Treasury response to Section 24 report by Dr Rosalind Beck

Treasury response to Section 24 report by Dr Rosalind Beck

15:34 PM, 17th November 2016, About 5 years ago 138

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Below is the response from HM Treasury to the comprehensive report written by Dr Rosalind Beck on Section 24 of the Finance (No. 2) Act 2015 “the unjust legislation that will make the UK housing crisis much worse.”HM Treasury

Click Here to Download the full report by Dr Beck

Please leave any (polite) comments you would like the Treasury to take on board and we will inform the HM Treasury that real landlords’ views of Section 24 can be found here.

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Comments

by Dr Rosalind Beck

12:03 PM, 19th November 2016, About 5 years ago

The comment about the Irish situation is not correct. My reply to this point will be seen when my follow-up letter to the Treasury is published on Monday on this site.

by Chris Novice Shark Bait

15:00 PM, 19th November 2016, About 5 years ago

Reply to the comment left by "Hamish McBloggs" at "18/11/2016 - 16:51":

Hamish, this is both true and significant. The various LL associations have offered other worthwhile suggested means of addressing the perceived problem, but it has fallen on either deaf or intransigent ears.
Chris

by Chris Novice Shark Bait

16:46 PM, 19th November 2016, About 5 years ago

Where are we with our media coverage in respect to section 24? The media company financed, through Crowd funding, property 118 Action Group. e.t.c. Either I have been missed me off an important mailing list or Steve Bolton and Chris Cooper. Have gone surprisingly quiet since the judicial review went against us, even though G.A.A.P. formed no part of that process.
Am I missing something?
I am surprised no comment as yet on this string from M.A. or Steve and Chris.
There are anomalies and questionable things playing into the hands of the government:
Is B.T.L a business?
Is B.T.L a pure investment strategy?
Imputed rent – V- M.I.R.A.S. Historically.
We not only did commit, but still do and should be commended for doing so, despite the fact that we receive less government incentive than our foreign counterparts.
My view is we were invited in to help solve the housing crisis.
Given the advent of B.T.L. mortgages, after council house sell offs (a conservative and divisive strategy) there was a gross lack of provision in the rented sector.
We played by the existing rules, saw a business opportunity and fully committed on a long term plan that cannot be simply unwrapped in 4 years turnaround without just calls for compensation.
The government talk of level playing fields in a haze of fog.
What they actually seek to do is change the goal posts to 2 feet wide, with 2 goal keepers and change the playing surface to a skating rink.
We are not ice skaters! Tuff. Live, learn and adapt or expire.
Who amongst us respects a government that will seek to do this for some bigger, undisclosed motive?
It begs the question of motive. The ends whatever they are do not justify the means.
So we are entitled to keep pressing them for an explanation which they have not yet acceptably given, (despite numerous such reasonable well documented rational requests).
Failing that we have predicted a disaster that did not need to happen. We have current grounds for a no confidence vote in the current conservative government, on the PRS issue alone, but only amongst ourselves currently.

by Pete David

16:53 PM, 19th November 2016, About 5 years ago

Reply to the comment left by "Chris Novice Shark Bait" at "19/11/2016 - 16:46":

Of course BTL is a business! Not only that, we've just been through a year long tax investigation by HMRC large business division. If it wasn't a business then what was all that about ? Take it from me BTL is a business. Buying a Renoir and locking in a safe storage is an investment. Buy to let is a demanding business. Let's be very clear about this.

by Chris Novice Shark Bait

17:51 PM, 19th November 2016, About 5 years ago

Peter, I agree with you but I can't "take it from you" it has to become accepted by all. How do we achieve that because that would be a huge step forwards? We are a political football otherwise with no public sympathy on a hammering to nothing.
Chris.

by Pete David

17:57 PM, 19th November 2016, About 5 years ago

I hear you but if I was challenged about this I would say of course it's a business, I am employing three letting agents, spending an average of three thousand pounds a month on repairs. Paying huge amounts of vat on operational daily expense. I have another business unrelated to property and that also has exactly the same behaviours and challenges. A five million pound property portfolio is hardly an occasional hobby.

by Mark Shine

18:44 PM, 19th November 2016, About 5 years ago

Reply to the comment left by "Peter David" at "18/11/2016 - 17:06":

@ Peter, you say: ‘this taxation leaves me slumped at my desk bereft of any glimmer of comprehension as to what it’s benefit is. To any one.’

Some of those who may directly benefit from the implementation of S24 include:

1. The ‘big boys’ - large corporate landlords whether their main business activity is buy to let or build to rent or a mixture of both. http://www.telegraph.co.uk/business/2016/05/19/private-renting-developer-grainger-profits-up-as-buy-to-let-sque/

2. The ‘lucky ones’ – smaller corporate landlords including those who have one or more properties that are held in a LTD company. I doubt the govt were intentionally trying to help these landlords, but it would have been very difficult for the political elite to help the ‘big boys’ without giving the same benefit to the ‘lucky ones’.

3. The ‘wealthiest ones’ – landlords holding unencumbered properties are unaffected by S24 but will benefit from lower supply in the PRS, less competition and upward pressure on rents.

4. HMRC – short term tax grab. CGT from any ‘individual’ landlord businesses with encumbered properties who are forced to exit as a result of S24. Also increased revenue from ‘individual’ landlords who own encumbered property in their own names. Although longer term, will HMRC’s receipts decline (income and capital gains) as more of the PRS becomes incorporated?

5. Some Tenants/FTBs – particularly those who are already in a position to buy anyway, and maybe some who were ‘nearly there’ but are hoping for increased availability and a market price correction due to S24. However the negative effects of S24 are likely to make it much harder for the majority of tenants.

by Rachel Hodge

19:43 PM, 19th November 2016, About 5 years ago

Good points Mark Shine. I've always thought the most outrageous point about this was the discrimination between the big boys and less than those. And I mean really big. City players. Tory donors. Big business would never tolerate the removal of finance costs from deductible expenses; that's why it never applied to big businesses. Like you say, there were some incorporated SME LLs who happened to slip through the net. Unfortunate for OsCam, but the only way to protect the big businesses from the radical policy was to exclude incorporated businesses. I would love to see the minutes of the meeting where that idea was cleared. That would certainly prove the state aide argument.

Wrt whether BTL is a business, I've never understood how it could be classed as anything else when there are legitimate businesses managing lettings, and there are incorporated LLs conducting their businesses, the same way I do. So why is my business any different when I'm doing exactly the same thing as those incorporated LLs and letting agencies, only I'm not incorporated? It doesn't change what I'm doing!

Of course, I do have the advantage of potential capital gains, but I'll be taxed to buggery on that.

by Mark Shine

20:04 PM, 19th November 2016, About 5 years ago

Reply to the comment left by "Rachel Hodge" at "19/11/2016 - 19:43":

Yes Rachel from the moment that George delivered that heavily spun part of his budget speech on July 8th 2015, it was very clear that Clause 24 was effectively State Aid, even if the courts ruled that HMG were legally allowed to ‘get away with it’.

by Gromit

20:46 PM, 19th November 2016, About 5 years ago

Reply to the comment left by "Mark Shine" at "19/11/2016 - 18:44":

6. George Osborne when stands down (or kicked out) from Parliament. He'll pick up a few cushy non exec directorships at some BTR Companues has helped with 6 figure salary, maybe even a position at Shelter or Crisis ?


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