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At Property118, we have been saying for some time that the Government’s discriminatory fiscal attack on unincorporated landlords with finance costs (embodied in Section 24 of the Finance (No. 2) Act 2015) is an outrage and will lead to massive rent rises, including for students.
As we know, at the same time that the Government is imposing potentially infinite tax rates on ‘individual’ landlords, they are feting and exempting institutional providers of housing, many of whom ‘specialise’ in the student market.
As part of this the Government is promoting the ‘Build to Rent’ programme, whereby institutions, many of whom donate to the Conservative Party build homes to rent out at hugely inflated prices, often more than triple what ‘individual’ landlords charge. They then boast to potential share-holders about the huge yields they can achieve. This is of course a scandalous conflict of interest on the part of Government policy-makers and a dreadful development for the young people of this country.
British students are now realising the full implications of this and they are speaking out. This week a group of student representatives wrote the following, with regard to an award programme for the best providers of student housing:
“Dear Property Week,
We appreciate the opportunity given to us, as students, to judge the Student Experience category for the upcoming Student Accommodation Awards. However, we regret to inform you that the panel could not come to a decision to award any of the entrants.
Unfortunately, none of the entrants could demonstrate that they are meeting the urgent need of students to live in accommodation that will not force them into poverty.
Most entrants price their cheapest rooms above the national average of £146 per week, and certainly above a level which student maintenance loans will reasonably cover. Many charge rents of more than £300 per week.
One entrant is reported for having put disabled students at great risk of danger. Another charges hundreds of pounds to act as guarantor, profiting from the discrimination of migrants and the inability of poor estranged students to provide a guarantor.
Another, in their application, puts shareholder satisfaction before student satisfaction and boasts of “20m revenues”.
Students are not seeking luxury getaways or cinemas in our living rooms. We are not ‘satisfied’ knowing our student debt is lining the pockets of millionaire shareholders.
High rents are driving the social cleansing of education. Working class students are being priced out: unable to access higher education altogether, or forced to work long hours, disadvantaging the poorest.
We urge all providers to invest in affordable accommodation so that the future of higher education is open to all, regardless of parental income. We urge all universities to cease the privatisation of accommodation, and to provide a guarantor service, We urge the sector to lower profits, reduce rents and support the call for greater financial support for students in the form of universal living grants.
Unless all students have access to safe, affordable accommodation at every institution and the means to pay for it, there is no cause for celebration, nor the ability for us to award a for-profit sector failing so many of our peers.
Student Accommodation Awards Student Judges 2016”
As a licensed landlord with student housing in Cardiff, my rents average around £265 a month excluding bills and around £330 a month including bills in traditional house-shares, some of which have lovely original features and are often spacious and characterful. I am flabbergasted at how these institutions now think they can charge these huge rents for their allegedly ‘luxurious’ provision. As the students say, they can’t afford this luxury. They would prefer ‘cheap and cheerful,’ and to not be saddled with enormous debts.
This is a truly awful development (misrepresented as an ‘improvement’) and will have extreme repercussions for the young people of this country. The problem is that the institutions may gain a monopoly as many portfolio landlords who provide the far more affordable traditional lets will be driven out of business because of having to pay huge amounts of tax on their main cost, while the institutions continue to deduct finance costs as an allowable expense (which is normal business practice).
To make matters worse, the students might not have taken into account the fact that there is also likely to be a knock-on effect, whereby the institutions also gain dominance in the ‘young, professional let’ market, so they will have to shell out huge amounts of their salaries for years to come, thwarting any ambition to save a deposit to buy their own home and condemning them to all of the worry experienced by people facing a life in debt. George Osborne stated that this fiscal attack on landlords would help first time buyers. We can all see how that was a lie.
This Government-sponsored programme of handing institutions a monopoly in the market must be halted immediately – and Section 24 reversed – otherwise, the financial futures of the young people of this country look grim indeed.
It must be added that, perhaps surprisingly, the interests of ‘individual’ landlords and students are now closely aligned and it is incumbent on both groups to unite to fight this attempt to obliterate the affordable ‘traditional’ lets in our University cities. The first step in this is to immediately:
Scrap the buy-to-let tax!
Dr Rosalind Beck
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