Landlord email to Scottish MPMake Text Bigger
This week a landlord based in Scotland very kindly bcc’d me into an email he sent to his MP. I felt it was well worth sharing on the basis that it may inspire YOU to educate YOUR MP by writing a similar letter to him/her. Naturally, I have redacted personal details for the purposes of confidentiality.
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The email …..
Further to my email to you on 25 July 2016 regarding the issue of property taxes, I thought it might be useful to let you know the action that I will take to mitigate the impact of the Government’s tax changes.
Firstly, I will pass on the additional costs to my customers (ie. my tenants). As previously stated, I have three properties in your constituency. The current rents are £360 (one bedroom flat in *******), £495 (2 bedroom flat in *******) and £875 (four bedroom house in *******). I have calculated that I will need to increase rents by at least 3% per annum over the next four years in order to pass on my additional costs to my customers. By 2021/22, when the full impact of the Government’s restriction on finance cost relief is fully implemented, my rents will have increased to £405, £557 and £957 respectively. This action is not because I am a greedy landlord. It is a necessary response to Government policy. Such action will have a detrimental impact on tenants’ finances. For those who may aspire to become first time buyers, having to pay increased rent will make it more difficult for them to save for a deposit.
Five of the properties in my portfolio were purchased as new build properties directly from house builders. Such action by me as a landlord increased the overall housing supply. As a direct consequence of the Government’s tax policies, I will not be buying new build properties again. The overall supply of housing will not grow as quickly as it could because of the Government’s tax policies as other landlords will also stop buying new builds. This is a shame when it is widely acknowledged that there is a shortfall in housing supply and a growing demand for rented accommodation.
Five of my properties are let to tenants in receipt of housing benefit. As you will be aware, providing homes for tenants in receipt of housing benefit comes with some added risk to a landlord because some of the tenants are not very good at managing their finances. My experience is that people in receipt of housing benefits are more likely to be in rent arrears than non-benefit tenants. Regrettably, I have decided that I will no longer rent to tenants in receipt of housing benefit as they will not be able to afford the rent increases that I will need to make. I will also need to reduce my exposure to the risk of tenants not paying their rent because of the much higher tax bills I will face in the future.
Other landlords I know are also planning to stop renting to tenants on housing benefit. The supply of rented accommodation for tenants on housing benefit is likely to decline as a result of the Government’s tax changes. This will in turn increase homelessness in your constituency and put financial pressure on Fife Council who have a statutory duty to deal with people who present as homeless. I have previously written to Fife Council to let them know of the consequences for them of the Government’s tax changes but did not receive a reply. It would be really good if you could contact the Head of Housing at Fife Council to raise awareness of the likely implications for the council.
Several of the houses I have purchased to rent out have been empty and / or in very poor condition. I have invested substantial sums of money to bring these houses up to an acceptable condition, suitable for letting.
The house in ******* is a good example of a property I have improved. This was a two bedroom semi-detached house that was very dated. It was marketed for sale when the previous owner passed away. I obtained a building warrant to convert the attic to provide two additional bedrooms and a new bathroom. The condition of the property was generally upgraded, including a new kitchen and new central heating. The total cost of the work was £60,000. This investment not only improved the condition of the property, it created work for local tradesmen. As a result of the Government’s tax changes, I do not plan to purchase any more properties like this to let out. The type of houses I typically buy are not those sought by first time buyers who usually do not have sufficient funds to refurbish properties that are in a serious state of disrepair.
I recently wrote to all of my tenants who are not in receipt of housing benefit to find out if they would be interested in purchasing the property they currently rent from me. Not one said they were in a position to do so. Some are EU migrants and do not qualify for a mortgage as they have not lived in the country for 3 years; several said they did not have enough funds for a deposit; some said they did not want the responsibility of home ownership; one said that his job was not secure so he did not want to commit to home ownership. Where will people like this live if many landlords are forced to sell up as a result of the Government’s tax changes?
I hope these comments help you understand the problems that are likely to be caused by the Government’s absurd approach to property taxation.
Would it be possible to meet with you to discuss my concerns?
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