Should I sell or risk tenants buying at undervalue price?9:08 AM, 25th September 2019
About 4 weeks ago 48
I have become increasingly frustrated at Shelter’s position on the Tenant Tax so have decided to write the following letter to Campbell Robb, Shelter’s Chief Executive.
I am having some difficulty understanding why Shelter has not come out against the Government’s plans to restrict finance cost relief for non-incorporated landlords.
As you will know, this tax change is being phased in from 2017/18 and will be fully in force by 2020/21.
I have tried to understand your position by reviewing the information on Shelter’s website.
Your website states that Shelter’s core beliefs are that everyone should have a safe, secure and affordable home.
You say that you strive every day to give people the help they need, and campaign relentlessly to achieve your vision of a home for everyone.
Your website says that safe is about being in a supportive community, free from harassment from rogue landlords, and living somewhere your children aren’t at risk from damp or bad wiring. It’s knowing that if something happens which means you might lose your home, there’s a safety net to catch you.
I agree entirely with these aims.
However, I do have concerns that the Government’s tax change will have a significant financial impact on many landlords. In some cases, landlords will be expected to pay tax bills which exceed their actual profit. In cases like this, how will landlords be able to afford to maintain their properties and keep tenants safe? Surely, there is a risk that the condition of private rented sector homes will deteriorate as a result of landlords being in financial hardship?
Your website goes on to state that security is about having a long-term tenancy so you can plan ahead for more than a few months, and feeling able to raise issues without the threat of eviction. It’s knowing there’s appropriate, reliable support there for you and your family if you lose your home.
Again, I have every sympathy with these aims.
However, I fear that the Government’s tax change for non-incorporated landlords will result in thousands of existing tenants being evicted as landlords will be forced to sell up as their businesses will no longer be viable. In some cases, landlords will ask tenants on benefits to leave in order to move in new tenants who can afford to pay higher rents. I cannot understand how the tax change will improve tenant security.
Your website states that affordable is about making sure enough homes are built, so everyone in our society can buy or rent a home and still have something left to live on. It’s also about the prices of homes to buy, and private and social homes to rent are in touch with what people earn. They should leave no one behind. It’s knowing there’s help available for the times when you might struggle to pay your rent or mortgage – helping you through the difficult times we all face.
Once again, I have no issue with Shelter’s aims.
However, I fear that new supply will be restricted as landlords will be discouraged from expanding their portfolios. I also have concerns that landlords will pass on their increased costs and increase rents. There is already evidence that this is happening. You will be aware of the recent RLA survey which showed that two thirds of landlords will be increasing rents as a result of the tax change which restricts finance cost relief.
There was no mention of tenants in the Government’s impact assessment on the restriction of finance cost relief. However, now that the implications of the tax change are understood, the tax has become known as The Tenant Tax because it is recognised that landlords will pass on their increased costs to their tenants.
You have probably worked out by now that I am a landlord. I am proud to be a landlord and regard myself as a housing provider. I have purchased new build flats (thus helping to increase supply). I have bought properties which have been repossessed by lenders (thus bringing empty homes back in to use). I have rented to tenants on housing benefit (thus helping to address the shortfall in affordable housing for people who cannot afford to buy).
Since 8 July 2015 when the Government announced the tax changes which restrict finance cost relief, I have stopped adding to housing supply. I have evicted tenants on benefits and increased all my rents. These actions were a direct result of the tax change. I take no satisfaction from my actions. These were decisions I simply had to take to protect the viability of my rental business. Thousands of other landlords are making similar decisions all over the UK to protect their businesses.
Can you please explain to me why Shelter does not oppose this tax change? Do you think the tax change will help Shelter achieve its aims?
I look forward to hearing from you.
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