The consequence of Section 24 – bankrupt councils and countless homeless

The consequence of Section 24 – bankrupt councils and countless homeless

9:45 AM, 26th January 2024, About 3 months ago 15

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News this week that councils around the country are flagging up the prospect of going bankrupt because of the ever-growing homelessness bill they have to meet. Oh please, cry me a river. Not once will councils and the government accept that their short-sighted policies hurting landlords are to blame. It’s always the landlord’s fault.

Council leaders held an emergency meeting in Westminster to highlight the cost of having to house homeless people and families. These costs are pushing them towards bankruptcy – they claim.

Eastbourne council claims – perhaps overstating the case – that they are spending 49p in every £1 of taxpayers’ money on temporary accommodation. If true, that is astonishing and unsustainable.

Crawley Borough Council says we are seeing ‘the end of local government’ unless the government coughs up more money. That council has an annual temporary accommodation bill that rose by £2 million in 2023 – and it will increase again this year.

Even Gloucester City Council spent £364,000 last year on temporary accommodation.

Everyone in the private rented sector predicted would happen

So, let’s take a closer look at this terrible situation which everyone in the private rented sector predicted would happen and what has happened.

The slippery slope for the PRS began with the clueless George Osbourne and his removal of section 24. The opportunity to claim mortgage interest as a business cost was hugely helpful. Not so much when the rule was removed, and landlord costs went up.

Then Mr Osbourne reduced the Local Housing Allowance so tenants struggled to find cheap places to rent because they couldn’t get the extra money needed to pay for it.

It also meant that landlords couldn’t afford to lower rents to accommodate them.

As a result, tenants faced the prospect of temporary accommodation – that is usually long-term – and a government hoping to slash its benefits bill (it didn’t work, natch).

No money saved during the so-called ‘austerity years’

What is interesting is that after the LHA cuts were brought in, there was no money saved during the so-called ‘austerity years’ (so-called because government spending didn’t decline as critics like to portray). That meant the buffoon Boris Johnson and his sidekick Rishi did poor tenants another disservice.

However, it did prove to be beneficial for temporary accommodation providers who cashed in – with councils picking up the bill. I say councils, I mean taxpayers.

But the rising homelessness situation is down to the landlords, right?

The issue of selling off council houses

Then there’s the issue of selling off council houses – which should never have been introduced – and not enough new social homes being built.

That means that the temporary accommodation bill for homeless families with children goes up.

Private landlords stepped into the breach to provide homes for those who lived in areas with a diminishing supply of council houses.

Two things happened here – councils still had to pay housing benefit to landlords and there still weren’t enough homes.

Another rising bill for councils. I mean taxpayers, obvs.

Double whammy of paying more taxpayers’ cash for housing

So, we were delivered a double whammy of paying more taxpayers’ cash for housing but having fewer homes for people to live in.

And we voted these clowns into power to come up with barmy ideas like this!

Remember, the housing crisis is only just beginning, and families are still being placed in pricey temporary accommodation.

Then Rishi froze the LHA in 2020 which led to more families being made homeless because that didn’t stop private rents from going up.

Poor tenants really were caught in the crossfire because more landlords are selling up and leaving the PRS.

They can’t make the numbers work what with rising mortgage rates, selective licensing bills and the prospect of what damage the Renters (Reform) Bill will do.

That means there are even fewer cheap homes to rent. And still, no council houses to rent either.

And all the while, the benefits and temporary accommodation bill goes up. Hooray!

Why we had to build council houses in the first place

Along the way we have lost sight of why we had to build council houses in the first place, and we are back at square one.

Adding to the situation are a huge number of legal and illegal migrants wanting a home. And they can jump the queue because the system of allocation under Labour turned into one of need.

The bottom line is that we have had third-rate politicians coming up with policies to serve an economy they thought we had – not the one we really did have.

So why not rescind section 24 so that landlords can make the numbers work again?

Alongside this, build more homes – make planning easier and let’s forego some of the green belt (NIMBYS are happy with homes being built anywhere but where they live, apparently).

Scrap selective licensing for the expensive nonsense that it is – it puts up rents and HMO rules are seeing larger room regulations being introduced so fewer people are being homed.

Private landlords have done amazingly well

There needs to be an honest conversation (that won’t happen) which highlights that private landlords have done amazingly well under the circumstances.

Councils – which needlessly harass landlords and make renting difficult and expensive – will need to accept their role in this debacle.

We also need to appreciate that the government’s scrapping of Section 24 and then freezing LHA effectively lit a fire under the homelessness numbers.

Landlords and landlord organisations told everyone this would happen when Section 24 was binned.

Nobody listened.

So, here we are.

Until next time,

The Landlord Crusader

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10:10 AM, 26th January 2024, About 3 months ago

As always hit the nail on the head.

And this is only one area of government, why do you think schools are crumbling, military weakened and NHS failing. Not to mention HS2.

The lesson we can learn from this and the fall of the Soviet Union, is governments organise very few things well. They are like that Harry Enfield character, who says "you don't want to do that, you want to do that"

Jon Landlord

10:15 AM, 26th January 2024, About 3 months ago

"The consequence of abolishing Section 24"..."George Osbourne and his removal of section 24": was the _creation_ of section 24 that changed the tax rules on mortgage interest. Abolishing it is presumably what most landlords want!

(Incidentally, a Google search indicates that a lot of articles link to the wrong Act of Parliament. It's section 24 of the Finance (No. 2) Act 2015: )


10:34 AM, 26th January 2024, About 3 months ago

Great article...if only the main stream media were brave enough to print this!

Jo Westlake

11:01 AM, 26th January 2024, About 3 months ago

If Section 24 was abolished and the SDLT 3% surcharge removed presumably we would return to buying new builds offplan, which would boost the overall number of houses and would speed up the delivery of more Social and part rent part buy houses. About 30% of new builds are supposed to be 'affordable'. They don't get built if no one is buying the full price houses.

To really incentivise landlords to get into or remain in the industry indexation relief on CGT is pretty much essential.

The incorporation idea doesn't really work for most landlords. How many people expect to be portfolio landlords when they buy their first BTL? Moving from personally owned to incorporated is expensive and complicated. At what point do you make the switch?


11:01 AM, 26th January 2024, About 3 months ago

Can't argue with anything you have written.
I had one set of tenants, a family on benefits. They basically wrecked a nice 3 bed terrace. They dropped into arrears. Ultimately I got a portion of their rent paid directly but used to receive numerous letters from DWP telling me payment this month was reduced to xxxx with no coherent explanation. The numbers never made any sense and I am actually a chartered accountant. I served a s21 and was then fought tooth and nail by the council, Shelter and their legal aid solicitor, but I won.
I will never let to anybody on benefits again as a result of this dreadful 5 figure losing experience and I know that nearly a year on this family is still in temporary accommodation which is presumably costing a fortune. All it would have taken would have been somebody from DWP or the council to say "hey how much are they in arrears?", paid it, and somebody else to tell them to sort their act out in terms of cleaning etc and they could have stayed. My rent was actually £600pcm below market value compared to the current rent on it. Instead all those parties tried to make my life hell like I was somehow in the wrong.


11:25 AM, 26th January 2024, About 3 months ago

Great article
The best is yet to come just as soon as they remove section 21
Perfect storm!

Freda Blogs

11:45 AM, 26th January 2024, About 3 months ago

Government and Councils keep biting the hand that feeds them.

When will they see (or at least acknowledge) that PRS LLs are not the problem, we are part of the solution for this housing crisis.

If and when they ever do, likely it will be too late as I, and many others, are selling.


14:57 PM, 26th January 2024, About 3 months ago

I would not have had to end tenancies and sell properties had S24 not come in.
Simple really, if your not making a decent return on investment considering the risks involved, then you won't invest.


20:17 PM, 26th January 2024, About 3 months ago

The problem is people think they are entitled to own their own home rather than rent therefore the right to buy should never have happened, especially at a discount. The stock was never replenished

House building is supply and demand also, house builders control the pace if all of a sudden planning laws were scrapped and they built houses quickly the prices would drop; they want to make as much money as possible by building slowly keeping the bottom line as high as possible.

I got hit by S24 although I didn’t like it is actually fair when you compare it to other tax reliefs other self employed do or don’t get.


11:12 AM, 27th January 2024, About 3 months ago

Reply to the comment left by Jo Westlake at 26/01/2024 - 11:01
Jo you make a really good point here, I haven't heard anyone say it in this way before.

Sometimes it takes a while for things to really click with me 🤷‍♀️.

It's good because it puts a positive spin on how removing S24 and all the other anti landlord policies for that matter all would increase house building.

Politicians, housing groups and think tanks agree that one of the main causes of our housing crisis is, we're not building enough houses.

We LLs need to push this point.

We really need more houses. More houses means less competition, lower house prices as well as lower rents. Basic supply and demand. Everyone agrees on this because it's common sense.

Yes, we understand that the government want more build-to-rent so that big businesses can make more money but they are clearly unable to invest at a rate TO FULFIL THE REQUIRED NEED. Otherwise they'd be doing it. So not enough units are being built.


Fact: time has shown that anti landlord policies are creating more homelessness as well as bankrupting councils. Not good for anyone. Not good for the country. Certainly not good for tenants who are paying more rent or tax payers who are footing the bill for temp accommodation bill. Resulting in less money to put in the NHS, Councils and education. Time and REAL WORLD EVIDENCE has proved this.

Jo's point is, remove the policies that dis-incentivise LLs (preventing LLs from making a profit), which will increase the money available to invested in off-plan, which will increase the number of houses built.


FTBs firmly blame LLs doing this increases house prices, but the REAL WORLD EVIDENCE that's been happening over the past few years proves a different picture.

There's a big ish development near me where you can clearly see that the developers are putting houses on the market in dribs and drabs because there aren't enough buyer's of any persuasion. Yet we know there aren't enough houses 🤷‍♀️. So how can FTBs be competing with LLs be a real world? It's a made up issue that evidence over time has proven wrong? There's nothing stopping LLs and FTBs buying off plan, the more houses that are reserved, the more houses the developers build. And:


But it's not happening because LLs won't invest in a hostel market. So what's stopping FTBs? It's not LLs after all. If it was LLs competing against FTBs that was keeping prices high then they should be having a field day right now. It's not happening because it was never the problem in the first place.

The Government (of either persuasion) should change tact because stifuling LL investment is clearly NOT working.

Encourage LL investment in off-plan. Use Joe Blog's money to build more houses because the public sector purse just can't afford to build them and big businesses can't invest fast enough.


Telling the government that they're wrong because it's really hurting us, tenants and vulnerable families isn't working.

But MONEY, they understand. They understand that a thriving economy helps everyone.

More houses being built means more money being made by everyone. You can always tell the health of an economy by the health of it's building industr

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