should protect existing landlords but discourage more people from investing in rental property, because the Buy to Let boom has bid up prices and reduced home ownership among younger people.”

At least he does curtain his hostile report by at at least admitting existing landlords should be protected, which flies in the face of exactly what Section 24 mortgage interest relief restrictions did.

The Sun was also told: “”If we’d kept the balance between rented and owner-occupied properties the same since 2000 we’d now have over two million more families owning their own home.”

In the report solutions to the housing crisis included:

  • The government building half a million new flats and houses for workers aged under 40, with hefty discounts of up to a fifth off market value
  • Greater security for renters with tenancies of up to ten years
  • Half a million new Government backed ‘stepladder loans’ to help young people overcome the hurdle of paying a house deposit

It’s the fundamental notion that there are in some way ‘Tax Breaks’ that need to be withdrawn that will confuse landlords the most. Exactly what tax breaks Mr O’Brien?

Onward describes itself as:

“A powerful ideas factory for centre-right thinkers and leaders. We exist to make Britain fairer, more prosperous and more united, by generating a new wave of modernising ideas and a fresh kind of politics that reaches out to new groups of people.

We believe in a mainstream conservatism – one that recognises the value of markets and supports the good that government can do, is unapologetic about standing up to vested interests, and assiduous in supporting the hardworking, aspirational and those left behind. Our goal is to address the needs of the whole country: young as well as old; urban as well as rural; and for all parts of the UK – particularly places that feel neglected or ignored in Westminster.

We will achieve this by developing practical policies that work. Our team has worked both at a high level in government and for successful think tanks. We know how to produce big ideas that resonate with policymakers, the media and the public. We will engage ordinary people across the country and work with them to make our ideas a reality.”

The full report recommendations are:

  1. “Britain should move away from piecemeal, sequential development tacked onto existing villages and towns. Give councils new Compulsory Purchase Order (CPO) powers and borrowing capacity so they can buy land and put more development into planned new villages, towns and cities. Require councils to plan infrastructure on the basis of cumulative impacts, not just individual applications.
  2. Tilt policy towards building more in our cities. Revise up housing need figures for the centres for our cities and give cities new powers, including over transport, to enable densification. Extend the powers and resources of Homes England as a regeneration agency, including to support town centre regeneration. Liberalise rules on building upward. Support the growth of other parts of the economy by rebalancing capital spending away from London.
  3. Central government should play a direct role: creating a new generation of garden cities, supporting more integrated planning for transport and housing, and merging the Department for Transport with the housing and planning functions of the Ministry of Housing, Communities and Local Government.
  4. Give councils borrowing power to buy land and grant themselves planning permission, to enable councils to capture more of the gains from development. Reform the 1961 Land Compensation Act to clarify that local and central government can purchase land at current market use values, not inflated or speculative “hope” values. Reform Section 106 to relax constraints on what councils can charge.
  5. Abolish central government controls which direct how Section 106 receipts are spent. Revise guidance so that more of captured planning gains can be spent on initiatives of direct benefit to existing residents –landscaping, payments for disruption for neighbours, and new community facilities. Build discounted housing with priority for young people with families in the immediate vicinity of development. Prioritise these neighbourhood benefits rather than social housing or other initiatives aimed at the local authority as a whole.
  6. Boost competition to end the UK’s broken model of development and the dominance of vertically integrated ‘developers’ who focus on land assembly. Bring small builders back into the market by requiring some plots on all large new sites to be available to SME builders. Require all options on land to be centrally registered to be valid, revealing who controls what land.
  7. Create incentives to plan for the long term. Where councils are meeting the new Delivery Test, give them more powers to control development, including making views and landscapes enjoyed by existing residents a legally-allowed planning consideration for the first time. Create a category of ‘Outstanding’ local authorities with adopted long-term (10–15 year) plans and make these authorities exempt from rulings from the Planning Inspectorate as long as they continue to meet their plans. Reboot neighbourhood plans by making them more powerful and quicker to create. Prevent developers pre-empting plans by giving more legal weight to emerging plans.
  8. Reform property taxation to limit demand for housing and land as speculative assets. Divert new housing supply to owner occupation. Cut other taxes to encourage investment into businesses and more productive assets. On a grandfathered basis, end loopholes within the Capital Gains Tax (CGT) exemption for the primary residence and reform mortgage interest relief for landlords. In areas where affordability is worst, give councils powers to limit overseas purchases of new homes.
  9. Reset inflation expectations by setting a long-term target to increase affordability, backed up by a new taskforce between HM Treasury and the Bank of England with explicit powers to dampen price inflation.
  10. Create Homes for Younger People (HYP) – a programme to help one million younger households over the next decade – half by helping with deposits for 500,000 new build homes, half by building 500,000 new discounted rental properties for young working people. Fund it through capturing more planning gain and by transferring the remaining local authority housing stock to housing associations.”


Comments

Sami Houmrani

17:52 PM, 25th June 2018
About 3 months ago

Buy-to-let returns unlikely to improve anytime soon, any rise in the stock of privately rented dwellings is likely to come from the build-to-rent sector, not buy-to-let or social housing.

Monty Bodkin

19:38 PM, 25th June 2018
About 3 months ago

"any rise in the stock of privately rented dwellings is likely to come from the build-to-rent sector"

You've fell for the propaganda there Sam.

The build-to-rent sector is a tiny proportion of the market with little sign of getting bigger anytime soon.

Maybe that is the plan? Tax and legislate private landlords out of business, drive up rents, then bung billions to the corporates to 'fix' the problem they have created.

AA

19:50 PM, 25th June 2018
About 3 months ago

Another populist attention seeking space cadet. Apparently a member of an organisation based just left off one of Jupiter s moons. They should have added in their encore people being free from famine, disease and war. As much as I would wish the aforementioned every point is fundamentally either economically or politically flawed.

Monty Bodkin

19:55 PM, 25th June 2018
About 3 months ago

Reply to the comment left by Sami Houmrani at 25/06/2018 - 17:52
"Buy-to-let returns unlikely to improve anytime soon"

I don't think so, rents are going to go through the roof in the next 5 years.
That will be the next round of landlord bashing headlines;

"Greedy Landlords! Sky-high Rents! Soaring Homelessness!Rachman Returns!

It won't happen overnight, the rental market moves with glacial slowness, but once it starts moving...

Sami Houmrani

22:25 PM, 25th June 2018
About 3 months ago

Reply to the comment left by Monty Bodkin at 25/06/2018 - 19:55
landlords will be directly impacted by the change. With many more unaware of the effect that the Chancellor’s policy will have on their future business opportunities.

I believe that a significant volume of landlords will be forced to sell property, 26 per cent of landlords surveyed recently stated they would have to sell some properties and 5 per cent are already planning to exit the sector completely.

Sami Houmrani

22:53 PM, 25th June 2018
About 3 months ago

Reply to the comment left by Monty Bodkin at 25/06/2018 - 19:38
“The build-to-rent sector is a tiny proportion of the market with little sign of getting bigger anytime soon.”

Build - to - rent its first growing sector in Apr 2018 · More than £2bn was invested in purpose-built rental flats last year. This is likely to remove upwards of 615,000 units of rented accommodation from the private rented sector – as a direct consequence of Mr Osborne’s decision – at a time when the Government is committed to increasing supply to meet demand.

Sami Houmrani

0:52 AM, 26th June 2018
About 3 months ago

Reply to the comment left by Monty Bodkin at 25/06/2018 - 19:38
“Maybe that is the plan? Tax and legislate private landlords out of business, drive up rents, then bung billions to the corporates to 'fix' the problem they have created.”

I believe that it is deliberate Tory policy to impoverish the vast majority of the population.
Any way the ordinary hard working person has of investing for the future has been sabotaged, and young ambitious people are saddled with student debt which will take them years to repay if at all.

Small landlords are now being squeezed out of the market, and private buyers now have to put up enormous deposits, a crash in house prices is now inevitable and large corporations and hedge funds are now waiting like vultures.

Monty Bodkin

8:17 AM, 26th June 2018
About 3 months ago

Reply to the comment left by Sami Houmrani at 25/06/2018 - 22:53
"Build - to - rent its first growing sector in Apr 2018 · More than £2bn was invested in purpose-built rental flats last year. "

£2bn a year sounds mighty impressive
-until you look at it as a proportion of the whole market;

http://www.propertyreporter.co.uk/finance/btl-investment-at-all-time-low.html

The Council of Mortgage Lenders said lending in March was £21.4bn, down 19% on the year before almost entirely due to landlords withdrawing from the market.

Corporate landlords aren't going to fill the gap anytime soon, if ever.

AA

9:40 AM, 26th June 2018
About 3 months ago

Reply to the comment left by Monty Bodkin at 26/06/2018 - 08:17
And they are not up to the job. Whereas private landlords invest heavily in time and effort in service delivery relating to tenancies I cannot envisage private companies doing this at competitive rents.

Tobias Nightingale

22:11 PM, 26th June 2018
About 3 months ago

Reply to the comment left by AA at 26/06/2018 - 09:40
Plus from what I have read around 1/2 of the build to rents are being built/built in London so the demand up and down the country is ignored. Plus a bbc article a while ago suggested history may repeat it self with the big boys thinking again about investing given the chances of corbyn.

1 2

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Help calculating rents?

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More