Are the RLA losing the plot?

by Mark Alexander - Founder of Property118

9:30 AM, 12th January 2017, About 8 years ago 28

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I do not want to fall out with the RLA as I think Alan Ward and his colleagues have written many brilliant articles. However, his recent article published by City AM entitled: “Why solving the country’s housing crisis means backing – not battering – landlords” contains counter-productive suggestions to Government and signals acceptance of S 24 and of the higher rate of CGT.

Alan Ward has suggested that some of the money raised by S 24 is used to …

“help finance a policy of not applying the levy where a landlord is prepared to invest in a home to rent which adds to the net supply of dwellings. This could be a new build property, converting commercial units into housing or bringing one of the over 600,000 empty homes back into use.”

However, anyone who wants to do that in future can avoid S 24 by purchasing via a Limited Company. What about those of us who will pay the levy on loans we took out to add to the net supply of dwellings in the way he describes? He will “continue to call for the changes to mortgage interest relief to apply only to new borrowing.” That is simply not good enough! When the RLA makes any statement about a compromise re s24, they should clearly state it should apply to new purchases and not to new borrowing. If it applied to new borrowing this could be interpreted as including remortgages on existing properties. The worst thing about s24 is its retroactive nature and how it damages existing portfolios. If it only applied to new purchases on the other hand, many of us would be very happy with this compromise, because at least any landlords who do want to purchase under the new crazy tax regime can go into it (or not) with their eyes open.

To illustrate the problem a bit further: If new lending and remortgages were interpreted as the same thing, many landlords would thereby be condemned to stay long-term on expensive and punitive variable rates or face the s24 regime. There are also hundreds of thousands of UKAR mortgages for example, many of which are due to come to term. Borrowers here have to redeem the mortgages – they have no choice – again, this could be seen as new lending and the borrower could move into the s24 regime. All that would have been achieved is a delay of however many years they have left on their term. The legislation would still therefore be retroactive. This is why we should insist on the phrase ‘new purchases’ being used.

I may have misunderstood the article, the wording wasn’t entirely clear. It could be that Mr Ward was referring only to the 3% Stamp Duty levy. If that is the case his suggestions are even more feeble and accepting of s24.

The next RLA statement I challenge is …

“in the 2016 Budget the government announced that capital gains tax would be cut from 28 per cent to 20 per cent from April 2016. It noted at the time that it would not apply to residential property in order to incentivise investment in companies over property.”

I don’t recall that being given as a reason. If Mr Ward means shares, money only goes to a company when a share is first issued.

Then ….

“we believe that the lower rate of capital gains tax should apply where a landlord is prepared to sell a property to a sitting tenant.”

If a landlord is prepared to sell he is prepared to sell to a sitting tenant. But how many of the latter are able to buy, and why haven’t they bought somewhere else?

Clearly the latest RLA article represents a tacit acceptance of s24 as a fait accompli; by recommending how the spoils should be spent, it also follows the Government’s perverse anti-private landlord agenda.

My questions to the RLA are:

How can any of these suggestions be fair for those of us having to pay potentially infinite effective tax rates on loans we took out, in many cases adding to the net supply of dwellings in the way you describe? This would mean we are punished for adding to the supply but that anyone new coming in would be rewarded.

Which if any of these suggestions were discussed with the new coalition between RLA, NLA, ARLA, SLA under the “Axe The Tenant Tax” banner, and if the answer is none, what is the point of the alliance?

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Comments

Dr Rosalind Beck

8:23 AM, 15th January 2017, About 8 years ago

Reply to the comment left by "Ian Simpson" at "15/01/2017 - 07:20":

I am a member of the Guild of Residential Landlords and have always recommended them to everyone - they also make available all the up-to-date forms etc. Unfortunately, however, they too recently published an article indicating that what was being written about s24 is exaggerated and it won't be harmful to many etc. Utter rubbish and very disappointing when it comes from someone who is so good on the other things - like how to deal with tricky tenants and so on. In a way, they should just stick to that side of things and stay out of things when they either don't understand them or when they are willing to 'sacrifice' the lower number of portfolio landlords in order to favour those with fewer properties and a lot less to lose. The point is about justice and the fact that s24 is 'plain wrong' (Paul Johnson, IFS). All the landlord bodies should have stuck 100% to this message.

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Saul Smart

9:38 AM, 15th January 2017, About 8 years ago

Reply to the comment left by "Simon Griffith" at "13/01/2017 - 11:25":

Here here!!

Couldn't of portrayed the sentiment better myself.

I know what mark has said regarding funding issues and it may not being possible but if it was done it would be welcome to my membership fees (and manyore landlords I know). How many more landlords are there out there feeling 'sold out' by the very organisations they thought 'had their backs'?

It's obvious we badly need an organisation with 'bal*s' and 118 is the only organisation I have seen in the last three years that appear the said items.

Shame on you NLA/RLA

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Paul Blogs

11:07 AM, 16th January 2017, About 8 years ago

I only join the NLA for the advice line. If there was an advice line on Property118 and I'd join them instead as it's been much more useful.

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Mark Alexander - Founder of Property118

11:57 AM, 16th January 2017, About 8 years ago

IMPORTANT

I do not recommend any Property118 members to cancel their memberships with Landlords Associations.

We DO NOT and cannot compete with the value for money they offer. We are different.

With membership of a Landlords Association you have access to workshops and reps, up-to-date documentation, advice lines and discounts on many things including licensing and MUCH more.

I am a member of a Landlords Association myself and I recommend all Property118 members to join at least one of them too.

Admittedly, I too get frustrated with them sometimes. Occasionally their advice teams offer questionable telephone based advice and such issues are freely discussed on forums like ours where peers can also be consulted for input. Like many who have commented I also get frustrated that the Landlords Associations don't work closely enough together by supporting each others campaigns and sharing resources, particularly knowledge.

I was very upset when the larger Landlords Associations didn't back or promote our legal campaigns against The West Brom, Bank of Ireland and Skipton Building Society and it is irksome that they perceive Property118 as competition - WE ARE NOT!

To my knowledge, none of the Landlords Associations offer the same benefits of membership as The Landlords Union. I don't understand why people feel they have to make choices and only be a member of one or the other.

Above all I am frustrated with the lack of joined up thinking in our industry with regards to tackling the tax changes.

Despite all of the above though, I still commend membership of Landlords Associations because I believe they provide incredible value for money with membership fees of less than £100 a year.

Property118 has no intention of providing a telephone helpline, we have a forum for that. If you want specialist help we recommend the people and business we believe are the best in the business. If you want bespoke legal help we have a section dedicated to that on this website - you get what you pay for.
.

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Whiteskifreak Surrey

10:15 AM, 27th January 2017, About 8 years ago

This morning I have received an update from NLA:
https://nlauk.wordpress.com/2017/01/26/nla-budget-lobbying-update/

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Old Mrs Landlord

12:02 PM, 27th January 2017, About 8 years ago

Thanks for the NLA update link. Does anyone know the source of the "new research" mentioned refuting the Treasury's assertion that Section 24 will only affect one in five landlords? I know research by the RLA has placed the figure of basic rate taxpayers forced onto higher rates at around 440,000 which in itself is more than 20% of a generally accepted total figure of two million landlords nationally. When added to all the unincorporated landlords who are already taxed at 40% or higher and will be punitively clobbered by S.24, the numbers must be way higher. Thus the most cursory examination of the Treasury's statement is sufficient to disprove it, though it's still being parroted by the local MP where our own properties are situated. However, I would be interested to hear of any further evidence the RLA have produced and not being an RLA member I don't have access.

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Appalled Landlord

13:39 PM, 27th January 2017, About 8 years ago

Reply to the comment left by "Whiteskifreak Surrey" at "27/01/2017 - 10:15":

The NLA has fallen for government sophistry.

“The Government have stated they want to change the investment habits of people away from property and into other savings which could help pay down the Government debt. ”
https://nlauk.wordpress.com/2017/01/26/nla-budget-lobbying-update/

The only way savings would reduce the National Debt is if the owner donated them to the Treasury, or if the government confiscated them.

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Whiteskifreak Surrey

14:39 PM, 27th January 2017, About 8 years ago

Reply to the comment left by "Appalled Landlord" at "27/01/2017 - 13:39":

I left a comment on that article - actually also quoting Teresa May's Davos speech (as in another thread, on summer budget 2015). Got an email reply from them:
==quote==
Thank you for getting in touch. We have consistently lectured on its retrospective nature since day one – but unfortunately, to no avail. We are absolutely aware, and have pointed out, the hypocrisy of this Government’s approach to business to both Treasury and No. 10. At this point, regrettably it seems as though they know what they are doing and refuse to be swayed. Even so, we will continue to lobby against these policies.
==unquote==

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