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 H B

6:03 AM, 21st November 2016, About 5 years ago

Reply to the comment left by "Rob Crawford" at "20/11/2016 - 19:50":

Council tax business rates? That will really drive landlords out of business and increase homelessness.

Perhaps this is the next trick that the Treasury will come up with in the Autumn statement. My other fear is a removal of interest rate tax relief on residential property within limited companies.

by Hamish McBloggs

9:23 AM, 21st November 2016, About 5 years ago

Hi,

Can someone explain fully and 'in the round' why house prices are so rampant?

Is there an official, peer reviewed apolitical report that points to the causes?

It can't be all the fault of Russian oligarchs, FTSE 100 Chiefs, footballers and private landlords.

By weight of numbers, average salary earners must win? Besides, the ONS own figures show that average earnings declined between 2009 and 2013 as has those of the top 10% of earners.

I read a lot and still don't get it.

Therefore I will write to the Treasury today and ask them to provide me with their vision of the housing market and how they feel it should operate. There must be a strategy and a report articulating it.

I am expecting it to be volumes.

My suspicion is that the real problems would require a 'think tank' of researchers to unpick. This would be too costly, take too long in a highly dynamic system and could never be independent. Besides, bashing landlords gets the popular vote.

I also firmly believe the 'un-crystallised' CGT is a significant incentive for the Treasury to manufacture lots of long grass as their objectives are not strategic and fishing with dynamite is easy.

Hamish

by Dr Rosalind Beck

9:29 AM, 21st November 2016, About 5 years ago

Reply to the comment left by "Hamish McBloggs" at "21/11/2016 - 09:23":

In many parts of the country house prices aren't rampant at all and they are at the level they were at in 2008 or lower and haven't yet recovered. This is a regional and not national phenomenon. Kate Faulkner is good at producing these kinds of reports which are broken down into regional patterns. If you google her name you might find what you are looking for.

by Sean Graveney

9:31 AM, 21st November 2016, About 5 years ago

Even 2008 prices are really really quite high when you compare them to average earnings.

As amazing as it sounds I would be amazed if the Treasury had a master plan for the housing market.

by NW Landlord

9:34 AM, 21st November 2016, About 5 years ago

I would be staggered if they turned on limited companies as big property companies will be donors etc

by James Fraser

9:46 AM, 21st November 2016, About 5 years ago

Hamish,

I think there are multiple problems, reasons and explanations that cannot be encapsulated easily. Ros's point is a good one - it absolutely is NOT a national issue but a regional one.

I keep harping on about the fact that as a national average, prices have doubled every 7.5 years since 1948. HPI is nothing new. And perhaps surprisingly, the graph post-1996 doesn't change, so oligarchs, city bonuses and BTL has had very little effect. (Oligarchs and City bonuses have inflated London and some other places but not really overall).

There must be some fundamental reason. Is it availability of borrowing perhaps? I doubt it's much to do with 'not enough houses' in most places as some areas are over-supplied and cheap as a result. And, according to the ONS the population has grown 13% over 45 years but the number of dwellings has risen 43%. (I've checked these graphs personally and depending on how you interpret them it's between 35 and 50% so I can accept their 43%). Plus, the two biggest post-war housebuilding years - 1957 and 1968 - did nothing to dampen demand. Perhaps it's just a post-war economic boom that has never really stopped, only eased off occasionally?

It's a fascinating question but one which has no ready answer.

by Mark Shine

10:21 AM, 21st November 2016, About 5 years ago

Reply to the comment left by "NW Landlord" at "21/11/2016 - 09:34":

Agreed. I doubt there is much of chance that they will even think about trying to turn on ltd companies. Regardless of the spin, S24 was obviously designed to benefit the ‘big boy’ landlords entering the PRS in a big way by ensuring there will be sufficient future demand for their ‘products’.

by Hamish McBloggs

10:40 AM, 21st November 2016, About 5 years ago

Reply to the comment left by "Dr Rosalind Beck" at "21/11/2016 - 09:29":

Doc,

I agree absolutely that it is regional. Government's own info 'England by region' annual change since June 2015 shows all regions as positive with the lowest being Yorkshire and The Humber @ 5.5%. An unsustainable change.

Hasn't there traditionally been a 'correction' when house price/earning ratio get to approx. 3.5:1 Nominally and historically bounded between 2 and 3.5:1.

The mean has moved up and seems now to be bounded between 4 and 6:1 (I will ignore London, tis a silly place) Source - Nationwide First time buyer gross house price to earnings ratios. I suspect it has to do with the recent low cost of borrowing permitting larger multiples implying a correction would be brought about by a increasing the base rate.

Also, as mentioned elsewhere, the population is growing. But not disproportionately. Increasing the supply will of course depress the prices (or at least the rise in prices) but I am unconvinced that this is a leak proof and complete argument. How could the intent of the purchaser and future owners be controlled to prevent the values 'leaping' to market rates?

I also 'feel' there are deeper social issues at play which raise the demand. For example, our recent search for a new tenant brought about 10 applications from failed marriages and fragmenting family units. 2 houses required where 1 would have done. I have no context to put this example and have to look at more statistics, cast the net wider in the search for a full answer.

I am reading through your references as fast as time allows.

Thanks

Hamish

by Gromit

12:26 PM, 21st November 2016, About 5 years ago

Reply to the comment left by "James Fraser" at "21/11/2016 - 09:46":

The population may have only gone up by 13% but the number of households has gone up more. I don't have any stats but I am sure the average number of people per household would have declined over that same period of time.

by Roanch 21

12:37 PM, 21st November 2016, About 5 years ago

It sounds to me like the Government wants to introduce a fairer tax system where they higher earning Landlords pay more tax then those not earning so much.

How about they look at taxing us on our income bands? You know maybe let us have say £10k at 0%, then say charge us 20% on the next £30k and then maybe for the higher earners over say £45k they could tax us at say 40%. This sounds great to me because it means those earning more will pay more tax and after all they can afford to pay it. And for those earning less it means they will pay less tax.

I think this would level the playing field so to speak because it would be treating us exactly the same as every one else.

I think it's quite easy for the Government to do this because all they'd have to do is .... NOTHING.

Roanch
Ministry of the Bleeding Obvious.


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