Treasury response to Section 24 report by Dr Rosalind Beck

Reply to the comment left by "Peter David" at "18/11/2016 - 15:05":

I see...but how can you be adamant that someone will pay extra £24000 in rent, what if people can't afford to pay increase? then I would assume only option would be to sell?

Recently (mostly) cleared a mortgage.
In part to avoid this nonsense
In part because the 'prudent lending rules' are ludicrous and simply cannot cope with self employed. (Fred Goodwin still has a lot to answer for). Could not get another sensible mortgage.

Sooo,,,,

Last tenant moved out a short while ago
Almost finished giving the property a '10 year service'

INCREASED the rent, up by the CPI
ADDED an amount to balance the cost of capital I no longer have.
ADDED the additional tax I have to pay.

Anything else would NOT be sensible business practice.

New tenant before Christmas who will be paying my additional tax and cost of capital.

I will be standing still.

Treasury coffers will be fuller.

Social mobility is improved.

Reply to the comment left by "Simon Hall" at "18/11/2016 - 13:40":

'Most landlords are from ethnic minorities'??????

Explain?!

They either will afford it, painful though it may be, or move to somewhere cheaper. I dont want to evict anyone and will try my damnedest not to, but if any of my tenants have to leave, we have plenty more offers from people moving out from wealthier areas (notably London).

I think my additional bill is around £35,000. It's do-able in rent terms, but utter madness in reality.

Reply to the comment left by "Sunita Rickman" at "18/11/2016 - 14:29":

Because Nigel farage is a self serving double glazing salesman. He has never been voted in as an MP. Simply another freeloading euro crat

Reply to the comment left by "Dr Rosalind Beck" at "17/11/2016 - 17:18":

Hi,

Sell and get out is presumably euphemistically encompassed by the term "difficult decisions" and is an implicit desired consequence; to release more properties to the market place.

Are the capital gains implications for unincorporated landlords more onerous? Would this change the calculations?

Government has not shared the risk. This 'uncrystallised revenue' has not been earned. Forcing 'difficult decisions' is therefore unfair.

I do not see any response from Government that suggests mechanisms that might ease the exit of those with increasingly marginal finances whilst the BTL market 'realigns' itself.

I do not see any response from Government that explains their vision of the rental market and whether unincorporated landlords have a financially viable role in that future.

Hamish

Reply to the comment left by "Peter David" at "18/11/2016 - 13:36":

..... well it's like this.

In fantasy land, where George Osborne is actually respected and consider smart, ......................

I am reading ours posts and feeling uneasy, as we are excellent keyboard warriors, but we are not being listened to.

The main feature on the BBC news yesterday was the atrocious lack of housing.
It was like a party political broadcast for Shelter.

Nobody has a solution and it's about to get a whole lot worse.

I have already evicted 5 social tenants and will get rid of another 8 in the new year.

Perhaps this might be a question to pose to our so called "Housing Minister".

Dear Mr Housing Minister,
Cc. The Prime Minister

I am surprised that you have not yet been sacked or had the experience of an opposition party rip you to shreds, but I get the sense that your time is about to arrive and you are going to wish that you never accepted your current positions.

Let me see if I can enlighten you to what your previous chancellor of the exchequer has set in motion.

It's going to be the equivalent of a political atom bomb that may see your party in opposition for about 20 years and get UKIP into power at a stroke.

It's called U.S (Utter Stupidity) or Section 24 of the Finance Act 2015.

Yes, we know, it's that thing that those whinging landlords keep saying will cause mayhem, but you don't or won't believe them.

Well nobody believes that George Osborne was a genius either, which I see why you probably sacked him.

For example, let's see if you can follow a simple excercise in "common sense"

If you wanted to treat more patients in the NHS without a perceivable cost, would you kill all the blood donors, Specialist's and organ donors with an injection of poison?
You wouldn't would you, I mean you would kill off the medical providers, that would be sheer madness wouldn't it?

But you have injected the Private Rented Sector with the equivalent of a slow acting poison and you have a very limited time to introduce an antidote.

Would you limit a surgeon to 3 litres of blood per operation?
But you intend to limit the funds that a housing provider can borrow, from the 1st January, 2017.

Would you tax a surgeon in such a way that he or she would pay income tax at a higher rate than a multi millionaire?

But you intend to tax housing providers in such a way as to cause bankruptcy, even if they make a loss?

Would you tell a doctor that you would cap their revenue, but will want them to treat another million people with less money?

But you intend to ask private landlords to increase supply, with less money, tax them to oblivion and stigmatise them or allow others to do so?

Anyone that did that would be described as a lunatic.

Are you a lunatic?

Did you go to a grammar school or pass a simple business test?

I.e.: Gross profit - allowable expenses = taxable income.
As opposed to
Grudge politics + Gross Profit + 80% of finance costs = taxable income that social tenants can't afford to pay through rents and so will be evicted and working tenants will pay through higher rents or landlords will go bankrupt.

I assume that you wouldn't, fall into that camp, I mean that would be stupid wouldn't it?
if you agree that that would be utter madness.

Perhaps you feel that People who claim tax relief against a genuine business cost are a burden on society.

Well apply it to all industry and watch U.K. Plc shut down overnight!

Some Landlords are demonised at the moment, some justification is valid for the criminal landlords, but the same applied to MP's caught fiddling their expenses and it's was generally accepted that you were not all guilty.

Anyone who came up with Section 24 may have thought it had some merit, but does it?
Well if you think a rented house can only come from a councils stock, possibly, but let's face it.....

Section 24 is never going to survive, because it will bankrupt landlords and evict hundreds of thousands onto the streets.

It was and still is simply grudge politics, but it also just means the people that have placed that thought into your head are academically foolish.

I am curious that as a housing minister you appear to be injecting the major group that bears you no grudge with a deadly poison of bankruptcy via HMRC or taxation on non existent profit and watch in absolute horror as the private rental market eventually gets taken over by thousands of incorporated folk that will be able to eradicate their tax bills with bonafide tax allowances at the expense of small pension pot builders.

Those people will place their properties into an asset class that may never come back to the market, as such assets are passed down for generations in companies that never die.

As you attack the multiple millions of BTL landlords by stealth, your party is going to get ripped apart as your social rental sector totally collapses, as it is doing right now, as I and thousands of other Private Sector Landlords either sell up, incorporate or evict social housing tenants.

I didn't want to, but I now have no choice.

These are the same people, who at a later date, will repay your political party with oblivion as they switch allegiance to UKIP or any other party that speaks common sense, which yours currently doesn't.

You have at your disposal an army of housing providing entrepreneurs that instead of encouraging, you are about to destroy and replace with either a corporate organisation which will Ratchet up rents across the U.K. The likes you have never seen before or will simply retire early with their funds and invest outside the U.K. or the next big thing, (we don't know what it is yet, but it won't be housing).

It will be a stampede of panic that you and your government will watch as the housing values outside of London could crash as any interest rate increases will anniallate all the BTL landlords with taxes on non existent profits.

Why are you not utilising your army of BTL investors?

If 1.5 million landlords renovated or bought just one more property each in the next 3 years, would it help your so called housing crisis?

If so, then get your chancellor to reverse section 24, before it gets any worse and remove the 3% SDLT surcharge so that we can get on with providing your houses.

If you dont' well you might want to consider an election before next April, before the panic really sets in.

I am no longer accepting LHA or UC tenants, because they will not be able to afford my forthcoming tax bills, I have stopped renovating and I am selling off poor performing properties.

I am a basic rate taxpayer and next April I will become a higher rate taxpayer, not by any increase of income, but by a new crazy Tenant Tax called Section 24,

It will kill off BTL and you will pay a terrible political price

You have been warned, on more than one occasion,you have an opportunity to get the housing market moving again, don't squander it.

Furthermore what on earth is the government doing interfering with businesses and making them financially unviable through extreme taxation? Myself and my partner are happy, our tenants are happy, our mortgage companies are happy, our management agents happy, the repair guys are happy, everyone in our portfolio is bumbling along reasonably nicely one way or another. Then a conservative government no less steps in and basically starts to smash everything up. I am reasonably intelligent but this taxation leaves me slumped at my desk bereft of any glimmer of comprehension as to what it's benefit is. To any one. It's political vandalism.

Reply to the comment left by "Steve Wood" at "18/11/2016 - 13:38":

@Steve,

I tried this some time ago also tried Douglas Carswell, my local UKIP candidate (Matthew Brown), the local management committee. I offered them ~2m landlords (+ their other halves as well) votes at the next election for just fair policies/taxation, not even Landlord biased policies.

The best I got back was that they hadn't formulated a housing strategy, to which I replied it was pointless having a strategy unless they got sufficient votes to get them into power to implement it. Then silence.