Our own report sent to new high level review of the Private Rental Sector

by Property118.com News Team

11:05 AM, 29th March 2017
About 2 years ago

Our own report sent to new high level review of the Private Rental Sector

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Our own report sent to new high level review of the Private Rental Sector

The comprehensive report written by Dr Rosalind Beck:

Section 24 of the Finance (No. 2) Act 2015: “the unjust legislation that will make the UK housing crisis much worse.”

Has been sent to The Centre for Housing Policy at the University of York which will be carrying out a review of the PRS led by Julie Rugg and David Rhodes who were authors of, The Private Rented Sector Its Contribution and Potential. Released in 2008 this was more popularly called the Rugg Review.

Julie Rugg is considered by many in the sector to have produced balanced reports on the PRS in the past and it is hoped the above report will be taken into close consideration.

The review of the PRS in England is being funded by The Nationwide Foundation with the remit to consider broadly whether the PRS meets the needs of tenants and if the recent tax and regulatory changes coming into force will assist the sector to operate more effectively.

Along with this main review there will also be a secondary report assessing to what level the PRS the meets the housing needs of vulnerable tenants.

Member of the all party parliamentary group for Housing and Planning, Helen Hayes MP, said “it’s clear to me that while recent changes to the private rented sector have been significant, particularly around its size and the wide ranging circumstances of the tenants living in it, unfortunately these changes are not at all well understood”

“The 2008 Rugg Review work was extremely useful and well regarded, so I warmly welcome this opportunity for it to be revisited, giving politicians and policymakers an up to date and robust picture. I expect this review of the sector to pave the way for meaningful policy changes and interventions.”

Leigh Pearce, chief executive of the Nationwide Foundation commented that this report was vital with currently little agreement on what is truly happening in the PRS and with both landlords and tenants being similarly demonised.



Comments

Dr Rosalind Beck

12:55 PM, 29th March 2017
About 2 years ago

Yes, I sent the report to Julie Rugg and David Rhodes at the beginning of November 2016 and Julie said that she would read it. I have now re-sent it to both and ask that it be taken into consideration. I added the following:

'One point I would make is that the Government is now assuming that the housing market is broken, but I believe the evidence shows that the PRS is not broken at all and has worked very well on the whole. What is now breaking it is Government intervention.'

bhrat Kapur

13:02 PM, 29th March 2017
About 2 years ago

Reply to the comment left by "Dr Rosalind Beck" at "29/03/2017 - 12:55":

Hello Dr Rosalind Beck

Sorry to disturb you.

I had contacted the european competition commission in regards to Clause 24 as it gives an unfair tax advantage to corporate landlords and hurts individual landlords badly.

They have come back to me after almost a year and I wanted your help in taking this application further. Please can you send me your contact details.

I have already forwarded them “The ROS Report” but I think the case is at critical point and it can help our cause.

I have sent similar emails to others (chris cooper and steve bolten) and waiting their response on this.

I can be reached at bhratkapur_bel@hotmail.com.

Thanks
Bhrat Kapur

Tobias Nightingale

16:42 PM, 29th March 2017
About 2 years ago

Reply to the comment left by "bhrat Kapur" at "29/03/2017 - 13:02":

Its not only that. If you were able to win a case on that point, you could in theory I would have thought have case around Holiday lets are seen as a business but residential lettings are not for tax purposes.

Dr Rosalind Beck

17:24 PM, 29th March 2017
About 2 years ago

Reply to the comment left by "bhrat Kapur" at "29/03/2017 - 13:02":

Hi Bhrat. If you check your emails you should find the email I sent you. All the best. Ros

Gromit

20:02 PM, 29th March 2017
About 2 years ago

I don't want to dampen your enthusiasm but it it is worth remembering the main reason the Judicial Review failed, namely, that individuals and companies have always been taxed differently.
A stronger argumentmight be comparing unencumbered private Landlords with encumbered private Landlords.

Appalled Landlord

21:23 PM, 29th March 2017
About 2 years ago

Reply to the comment left by "Barry Fitzpatrick" at "29/03/2017 - 20:02":

Hi Barry

Individuals and companies are taxed differently, but the calculation of taxable rental profit has always been identical for both categories, using Generally Accepted Accounting Principles.

As from 6 April, individuals who bought rental properties in their own name will not be able to deduct their finance costs in full when calculating their profit, whereas companies will continue to deduct theirs in full.

So individuals will pay tax on fictitious profits - and some will be bankrupted - but companies won’t. Individuals will be driven out of the market, to the benefit of companies.

Gary Dully

5:27 AM, 30th March 2017
About 2 years ago

http://scruffypropertywanted.com/s24 is where a web calculator resides that produces a rather shocking graph and pie chart with the effects of Section 24.

It's my website, so don't buy anything, I'm not promoting it, but if you find it useful I will gladly pass the web files to Mark as a tool as it runs on Wordpress sites such as this one.

Just leave your profit at the minimum living wage ,(£14,796), and do a standard stress test with interest rates at 5 or 6%, brace yourself, get down to your accountants and then book your tax planning with Mark.

Gromit

7:23 AM, 30th March 2017
About 2 years ago

Reply to the comment left by "Appalled Landlord" at "29/03/2017 - 21:23":

@AL

Totally agree, but it didn't wash with the judges in the JR

Gromit

11:37 AM, 30th March 2017
About 2 years ago

Reply to the comment left by "Gary Dully" at "30/03/2017 - 05:27":

@Gary

I like the calculator on your website. But I calculate the rent increase to be not quite double that which your website calculates, This is because any increase in rent will itself be taxed (as your taxable profit will increase) and then the BTL tax so the extra tax needs to be "grossed up" to get the increase in rent required. In my case the BTL tax is £3.925 but I 'll have to increase my rents by £6,541 (this keeps my after tax profit exactly the same).

If you're employing a letting agent who charges a percentage of the rent collected as fees, then this would have to be taken into account as well.

The bottom line though is that there has to be a massive hike in rents to pay this extra tax.

Glenn Ackroyd

10:55 AM, 1st April 2017
About 2 years ago

Landlord's can't simply increase rents to pay for the tax - Rents will go up or down dependant on local market supply.

We're seeing landlords selling up with houses going more and more to first time buyers - Demand from 'new' landlords is half what is was - And this is borne out by BTL lending figures from the Council of Mortgage Lenders.

So rents may rise because of fewer houses - but then again, there may also be fewer tenants if they are now becoming first time buyers...

Another factor is affordability. In London and the South East many tenants are paying 40%+ of their income on rents - pushing people into sharing.

In the North that figure is 25-30% of income - So the North has the capacity for rental growth. Expect strong growth in prices in Manchester, Liverpool, Birmingham, Leeds, Sheffield and Newcastle over the next couple of years.

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