Keeping the momentum going against Section 24

Keeping the momentum going against Section 24

9:29 AM, 13th December 2016, About 6 years ago 61

Text Size

I have decided to adopt a policy of making myself a complete pain in the backside and try to create as much noise around this subject as possible. Not sure it will work but it’s better than sitting around waiting for the inevitable.momentum

I have written to my local MP Caroline Dineage and have received the following response. I was wondering if anybody, who knows more about the subject than I do, could help me to fashion my next response to what I consider to be a bog standard misinformed piece of nonsense. I would like to go back with as much fact as possible to argue against each of her points. I can do the research and thinking on my own but 10,000 heads are better than one and wondered if anybody had any ideas or information that dispels the figures/information she is quoting?

I have also written to each member of the select committee on housing which met last week and will be responding to what I strongly suspect will be a very similar email reply from each of them:

“Thank you for your e-mail. I am very sorry for my error in sending a response to you regarding letting agent fees rather than mortgage interest relief. I have been receiving a great deal of correspondence on these two issues and inadvertently confused your e-mail with another.

As a former business-owner myself, I am passionate about helping small businesses thrive and fully appreciate your concerns about this policy proposal for the viability of your business.

The reason for these reforms is that the Government feels that the interests of the professional rented sector need to be balanced against the wider interests of the economy, including home ownership rates, a fairer tax system and mitigating against any future risks.

The current tax system supports landlords over and above ordinary homeowners, with tax relief particularly benefiting wealthier landlords with larger incomes. Every £1 of finance cost they incur allows them to pay 40p or 45p less tax.

The Changes to Mortgage Interest Relief do not tax landlords on turnover as opposed to profit. Rather, they remove mortgage interest from what is qualified as ‘allowable expenses’. I think it is important to note that maintenance and repairs, along with agents’ fees, legal fees, insurance, utilities, and service charges, are all still ‘allowable expenses’ and thus still tax deductible.

I appreciate you feel this could cause many private rental businesses to fold, but I would stress that less than 1 in 5 individual landlords are expected to pay more tax as a result of the restriction to Mortgage Tax Relief. Furthermore, I would assure you that this change is being introduced gradually from April 2017 over 4 years, giving landlords time to plan for and adjust to these changes.

While I appreciate you might find this response disappointing, I hope it goes some way to explaining the Government rationale on this issue.

Thank you once again for taking the time to write to me on this important issue.

Kind regards
Caroline”

Any guidance, info, statistics, quotes, etc. to make it harder to argue against us would be very much appreciated.

Regards

Pam



Comments

Chris @ Possession Friend

20:54 PM, 14th December 2016, About 6 years ago

Reply to the comment left by "Pamela Potter" at "14/12/2016 - 08:39":

I'm going to get all my Tenants email addresses and ( bcc ) them the Change petition
How does everyone think that idea may go down ?

JBourne PAINE

21:23 PM, 14th December 2016, About 6 years ago

Hello.

I am a small Landlord in London and I wish I could section 24 would be reversed. I think that wishing or pushing for the changes to the new landlord taxes are fantasy on the part on Landlords. I will probably still make a profit when the section 24 is fully implemented but I will be paying a lot more tax.
I think government tax receipts from 'smaller' Landlords was not great because we are able to claim mortgage interest relief, wear and tear allowance etc.. So while we are making a profits and some landlords earning a decent living the government was not getting much in return. Section 24 and abolishing wear and tear allowance will significantly increase taxes they receive from landlords. So why should the change that?!
The increase in stamp duty relief for investors is also an attempt to make it easier for renters, young people to buy their own home. I have a home and several flats in North London. Although I feel I have provided a service and a good one at that to my tenants I do feel a little guilty. Why do we as landlords need to own 5, 10 or 50 homes when some young people cannot afford one!.

I have sold one flat in March and trying to sell another one In before the end of the next financial year. As much as I don't agree with the financial principles of section 24 I understand the motives of the government and to be fair they have given us a chance to prepare for it in 2020, I have accepted it and I think other Landlords should do so and plan accordingly.

Jennifer Aniston

21:27 PM, 14th December 2016, About 6 years ago

Hi Chris

I have been a bit selective about which of my tenants I tell. But the ones I have told have signed the petition and have promised to pass it on to friends who are also renting. I'm not sure if the response so far is good or not, if it keeps up this pace then it'll be amazing. Not got much experience with campaigns so not sure what to expect. But I'm specifically tweeting the comments from tenants on to Hammond, May (not Clarkson!), Rudd, Corby, Abbott, Farron, and a few of the media people like Jeremy Vine in the hope that they'll pick it up and debate it.

Back to the subject of tenants, however, I have some tenants that are vulnerable in a variety of ways and I have decided that I'll delay speaking to them until after Christmas, which means I'll also have a better idea of what I'm doing by then (selling or increasing) - still don't know yet. No point worrying them needlessly but I am absolutely dreading it. My tenants are all cracking people and really do not deserve this. Makes me so sad.

Pam

Rachel Hodge

22:03 PM, 14th December 2016, About 6 years ago

Reply to the comment left by "Chris Daniel" at "14/12/2016 - 20:54":

Rightly or wrongly, I won't be emailing this to my tenants yet, as I don't want to worry them. I won't have any choice but to speak to them about it in time, but not until I've tried all I can to stop it.

I am meeting my MP on Friday. He's a former Housing Minister, so should have some idea of the issues facing the sector. James Fraser is coming with me too, so I'm hopeful it may contribute a little to the mass movement against S24!

Rachel Hodge

22:15 PM, 14th December 2016, About 6 years ago

Reply to the comment left by "Rachel Hodge" at "14/12/2016 - 22:03":

One of my aunt's cousins has just shared the petition on FB with a note that she has one rental property which she may have to sell due to this tax. I had no idea she was a LL.

Hopefully this petition will widen the net. Well done Pam, it's so well written.

Rachel Hodge

23:28 PM, 14th December 2016, About 6 years ago

Reply to the comment left by "JBourne PAINE" at "14/12/2016 - 21:23":

Why do you think incorporated LLs are exempt from this? Is it because maybe they don't really care about the advantages they've been given over OOs and FTBs, and don't feel guilty in any way at all about being able to deduct finance costs from profits before calculating tax, as any other business would?

Let me put that another way, as I want to make my point clear. If this tax is in some way defendable and fair, why does it not apply to corporate LLs? I mean, that would really level the playing fields, where as now it doesn't at all.

Simon Griffith

7:57 AM, 15th December 2016, About 6 years ago

JBourne PAINE. No need to feel guilty. Let the maths assuage any guilt. You could sell all your properties and all leveraged landlords could do the same. Using the goverment's own figure of 1 in 5 that would mean say 400,000 homes then available to FTB, in theory. 350,000 net immigration each year, relationship split ups, older population etc all increasing demand and with pitiful new builds making little impact on supply. Even in the extreme where they all sold at the same time and assuming unaffected landlords (corporate/unleveraged) did not buy there would not be a significant impact on prices and so really and truly a significant number of FTB will not benefit. (it's not just about house prices and housing availability - mortgage finance availablility has a big role to play in the problem.) In the meantime and crucially you will have stopped providing homes to rent for immigrants, relationship break ups, new couples, youngster starting off, mobile workforce, lifestyle choice, poor, ill, disabled, students etc all of whom either choose to rent or are so far removed from ever being able to afford a house they have to rent and possibly always will. You make them homeless to favour FTB. The helping FTB spin is a crowd pleaser -disingenuous at worst and mathematically incorrect at best. The guilt free solution is to really get stuck in and build a lot more property both to rent and sell - not effectively rob peter (tenant) to pay paul (FTB) because it doesn't work anway and in the process you make peter tenant homeless and then having to pay increased rent elsewhere(supply of rented falls - madness.

terry sullivan

7:57 AM, 15th December 2016, About 6 years ago

Reply to the comment left by "JBourne PAINE" at "14/12/2016 - 21:23":

to jbourne paine i have to say i cannot understand why you are part of PRS--perhaps a non-job with shelter would be more appropriate

ps you are not a troll perhaps?

Jennifer Aniston

8:58 AM, 15th December 2016, About 6 years ago

Reply to the comment left by "Rachel Hodge" at "14/12/2016 - 22:03":

Good luck Rachel, let us know how you get on!

Pam

Gary Dully

13:56 PM, 15th December 2016, About 6 years ago

Reply to the comment left by "JBourne PAINE" at "14/12/2016 - 21:23":

Well JBourne,

I respect your point of view, it is plain to see that you assume that you have taken advantage of people who didn't buy a property at the same time that you did, for the same price or less.

I however was encouraged at the time to view BTL as a business that would supply homes for people to rent, at a profit, so that I could make a living wage.

Gain by doing this service would be simply taxed at a later date by capital gains tax and any profit derived will be taxed via income tax.

I feel no guilt concerning providing this service despite the fact that landlords are demonised currently as a scapegoat for politicians not providing sufficient housing stock for the purposes of renting to people or buying.

Your logic would require me to farm my own food, refine my own fuel, diagnose and treat my own illnesses etc.

But I don't, I rely on other people to provide a service, which I pay for.

The same applies to the housing market I pay for both my personal mortgage which I object to from time to time especially when the interest rates increase and I also pay business mortgages in the form of buy to let mortgages.

Section 24 is simply discrimination based upon someone's occupation and is no longer based upon profits earned.

It is based on grudge politics, short and sweet.

I don't think I have a single tenant who is in a position to buy their own property at this current time and more likely wouldn't be in a position, if I offered to sell then the property that they are currently living in.

Which means that there is simply a demand for rental properties that I am fulfilling.

George Osborne described section 24 as a special measure which really means it's discrimination but with a nicer name.

Give me the same tax breaks as any other business and I wouldn't be complaining.

Leave Comments

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

or

Don't have an account? Sign Up

Landlord Tax Planning Book Now