Shelter CEO is confused about the reasons for evictionsMake Text Bigger
Polly Neate took part in the Tonight programme last week called Britain’s Property Crisis. Click Here to see episode.
She said, just about 5 and a half minutes into the programme “At Shelter we see, every day, people who’ve been evicted for absolutely no reason, so they have been paying their rent, they haven’t damaged the property in any way, they haven’t done anything else that should lead them to be evicted, they’re being evicted, for no reason, often because the landlord wants to put the rent up and they can’t afford it.”
In a single breath you have claimed there is no reason and then given a reason. Do you see the difficulty with your claim, Polly?
I’ll let you into a little secret. No landlord evicts a tenant without a reason. Ever. When landlords have tenants who pay the rent on time, treat the property with respect and treat the neighbours with respect (what I will call RPN) they are happy to let them stay as long as they like, and without rent increases, because they don’t want them to start looking for somewhere else. It does not make sense to evict a good tenant, and incur the costs of finding a new unknown quantity.
At least, that’s how it used to be, until Section 24 of the Finance (No. 2) Act 2015 was announced by George Osborne, a History graduate, who rose without trace. He adopted a recommendation that was made in a flawed report by David Kingman, a Geography graduate, to disallow mortgage interest and other finance costs when calculating the taxable profits of landlords who bought properties in their own names rather than through companies.
This change means that such landlords will pay substantially more tax. You don’t understand why? It’s because we will be taxed on a fictitious amount of profit. S 24 pretends that our payments of finance costs did not exist and that the money we have paid to the lender is somehow still in our bank accounts. Have a look at this real comparison from Caroline, a landlady I know:
|tax rate||tax rate|
|Rent less non-finance costs||220,000||220,000|
In 2020 she will have less than £11,000 for her and her daughter to live on. But she will not be entitled to any benefits because of her (mostly fictitious) deemed profit.
So she and other landlords have increased the rent just to pay the increase to HMRC – they will be no better off, but the tenants will be worse off.
Tenants who can’t afford the increase in rent are being replaced by those who can. So tenants on frozen or reduced housing benefit are being decanted in large numbers.
Other landlords have been forced to sell up, so their tenants have been evicted. The reduction in supply will force rents up, ceteris paribus.
Shelter supported S 24 when Osborne announced it. It is having the predicted effect of increasing homelessness just like a milder version did in Ireland. The Irish government started to phase it out for that reason just as the present UK government started to phase it in – last year.
Polly, if a landlord evicts a tenant there will be a good reason, either S 24 or a breach of RPN. Please stop pretending otherwise.
If you want to turn the tide of evictions, and reduce the misery it is causing, you should be lobbying to repeal S 24, or at least to stop it being retroactive. If you really want to turn the tide, that is.
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