Is government thinking of disallowing operating costs, and for companies as well?

Is government thinking of disallowing operating costs, and for companies as well?

9:12 AM, 15th March 2018, About 4 years ago 25

Text Size

Two days ago the Ministry of Housing, Communities & Local Government launched a survey “Questionnaire used for the English Private Landlord Survey 2018.”

The Ministry says that landlords and agents who are protecting a deposit in one of the authorised schemes are randomly chosen to participate, and will be written to by the scheme concerned.

Click Here for the questionnaire

It is not just aimed at people who hold property in their own names.  On page 3 it asks:

“Which one of the following best describes how you currently rent out your rental property(ies)? By “rental property” we mean residential property you own and rent out, but do not live in yourself.

(1) As an individual or group of individuals

(2) As part of a company

(3) Other (please specify)”

(These categories are later referred to as LLCat 1 2 & 3.)

I was surprised to see that the questioners are treating gross rents on a par with taxable income.

On pages 29 & 30 it reads:

“{ASK IF RoleTyp = 1}

RtInc (VARLAB: gross rental income)

Thinking about the last 12 months, approximately what was your total gross rental income from your rental property(ies)? (i.e. before tax and deductions, mortgage, letting and other operating costs)

{ASK IF (RoleTyp = 1) and (LLCat = 1 or 2 or 3)}

LlInc (VARLAB: landlord income)

Thinking about the last 12 months, what was {LLCat = 1 or 3: “your”; LLCat = 2 “your organisation’s”} total gross income (i.e. before tax and deductions) excluding income from rental property(ies)?

{Ask if RoleTyp = 1 and RtInc or LLInc = missing}

LLPrpInc (VARLAB: income from rental property)

What percentage of {LLCat1 = 1 or 3: “your”; LLCat1 = 2: “your company’s”} gross income (i.e., before tax and deductions) is rent from rental property?

(1) Nil

(2) 1% to 25%

(3) 26% to 50%

(4) 51% to 75%

(5) 76% to 99%

(6) All or 100%

(7) Don’t know”

RoleTyp 1 is Landlord (as opposed to Letting agent)

(It would appear from the programming instruction that you will only be asked for the above percentage if either of the first two questions is not answered.)

This is very worrying.  Why are they comparing gross rents with taxable income?  This is not just comparing apples with pears, it is comparing apples with pear trees.

Why do they want to know what your total income would be if you were not allowed to deduct the normal costs that all other enterprises in the country deduct?

They want to know how many properties you have, what they are worth and what the loans on them are.  They want to know exactly how much you receive in rent, exactly how much you earn from other sources, but they don’t want to know how much the costs of your property business are.

Is the government thinking of disallowing all operating costs, following propaganda from David Kingman who claimed credit for the introduction of Section 24 – which is already filling Travelodge bedrooms with homeless families?

He recommended that mortgage interest be disallowed in a report for the Intergenerational Foundation in 2013 (shortly after graduating in Geography).  In the same report he uttered the preposterous lie that “Landlords receive a public subsidy worth up to £5 billion in tax relief per year. This is relief that they are able to claim for their business expenses, including the 10% “wear and tear” allowance and interest relief on mortgages.”

£5 billion was the amount that he calculated that landlords would have paid in EXTRA tax IF NO BUSINESS COSTS AT ALL HAD BEEN ALLOWED.

To describe the non-collection of extra tax that would be imposed if landlords were discriminated against as a public subsidy because they weren’t being discriminated against is an abuse of both language and logic.  It was a nonsensical lie, designed to mislead gullible people.

However, it was good enough for Natalie “Brainfade” Bennett of the Green Party who adopted S 24 as policy, and for George “Bolter” Osborne who introduced it.

On page 2 the questionnaire states “If you have any questions about the survey, please feel free to email or telephone 0808 168 1356”

It would be rude not to.

Participation will be by invitation, and presumably will not be compulsory.  It would be a shame if the survey was boycotted due to the intrusive financial questions and the treatment of gross rent as taxable income.  Perhaps better just to leave those questions unanswered?


Tobias Nightingale

11:08 AM, 15th March 2018, About 4 years ago

Given the election result if they depend on labour votes to do this and given labour likes playing politics ie even voting against what was their policy as in the stamp duty reduction for first time buyers. With that i mind i cant believe the many tory mps that are even landlords themselves would vote for it. As with clause 24 they may try and restrict it to basic rate perhaps. I would all bare in mind the energy effience went down to 2500 when it was 5000

terry sullivan

11:52 AM, 15th March 2018, About 4 years ago

many businesses would fold overenite

ps do not respond to q

Ian Narbeth View Profile

12:06 PM, 15th March 2018, About 4 years ago

Can we all calm down? If the data is anonymised then it may actually be a good thing for landlords to provide answers. At least then the Ministry of Housing, Communities & Local Government will have some data. In fact I suspect only the conscientious landlords will complete it.
Only idiots or non-landlords are going to return the survey and answer "No, I haven’t done this" to Have you "Carried out any “Right to Rent” checks on tenants to confirm if they had the legal right to live in the UK", "Provided the tenant with a copy of the government “How to rent” information guide for tenants", "Registered the deposit with a government backed tenancy deposit protection scheme (TDP) if a deposit was taken." and "Ensured a working carbon monoxide alarm was installed in rooms containing a solid fuel burning appliance" and Carried out an annual gas inspection by a qualified inspector for properties where gas is installed"? It is odd to ask people who have registered deposits if they have done so.
If any Property 118 readers are asked to participate I recommend they do so in order that a wholesome picture of the market is given. That said, it is naive of the Minister to ask randomly since the "rogue" landlords who may have registered deposits but are breaching many other rules are unlikely to answer honestly.

Monty Bodkin

12:23 PM, 15th March 2018, About 4 years ago

It seems to me full of loaded questions that will probably be used as ammunition against landlords.
eg; Many landlords responded that they wouldn't let to non-UK passport holders. Therefore we are fully justified in bringing in yet more batshit-crazy regulation to stamp out racist landlords. And introducing another 'level playing field' landlord tax (obvs).
The 'other' answer could be used to advantage though.

Claudio Valentini

13:49 PM, 15th March 2018, About 4 years ago

Nothing would surprise me...
After the introduction of S24 I waited before looking to incorporate. I just felt that this cynical lot would wait for landlords to jump from sole trader to limited company and then tax them again...
I haven’t bought anything for two years now as a result.
We have to remember that as a constituency, rightly or wrongly, landlords are not a loved bunch and in general not many votes will be lost if we are taxed more aggressively.
It would be relatively easy for the treasury to make an amendment to commercial/Limited Company GAAP to exclude a property rental businesses.
So now, if I have £40/£50K to invest, whereas I would previously considered property as a no brainier today I’d have to look at my Pension plans instead, which is precisely what donors to the Tory party like L&G would want, having lost a stack of cash to BTL and in order to restore the investment status quo to what it was like in the days before mainstream BTL really took off.
Watch and wait would be my advice.
Get your LTV ratios down, fix to attractive mortgage rates and then try and ride it out...
If the Tories stay or Labour get in, either way I sense they’re coming for us...

Michael Barnes

14:10 PM, 15th March 2018, About 4 years ago

Reply to the comment left by Claudio Valentini at 15/03/2018 - 13:49
regarding limited company taxation, I think they are already planning 'look through' taxation, which will effectively remove small businesses from company tax laws and apply personal tax laws. That would mean S24 would apply.

Rob Crawford

14:16 PM, 15th March 2018, About 4 years ago

We should not criticise the Gov't if they are asking questions in an attempt to understand the PRS better. However, they will still need help in the analysis of data received. Unless completion of the survey is mandated, I suspect it's too long and respondents will drop out half way through! Assuming they start that is. I am concerned that data will be used as a means to cap rental profit and to identify where best to apply tax charges. Maybe they are also considering a Public sector retained deposit scheme, eliminating the current schemes so that the Government can enjoy the interest owned! There's so much one can read into all of this - maybe it's just a thesis for Joe Boggs PhD!!

Laura Delow

18:45 PM, 15th March 2018, About 4 years ago

It states the questionnaire surveys private landlords and letting agents in England, and collects information about their circumstances, their properties, their tenants, and the possible impact of legislative and policy changes in the sector.
You could take it that this implies how they can further attack the PRS or that they are trying to beware damaging it. I've become very cynical these last 2 years & am leaning towards the former.

Michael Holmes

9:20 AM, 16th March 2018, About 4 years ago

Personally I am always suspicious of Government surveys, even if they get a good response, politics tends to intervene at some stage and the results get skewed in the direction that the Minister in charge of the housing department is contemplating or whoever sat on him at his last interview. Don’t waste your time, better not to feed the tiger at all, they just come back for more otherwise.

NW Landlord

9:17 AM, 17th March 2018, About 4 years ago

I don’t trust any of them anymore after what’s been going on over the last 2 years. Selling quite a bit off over the next few years an I have incorporated. Put a house up for rent through open rent on Monday by Tuesday night I had to take the ad down because I had 60 yes 60 calls. The recurring theme was landlord is selling and this is before the first tax bills. Eventually something will give as this policy is simply unsustainable.

1 2 3

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership


Don't have an account? Sign Up

Landlord Tax Planning Book Now