Shadow Spokesman for Housing supports a tax that is increasing homelessnessMake Text Bigger
Lord Beecham has been the Shadow Spokesman for Communities and Local Government (CLG) since October 2010, and for Justice since September 2012, and for Housing since September 2015. Quite a workload, in addition to being a Councillor in Newcastle-upon-Tyne since May 1967, and consultant to Beecham Peacock Solicitors in that city.
He is anti-BTL. He not only approves of Section 24, he wanted it extending to companies. Furthermore he wants to prevent landlords passing the levy on to tenants.
Many confused people think that anything that is bad for landlords is good for tenants. But Lord Beecham has a First Class degree from Oxford University. In Law though, not in Economics.
On 5 December he tabled the following questions for written answer by 19 December:
Lord Beecham to ask Her Majesty’s Government whether they intend to take steps to ensure that limited companies are not better placed than other landlords in relation to the taxation of profits engendered by letting residential properties. HL3797
Lord Beecham to ask Her Majesty’s Government whether they intend to introduce plans to prevent landlords of residential properties from recouping the cost of changes to the taxation of rents of such properties which will come into force next year; and if so, how. HL3798
The first question shows that he does not understand how S 24 works, as it will restrict the allowance for individuals to 20% of finance costs, which is what corporation tax at 20% does.
His questions were answered/fobbed off as follows:
Answered by: Lord Young of Cookham
Answered on: 19 December 2016
Using actual self-assessment data, HM Revenue and Customs estimate that only 1 in 5 landlords will pay more tax as a result of this measure. Given that only a small proportion of the housing market is affected by these changes, the Government does not expect them to have a large impact on rent levels.
Incorporated businesses will continue to receive relief at the corporate tax rate. However, the rate of relief (currently 20%) is not more generous than the rate of income tax relief once these changes are fully in place by 2020-21.
The first paragraph is very familiar.
Lord Young gave the same reply to the second question. http://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Lords/2016-12-05/HL3798/
He claims there will not be a large impact on rents, even though portfolio landlords are already increasing them.
The day after Lord Beecham tabled these questions I sent him the following email:
“Dear Lord Beecham
I see that you attended the Royal Grammar School, “the best [private] school in the north of England” and got a First at Oxford, before qualifying as a solicitor. Let me draw a comparison with that profession.
Imagine what would have happened if the government had disallowed the biggest cost of solicitors’ practices – employee costs – so that the partners paid tax at 83% or more of the real profits. They would have had to increase the charge-out rates or go out of business, at a cost to their clients either way.
That is the choice facing many landlords now, thanks to George Osbornes’s unconsidered and anti-Conservative meddling – which you seem to support, judging from the questions you tabled yesterday.
Landlords will have to increase rents to pay the levy on interest imposed by Section 24. Tenants on benefits will not be able to pay the increases. Some of them have already been evicted for this reason and made homeless. Others have been evicted as their landlords go out of business, reducing the supply.
Those made homeless have to be housed by local councils in “temporary” accommodation at much greater expense. You must be aware, from your association with local government, that homelessness is growing.
Rent rises and increased homelessness are the inexorable result of Section 24, just as they were when the Irish government introduced milder forms of disallowing interest, before reverting to Generally Accepted Accounting Principles.
I would not have been too surprised if a misguided left-wing politician not only supported Osborne’s meddling but wanted to extend it to companies, and called for rent controls, “the most efficient technique known to destroy a city – except for bombing”.
However, I am shocked that an educated and knowledgeable man like yourself has done this. Or are you really highlighting the advantage that Osborne gave to corporate landlords, including Tory Party donors, and asking the government to confirm that the resulting rent increases will be uncontrollable?
So far I have not had a reply. However, yesterday he posted an article in which he acknowledged that “we have seen an increase of 40% in the number of people having to be found places in temporary accommodation.” He does not say over what period this increase occurred. And he blames landlords, as a matter of course.
“The problem is the sheer shortage of genuinely affordable housing to rent, and the lack of security of tenure, in a world increasingly dominated by buy to let investors who have bought up 35% (and rising) of former council houses. It’s not just a question of people being illegally evicted but the increased difficulty in our low wage economy to pay what landlords demand.”
So have sent him another email:
“Dear Lord Beecham
I see that you have had another dig at landlords, claiming that they have bought up 35% (and rising) of former council houses.
What difference does it make who buys a former council property from the original lucky incumbent who got the discount? The property was permanently removed from the stock of social rental accommodation when first sold.
It is not surprising that landlords bought them from the lucky incumbents. What potential owner-occupier would risk his money knowing that the council could put tenants from hell on each side and across the road, at any time in the future?
Labour did nothing to stop the sale of council housing when in power between 1997 and 2010.
And Labour allowed unfettered access to the UK from Poland and Hungary in 2004, claiming that only 13,000 would come each year whereas most EU members, including France and Germany imposed a waiting period of seven years.
“However, more than one million arrived in one of the biggest waves of immigration seen in this country.” per the article: “Labour made a ‘spectacular mistake’ on immigration, admits Jack Straw”
Where were this million housed?
It’s time you acquired some integrity and put the blame for the housing shortage where it belongs – on politicians, including the Labour Party – instead of on landlords who have, on the contrary, both increased the supply of housing and improved its utilisation.
I pointed out, in my email of 6 December, how and why Section 24 was already causing increased homelessness. Yesterday you acknowledged a 40% increase but did not say over what period. S 24 is not even in force yet. As it is introduced, evictions will increase for the reasons I gave. We keep telling Ministers the inevitable consequence of increased costs of temporary accommodation, but they will not listen. Only the SNP has shown any opposition to S 24.
It is not the case here that what is bad for landlords is good for tenants. As Shadow Spokesman both for Communities & Local Government and for Housing you are uniquely placed to speak up for both tenants and councils. Will you put dogma aside and oppose S 24 for the benefit of both?
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