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 Rob Crawford

20:58 PM, 19th November 2016, About 5 years ago

Worryingly the response NLA received is that the Treasury doesn't feel the introduction of clause 24 is a sufficient reason for landlords to increase rent! Any additional overhead will of course result in increased in rent, are they that naïve to think otherwise? Or do they know something that we don't? Dare I say it but, could there maybe a surprise in the autumn or summer budget that introduces rent capping! I think it's time for us to accept that clause 24 will be introduced and for landlords to prepare as best they can for the future with clause 24. Think out of the box! Interestingly the response above confirms that holiday lets will be unaffected by clause 24. Many landlords have properties in cities or on the coast or other areas of interest so maybe holiday lets or an AirB&B type arrangement could be an option, just be aware of the risks (pop up brothels are on the rise). Selling to reduce the size portfolios with the aim of lowering gearing ratios and reducing interest rates on the remainder. Maybe reducing your employment income by switching to a 3 day working week or even early retirement! Forming a partnership now and then a Ltd company, but be aware that HMRC will be looking for tax dodgers - it has to be a broader commercial concern. If you currently employ a high street letting agent, consider reducing your overhead by employing an online letting agent such as lettingsupermarket.com. At 4% full management fee it's worth a punt! I have no doubt others can add with ideas. Everyone is different, there is no single solution that will fit all.
Rob Crawford recently posted...HMO Mandatory Licensing to be Expanded

by David Price

21:04 PM, 19th November 2016, About 5 years ago

Reply to the comment left by "Barry Fitzpatrick" at "19/11/2016 - 20:46":

George Osborne in Shelter or Crisis, an interesting propspect.

by Gromit

21:11 PM, 19th November 2016, About 5 years ago

Reply to the comment left by "David Price" at "19/11/2016 - 21:04":

Well maybe not, once Shelter & Crisis realise the real effects of s24.

by Adam Lawrence

21:44 PM, 19th November 2016, About 5 years ago

Very interesting Jonathan. The only thing I could add is that the council meetings I've attended of late all tell one story - massive increases in those in temporary accommodation (in percentage terms) - small councils seeing 60-100% rises in numbers. Birmingham already has 15000 in temporary accommodation (not sure on % growth there). Very very small numbers don't take long to get material at those sorts of growth rates.

I think what you say about temporary etc. Is spot on and a bit of a joke......the central point really is the same. Understand the incidence of the tax!!

by Carol Duckfield

9:50 AM, 20th November 2016, About 5 years ago

And to rub salt in the wounds is this article from insidehousing
Profits rise 10 times faster than supply at major builders, report finds

16 November 2016 10:49 am | By Sophie Barnes

Profits grew 10 times faster than housing completions among the top five house builders between 2010 and 2015, a new report has found.

Academics at Sheffield Hallam University said the figures showed private builders would be “simply incapable” of meeting the country’s housing need alone.

The research, Profits Before Volume in Housebuilding, showed end-of-year profits for the biggest five firms increased from £372m in 2010 to over £2bn by 2015 – a rise of more than 480%.

During this period completions rose by 48% to more than 50,000, matching their pre-recession peak. The report said dividend pay to shareholders increased over this time amounting to 43% of profits, totalling almost £1bn in 2015.

Housing associations, with the exception of a small number of for-profit providers, invest annual surpluses in new supply and existing stock.

The authors called for the government to do more to increase investment by councils, housing associations and other non-profit bodies for housebuilding. This could include measures over the use of reserves, rent policy, land supply and borrowing restrictions.

The report concluded: “The failure of the private housebuilding sector to build in sufficient quantity is not some kind of temporary aberration, while the exigencies of the 2008 financial crisis work through the system. This failure is long-standing and is indeed integral to the business model that major house builders work with.”

Housing minister Gavin Barwell said: “We know there is more to do to ensure the housing market works for everyone and not just the privileged few, and we will be setting out further details in our Housing White Paper shortly.”

A spokesperson for the Home Builders Federation said the housebuilding industry has increased its output by 52% over the past three years.

He added: “The industry is keen to see contributions from other sources and we are working closely with government on how to enable SME builders to build. Cuts in public funding, however, dictate that the country will remain dependant on the private sector for the majority of its housing supply, a challenge the industry is committed to address.”

by Richard Mann

10:57 AM, 20th November 2016, About 5 years ago

Reply to the comment left by "Carol Duckfield" at "20/11/2016 - 09:50":

I really do not understand the point of this comment.
So ... building companies made a profit ? Great! Well done! Congratulations! I'm happy for you and the shareholders.
Pay more taxes ? Well of course! that's absolutely fine. That's all part of it, make a successful business and pay your FAIR SHARE.
So private business is not able to provide the anticipated number of new homes needed?
It's always been that way. What's new about that statement?
In the meantime lets provide a solution shall we ? Let's start a letting business and supply essential housing for people...oh no...wait a minute The Tory party don't want this lets penalise with S24, those who think for a moment they can help out and serve their community.

by mike bianchi

17:33 PM, 20th November 2016, About 5 years ago

I to am in a very similar position to Jim, I have a small pension. I worked for months on each house to turn them into very nice properties to rent, from know all of a sudden I'm a high rate tax payer earning net around 25K wow a really a high rate earner. This change does nothing to affect the rich, it simple penalise those of us who are trying to do the right thing.

Mike

by Mark Shine

19:31 PM, 20th November 2016, About 5 years ago

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

Rachel you say: ‘I would love to see the minutes of the meeting where that idea was cleared.’

As would I.

However I suspect that the chances of you or I ever seeing the minutes of the early meetings to conjure up what was to eventually become Section 24 of the Finance Act 2015 (No. 2) are zero.

The meetings would have been very private affairs that took place in such settings like a private room in a very exclusive private members only club in Mayfair or onboard a billionaire’s private yacht somewhere.

by Rob Crawford

19:50 PM, 20th November 2016, About 5 years ago

Lets not go down the route where landlords of privately rented properties want to be considered as a business - unless you want to start paying council tax business rates! Yes we are a business but different rules apply - there are pros and cons!

by Dr Rosalind Beck

21:35 PM, 20th November 2016, About 5 years ago


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