RLA call for Section 24 rethink after Stamp Duty windfall

by Mark Alexander

15:40 PM, 1st February 2017
About 4 years ago

RLA call for Section 24 rethink after Stamp Duty windfall

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RLA call for Section 24 rethink after Stamp Duty windfall

A few weeks ago I wasn’t at all happy with the RLA (“Residential Landlords Association”) and I published a rather damning article entitled Are the RLA losing the plot?”

Well, by my reckoning, they have now redeemed themselves with a Call for tax rethink after stamp duty windfall

Are the RLA losing the plotIn an article yesterday on the back of the figures published showing a £1.19 billion Stamp Duty surcharge windfall for the Treasury up to the end of last year the RLA have called for a Landlord Tax rethink.

“The RLA is now calling on the Government to use this extra revenue from the stamp duty changes to scrap planned reforms to mortgage interest relief, which will, in turn, prevent landlords selling up or having to increase rents.”

One RLA survey has found that 58% of landlords are considering reducing investment in their rental properties because of the changes. And 66% feel the tax changes will place upwards pressure on market rents.

At the very least, the RLA believes the Government should pause the start of the introduction, from April, of the mortgage interest changes to enable a better assessment to be undertaken of the likely impact of the policy.

RLA Policy Director, David Smith, said: “In raising nearly twice as much in just nine months as the tax was predicted to make in one year this stamp duty windfall gives the Government a chance to back the rental market and support the development of new homes which we desperately need.

“At no stage has evidence been published to support the assertion that landlords are taxed more favourably than homeowners, or that they are squeezing first time buyers out of the market.

“Assessments by the Institute for Fiscal Studies and the London Schools of Economics contradict the Treasury’s position completely.

“It is also nonsense for HMRC to suggest that one in five landlords will be affected by the mortgage interest changes, when what matters is the number of properties affected.

“The Government has received far more money than it  expected. We urge them to use this to support the country’s tenants and undertake a fuller impact assessment of a policy that has the potential to cause untold damage to the rental market.”

Comments

NW Landlord

12:46 PM, 4th February 2017
About 4 years ago

I'm getting constant calls from tenants saying landlord is selling plus we have just agreed to buy two portfolios through our limited company I think it is definitely the end of the small landlord they want companies running the PRS this is the aim in my opinion of the government

CazT

13:20 PM, 4th February 2017
About 4 years ago

Reply to the comment left by "Seething Landlord" at "04/02/2017 - 12:43":

Hi Seething. I sold one of my best properties to the current tenants at BMV, they were a young couple and I decided to help them out. They were really grateful and it made me feel a bit better about having to sell. I was in it for the long term rental, not the increase in value. They got a mortgage through my advisor. The second, a much smaller but newer one bed house was inundated by landlords wanting to buy before Stamp Duty increase. The chap who bought it paid cash and as far as I know, he decided not to rent and moved in himself. No profit to speak of on that one either. So as far as the Cons are concerned, they achieved what they set out to do and got two more homes into private ownership.
Sorry but it's not really a very good example, although the original tenants of the smaller property moved into one of my bigger homes as they needed more space and it was conveniently empty. It was a win-win for everyone (perhaps not so much for me). I have had local agents ringing trying to sell me BTL props and asking if I wanted to sell mine. The market seems very strong in Plymouth and is being sold up by local agents. It took the same agents nearly a year to comment about Section 24 in the local property paper and they played it down then!!
No selling fees on the first property and YOPA did me a deal on the second one. Rate them very highly btw (hope this is allowed?).

Seething Landlord

13:29 PM, 4th February 2017
About 4 years ago

Reply to the comment left by "NW Landlord" at "04/02/2017 - 12:46":

I think they also want to see the end of the highly leveraged individual portfolio landlord. The unknown at the moment is whether there are enough corporate or cash rich landlords to buy up all the properties. If so, those properties will probably still be available to rent unless bought by owner occupiers. Are you buying with vacant possession or taking over the existing tenants?

Dr Rosalind Beck

13:40 PM, 4th February 2017
About 4 years ago

Reply to the comment left by "Seething Landlord" at "04/02/2017 - 13:29":

It is leverage which enabled landlords to build and renovate a huge number of rental properties over the last two decades. Without leverage there would be a much worse housing shortage now. Landlords who, for example, now have 20 houses might only have been able to provide one or two rental houses if they had had to make cash purchases. Also, if the Government wanted to do a u-turn in this way and suddenly were against leverage in business and/or specifically in the case of housing provision, then why did they not just declare that no more BTL mortgages would be allowed as 'financing housing provision is now morally wrong'?

Seething Landlord

18:27 PM, 4th February 2017
About 4 years ago

Reply to the comment left by "CazT " at "04/02/2017 - 13:20":

Thanks Caz, I find that really interesting.

Seething Landlord

18:34 PM, 4th February 2017
About 4 years ago

Reply to the comment left by "Dr Rosalind Beck" at "04/02/2017 - 13:40":

Yes, I'm aware of all that. I was simply adding to NW Landlord's observation that the government's aim is to see the PRS run by companies.

Dr Rosalind Beck

20:18 PM, 4th February 2017
About 4 years ago

Reply to the comment left by "Seething Landlord" at "04/02/2017 - 18:34":

You weren't adding to a point about companies being preferred by Government (why 'ltd' after a name should make a blind bit of difference is anyone's guess); you were making a new and separate point, and I quote: 'I think they also want to see the end of the highly leveraged individual portfolio landlord.' I think that when one says what they think others think, it is often because they themselves think it.

Old Mrs Landlord

20:39 PM, 4th February 2017
About 4 years ago

Reply to the comment left by "CazT " at "04/02/2017 - 13:20":

Interesting to read your comments about local Estate Agents. In the area where our properties are the property section of the local paper carried repeated articles ramping BTL in the early months of last year. "Perfect time to get into BTL"; "Buy your rental property before 3% stamp duty" "Looking to invest your pension proceeds in bricks and mortar? Act before 5th April." etc. Absolutely no mention of taxation changes. Professional negligence in my view. Furthermore, following the autumn statement when the CGT reduction (for everyone except landlords} was announced, one local estate agent ran a piece telling first time buyers how this change was to encourage BTLers to sell up and bargains would be coming onto the market for them! Either they are pontificating from a position of ignorance or they are deliberately misleading potential clients out of self interest.

Seething Landlord

21:54 PM, 4th February 2017
About 4 years ago

Reply to the comment left by "Dr Rosalind Beck" at "04/02/2017 - 20:18":

Ros, you are welcome to think that I think whatever you think that I think. That doesn't mean that I think it.

Gary Dully

7:46 AM, 5th February 2017
About 4 years ago

My HMO in Leicester, with 5 LHA claimants, (all evicted), has gone to a First Time Buyer, that will convert it back to a 3 bed normal house, with a mortgage.

Next to go, will be a flat in Nottingham with a LHA claimant in it, aged 67, with severe health problems.

As the council are introducing mandatory licensing on all rental properties! I can't be bothered with the hassle any more.

I will invest closer to home.

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