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15:37 PM, 21st July 2016, About 8 years ago 54
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Dear Mr Hammond,
Upon her welcome ascension to the role of Prime Minister, Mrs May verbally committed the Government to act on behalf of the striving workers of Britain, rather than exclusively for the benefit of those at the top of society. It is therefore in this light, that I feel I must bring the following matter to your attention.
I am one of the many private landlords operating outside of the property hotspot of London. Throughout most of the country outside London rents have remained static, rising nationally at a rate lower than overall inflation. However, the trend with myself and among landlords that I know has been to charge the same rents year-on-year; the aims of this being to cover mortgage outgoings and other costs while insulating our tenants from disruption and hardship. In other words, just to let things “tick over”. It was for this purpose last summer that I re-mortgaged all of my properties: to prevent my rents from increasing (rents paid by hardworking strivers) I re-mortgaged to stop my mortgage outgoings from doing likewise.
Unfortunately, thanks to your predecessor George Osborne pulling the rug out from beneath myself and other formerly Conservative voting landlords (and by definition also our tenants), this effort appears to have been for nothing. Section 24 of the Finance Act 2015/16 will, with each year that passes until 2021, remove our ability to offset mortgage outgoings (our main cost) against tax. The affect of this will be to repeatedly and significantly rachet-up the amount of tax that we pay by reclassifying increasing proportions of a genuine business expense as fictitious profit. This is an utterly unprecedented and frankly dishonest method of increasing tax revenue. It is one of the policies, pushed through without proper consultation by the Treasury and absent from the Party’s manifesto, which caused George Osborne’s reputation among the Party’s grassroots to bomb through the floor and for his departure from the role of Chancellor to be greeted among them with such glee.
Within a year of the Conservatives’ election victory, Treasury policy has been pushing significant numbers of people to have voted Conservative not to do so again. This year’s local elections were the first time in my life that I chose not to vote Conservative: such was my discontent with George Osborne’s activity and the prospect of him potentially leading the Party in future. Every landlord that I know, who was aware of Section 24, also did the same. Through this policy, Mr Osborne also enlarged his reputation for granting favours to corporate vested interests: the reality of Section 24 is that contrary to previous official spin, the wealthiest cash-buying and corporate landlords (many of whom are prominent Conservative party donors) are completely protected from its implications. When subsequently, during his Autumn statement, the then Chancellor quite cockily responded to criticism of this unfairness with a targeted stamp duty hike upon smaller rental providers, he’d truly passed the point of no return… demonstrating the same punitive impulse as which would later drive his ill-famed “Punishment Budget”.
Of far greater importance however are the implications of Section 24 upon the hardworking strivers who Mrs May has pledged to stand up for. Because the projected higher tax bills calculated from fictitious profit will in many cases exceed today’s rents once added to mortgage outgoings, many landlords have no choice but to increase rents. Indeed, those aware of Section 24 have already begun to do so. This is why Section 24 has been dubbed “The Tenant Tax”. Thanks to your predecessor, the country is beginning to experience entirely tax-driven rent increases. This is bad for working Britons and their corresponding ability to save up a deposit of their own. Furthermore, as the minimum rents landlords need to charge rise, in order to cover their outgoings and inflated tax-liability, their ability to let to the poorest and most vulnerable members of society will decrease: particularly so following recent restrictions to housing benefit. Already stretched local councils and housing associations will therefore pay a heavy price for this past year of short-termist landlord-bashing. Those landlords resultingly unable to obtain rents high enough to cover their costs will in turn be forced to evict their tenants and sell with vacant possession, reducing the overall supply of rental accommodation, placing further upward price pressure upon the rental sector in the long-term, and damaging labour mobility within the country at large.
The state will also face further financial costs of its own, namely the cost of investigating the growing number of landlords driven not to declare rental income in order to keep their rental businesses viable, and the cost of defending Section 24 in Court during the upcoming Judicial Review of the measure.
In short – irrespective of Brexit, Mrs May becoming Prime Minister, and George Osborne’s departure – if the Treasury does not reverse the recent legacy of your predecessor and dustbin the impending cock-up that is Section 24 of The Finance act 2015 (“restrictions on finance cost relief for individual landlords”), the situation for both hardworking strivers and the reputation of the Parliamentary party among grassroots Conservatives will continue to deteriorate.
Thank you for your attention with this matter.
Yours sincerely,
Gareth Wilson
Please re-tweet the following …
Open Letter To The New Chancellor – @PHammondMP – https://t.co/8474MKsqaO pic.twitter.com/iFjssUErbV
— Property118.com (@Property118) July 21, 2016
Property118 Action Group is doing its bit and has proven that the power of a crowd can make a difference.
For example, £27,500,000 of overpaid mortgage interest was refunded to landlords in 2016 as a result of legal campaign undertaken by 300 members of Property118 Action Group against West Bromwich Building Society. Between them, just over 300 landlords raised just over £601,000 to take their case all the way to the Court of Appeal.
Just imagine what thousands could achieve!
Our target is 50,000 members paying £10 a month. This will generate a fighting fund of £6,000,000 a year.
We are calling upon all letting agents and professional advisers to recommend membership to all of their landlord clients.
Many are already benefiting from tax planning and business restructuring strategies discovered and shared amongst Property118 Action Group members, which are now saving them a fortune in tax.
Our latest legal campaigns are targeting refunds of an estimated £600,000,000 of mortgage interest overcharges made by Bank of Ireland and Skipton Building Society as well as a reversal of legislation increasing tax on landlords with mortgages, many of which will pay more tax on rentals than they receive in profits.
For just £10 a month YOU can be part of Property118 Action Group, TOGETHER we can influence the future of UK housing and we can all benefit by sharing enthusiasm and best practice.
Be part of something important, join Property118 Action Group TODAY!
FIGHTING FOR LANDLORDS & LETTING AGENTS
We also run quarterly competitions for Founder Members whereby the person who helps us to recruit the most members wins a 5 star holiday in Malta for a week.
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Our vision is crystal clear, as are the steps we need to take, but we need YOUR help.
If just a few hundred landlords can take on the might of a rogue financial institution (and WIN!), just imagine what thousands of us can achieve!
When Property118 Action group took on the legal campaign to challenge the actions of West Bromwich Mortgage Company there were obviously doubters who said we would never raise the £500,000 required to go to Court, and even if we did we would lose. We proved them wrong!
The Financial Ombudsman Service had previously ruled in favour of the mortgage lender!
Property118 Action Group has committed to pledge £100 to the “Axe The #TenantTax” campaign for every Lifetime Founder Member.
The #TenantTax is arguably the greatest threat to the private rented sector due many landlords considering selling up. Any reduction in supply of quality rental property will negatively impact letting agents and well as increasing demand amongst tenants, thus driving up rents.
In addition to providing funding towards the intended Judicial Review of #TenantTax Property118 Action Group has undertaken significant research and lobbying as well as using our official Google News Publisher website status to promote the cause. The Property118 website attracts more than 1.8 million unique users a year and is considered to be a centre of influence amongst mainstream and regional media groups.
There are many examples of landlords having been victims of fraud by abuse of position committed by their letting agent where Police and CPS have dropped cases due to lack of resource.
We have several cases ongoing where agents have used client money to pay themselves huge bonuses before putting their businesses into administration. As a result of the Police failing to get involved Property118 Action Group has been helping to raise the funding necessary to mount private criminal prosecutions on behalf of our members. Many of these are now coming to trial.
Property118 Action Group pay all initial costs associated with private criminal prosecutions where groups of 15 or more of our members have been victims of crimes perpetrated by the same business. The Crown picks up legal costs once Magistrates agree that a trial is in the interests of the public, regardless of whether the accused is found innocent or guilty.
In March 2013 Bank of Ireland raised tracker rate mortgage margins. Over 13,000 borrowers were affected. Many of these originally took mortgages with Bristol & West which was taken over by Bank of Ireland. Two Barristers and one QC provided written opinion that they believed the Bank were in breach of contract. Sadly, Property118 Action Group didn’t exist then. Many of the affected borrowers initially expressed an interest in legal action. However, when it came to having to commit substantial sums of money to fund legal action their enthusiasm quickly dissipated leaving less than a few dozen of the more militant campaigners with the impossible task of raising the required funds. If each of those affected had only needed to commit to paying a one of fee of £600 or committing to a monthly subscription of £10 a month the position might have been very different, as would the level of media attention on the case as it progressed through the judicial system. Many of the affected borrowers have already overpaid 10’s of thousands of pounds. The Financial Services Ombudsman ruled the bank was within its rights to make the changes. However, following the Court of Appeal overruling the FOS decision in respect of the West Bromwich Mortgage Company rate hike, Property118 Action Group plans to take further legal action on behalf of its member in August 2016. All Founder/Lifetime Members with mortgages affected by this lender will be invited to be part of this legal action at no extra cost.
In 2010 Skipton Building Society unilaterally decided to abandon a contractual commitment to cap their standard variable mortgage rates to 3% over the bank of England base rate. An estimated 135,000 mortgages were affected, many of which had been provided via their subsidiary company Amber Homeloans. The Financial Services Ombudsman ruled the lender was within its rights to make the changes. However, following the Court of Appeal overruling the FOS decision in respect of the West Bromwich Mortgage Company rate hike, Property118 Action Group plans to take further legal action on behalf of its member in August 2016. Again we have the legal opinion of two barristers, both of which have advised that the lender is in breach of contract and that a Court is likely to award a full refund of all payments over and above what the mortgage contract allowed for. All Founder/Lifetime Members with mortgages affected by this lender will be invited to be part of this legal action at no extra cost.
Property118 Action Group is not insurance based, it is more akin to a Union which utilises member subscriptions to protect and fight for the rights of its members. It does not provide legal services but will procure them where necessary.
Successes in the Courtroom enhance our public profile and drive an increasing number of landlords to seek the security and peace of mind that only Property118 Action Group membership can provide.
As many landlords have learned to their peril; when it comes to funding litigation against mortgage lenders or the Government, legal fees insurance policies often prove to be about as useful as a chocolate fire guard. Furthermore, trade bodies rarely have the necessary experience, resolve, finances or other resources to get involved in action beyond referring their members to their preferred suppliers of legal services, the authorities or Ombudsmen.
The UK private rented sector is often described as one of the UK’s remaining “cottage industries”.
Private landlords own around 4.8 million properties providing housing for around 22% of the adult population.
There are thought to be around two million private housing providers (buy-to-let landlords) in the UK
Private housing providers (buy-to-let landlords) often lack the experience and finances to defend their rights. Membership of Property118 Action Group provides a unique and powerful umbrella at a very reasonable price.
Letting Agents are highly reliant upon a healthy private rented sector.
Successfully defending our members’ rights continues to enhance our public profile through media based PR and reporting.
ARLA (Association of Residential Letting Agents) were the first to agree to promote Property118 Action Group at their landlord exhibitions, by having roll up banners on their own exhibition stand, handing out leaflets to attendees and signing up new members. From time to time we look for volunteers from our membership to represent us at events. Obviously we cover their reasonable expenses for this.
Naturally, we encourage our members to share the advantages of being a member of Property118 Action Group through social media, talking to friends, email and so forth.
We also run quarterly competitions for Founder Members whereby the person who helps us to recruit the most members wins a 5 star holiday in Malta for a week.
In 2015 the Property118.com website had over 3 million page views from over 1.8 million unique visitors. The projection for 2016 is over 8 million page views based on the results in the first half of the year, trajectory of growth and the anticipated additional interest off the back of the win against West Bromwich Mortgage Company at the Court of Appeal.
We continue to form strategic alliances with many more organisations representing large numbers of landlords or letting agents.
We have produced leaflets, logo’s, website widgets, and roll-up banners for use in offices, shops and exhibitions. These, along with other support in terms of copy-writing, Press Releases and joint PR are all available free of charge to any organisation that wishes to form a Strategic Alliance.
If you work with such an organisation please see this link
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Half of tenants would consider moving town to purchase
NW Landlord
10:30 AM, 23rd July 2016, About 8 years ago
The thing is it won't raise more money, as one of two things will happen,professional landlords like me and partners will incorporate and already have done and the ones that bury there head will not be able to pay which will happen time and time again as the sums just don't add up
I really believe it is an ill thought out school boy error that will get scrapped once it pans out very quickly as it is quite simply unsustainable.
Recardo
11:02 AM, 23rd July 2016, About 8 years ago
Hi Christine, people think it's easy being a landlord, money for old rope. I spent £4000 to refurbish a 3 bed house after it was trashed by a housing benefit tenant of 3 years. I employed people to do the work and spent 3 weeks of my own time away from home for free so the bills would not escalate. My annual profit on the property is about £4,000 and I have to pay tax, maintenance bills, insurance and accountancy fees on that. The new tenants moved up from London to East Anglia because they could not be rehoused by their council in London.
After 2.5 years they have trashed the house and as the last tenants they were told by the council " we have no right to re-house you if you leave before court proceedings and a letter from the bailiffs"
Although the couple have split up and no longer occupy my property I cannot have legal possession as the laws are in favour of them. Although no notice was required by me (sec 21 served at start of tenancy) I gave them 6 weeks notice and the council in the hope they would rehouse them. They have no properties. Court fees were £355 to get possession which I can claim back from people with no job or intention of ever getting one.
Although ordered by the court to give me possession last week I now had to pay £110 for the bailiffs to evict an UNINHABITED house full of belongings. The rent has also been stopped. I will probably have to pay another £4000 or more to bring the house to a habitable condition.
SO how easy is that to be a landlord. I will sell my properties and the housing crises will get worst. This is a business and its getting harder. Why is it fair a tenant that another property can give me one months notice by email as he wants to leave , but I would have to have given 2 months notice be letter. There will probably be a void period where I pay council tax and mortgage because it is not enough notice to find a replacement.
My best advice Christine is if you think it is so easy being a landlord is :
Get a 25% deposit and by a property.
find a tenant that may not pay the rent, and not trash the property
If you do get rent ,l pay tax on the money you give to the building society as if it were profit.
keep up with all the legislation on tenants rights , one slip will bite you in the a** even if you did nothing wrong.
If in ten years time hassle free you sell pay tax on the profit.
NW Landlord
11:16 AM, 23rd July 2016, About 8 years ago
Great post I've got loads of stories like that to many to share, great one today one of my tenants has done a bunk owing me a month and u know why because she saw a slug trail in the house !!!! and obviously it's all my fault.
People not in the game haven't a clue we are treated like dirt robbed off and demonised and have no help whatsoever from anyone and 99% are just ordinary people trying to earn a crust and not relying on the state to support us and our families and that total fool Osborne is twisting the knife further as if it isn't hard enough
Mandy Thomson
11:28 AM, 23rd July 2016, About 8 years ago
Reply to the comment left by "NW Landlord" at "23/07/2016 - 11:16":
No doubt your tenant is spoiled (as well as being spoiled in general) for choice for somewhere to live if she can just up and move on a whim like that (is this someone really young in her first place?). No doubt Daddy will buy or rent somewhere else for her.
Although a pest infestation isn't acceptable and needs addressing, it is only the landlord's fault if it's caused by a fault with the fabric of the building which is allowing pests to enter. Most likely, the tenant has being leaving the back door open and slugs have been allowed to crawl in, without taking any measure to deter them.
Recardo
11:31 AM, 23rd July 2016, About 8 years ago
Nice post. Day one my last tenants moved in and I got a phone call at 8pm Saturday night that there was no gas or electricity. It was on a card and could have been topped up at the post office 50 yards away. they had moved in 3 weeks after the London council delayed by not paying the DEPOSIT.
Day two: There are nails sticking out of the stairs that are ripping my boys heals apart. Carpet newly lay through the house and she was complaining about the gripper rods!
any more fun stories about us rich landlords out there. What was your tenant like in the first week. Did they think you were council or social services , NEVER again.
day 3: there are ants in the lean too.
Sayed I'm not he council or social services get a grip and look after my property
NW Landlord
11:43 AM, 23rd July 2016, About 8 years ago
Can you come round and clear the dead flies from my window sill ? My boiler has no pressure that's a classic ? The shower won't work she didn't pull the cord ? Christmas Day the outside pipes where frozen I have no water ? Xmas day I got that call ? I've lost my keys u need to bring me a new one even though I always supply 2 sets ? The radiators need bleeding ? Cloths stuck in washing machine send someone round immediately? Tried to evict a non paying Eastern European spoke percent English untill we got to court then suddenly forgot and I had to pay for an interpreter!!! After a 4 week cancellation and another free months accommodation on me I could go on and on
Fed Up Landlord
11:51 AM, 23rd July 2016, About 8 years ago
The brand new cooker has stopped working....have you tried turning it on.....I can't use the bath as I've lost the plug....have you tried B and Q.....the toilet door doesn't lock...have you tried turning the little catch underneath....
Inevitably out of hours calls on the emergency phone.....
Being a Landlord is great fun!!!
Michael Barnes
14:17 PM, 23rd July 2016, About 8 years ago
Reply to the comment left by "Christine Reynolds" at "22/07/2016 - 12:54":
Christine,
Once upon a time owner-occupiers paid tax on "imputed rent" (the rent hat they would have to pay to live there if someone else owned the property). However, they could subtract the cost of loan interest from the imputed rent to arrive at the amount they had to pay tax on, as it was a cost of achieving the imputed rent.
Then (I believe in the 1950s) tax on imputed rent was abolished, but the tax relief on mortgage interest remained. Eventually the tax relief on mortgage interest was abolished (which probably should have occurred when tax on imputed rent was abolished but wasn't, probably because the government wanted to encourage home ownership).
Today landlords pay tax on the rent they receive, and up until Clause 24 they could deduct loan interest payments from the rent received in order to determine the money they paid tax on (just as home owners could deduct it from imputed rent), as it is a cost of achieving the rent.
So, you are not being "very stupid", just taken in by the government's spin and anti-landlord propaganda by journalists who do not understand the concepts of business nor the history of mortgage interest relief for home owners (they remember it being abolished but not why it was there in the first place). It was indeed a "perk" for home owners at the time it was abolished, but never has been for landlords.
Kathy Evans
18:15 PM, 24th July 2016, About 8 years ago
Reply to the comment left by "Christine Reynolds" at "22/07/2016 - 12:54":
It's not "tax relief". Being a landlord is a business. All other types of business (Ltd and sole trader) are allowed to deduct their costs, including finance, from their sales in order to arrive a ta profit, on which they are taxed. S 24 stops this normal business practice for individual (sole trader) landlords but not for Ltd Cos. So how is that fair? It prefers one time of business over another - both sector and structure. Thinking about landlords and home owners as the same thing is a bit like equating a racing stable with a pony owner.
Alison King
16:23 PM, 25th July 2016, About 8 years ago
Reply to the comment left by "NW Landlord" at "23/07/2016 - 11:16":
I have had slug problems in my terraces; they get in through the air bricks. I've put mesh over the air bricks and that stops mice too. Luckily my tenants have been happy with that solution (so far touch wood).