Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Rachel Hodge" at "23/12/2016 - 02:15":

No need to wonder Rachel, just make up a number like 1 in 5 or whatever other figure suits your argument.

Personal written response to my 2 emails below from Conservative MP :

1.The measures introduced by your government in attacking the Private Rented Sector have made our business unsustainable in it’s current format.

You want us to sell our properties to First Time Buyers – in order to do this we will have to evict the existing tenant. When we evict the tenant have you any advice on what we should tell them ?

They will hitherto have been happy in the property, working hard (indeed many are those JAMS you MPs are so disingenuously claiming to want to help) and paying the rent. You want me to kick them out so they can move over for a First Time Buyer - what should I say to them ? Where can they go ?

PS If you are at all interested Dame Kate Barker has recently produced an impartial report for the Treasury Select Committee – another well informed professional warning of the impending doom.

2.I have sent you lots of information over the last year concerning the housing crisis which your government is making much worse. I think I might have over complicated it.

Brexit. Trump. Richmond. The people ain’t happy. Please listen. We all know that there will have to be a general election soon – those that rule do not respect the democratic rights of the population.

335,000 net immigration.

Say 2 in each household.

167,500 additional units required per annum (will need more to cater for post Brexit surge if a deadline is ever announced) to house immigrants. They clearly never come over here with a bag of cash ready to buy.

5,000,000 rented homes in UK.

You think landlords should sell to first time buyers (none of whom are likely to be immigrants) say 100,000 are sold per annum as a result of your attacks and a cheap crowd pleaser to first time buyers.

Every first time buyer who buys a rented property displaces the tenant who has nowhere to go. Why favour first time buyers over tenants ? More likely to be Tory voters of course.

That means you need 167,500 plus 100,000 = 267,500 additional units per annum from your Build to Rent Corporate buddies who bank roll the Tory Party – they aren’t going to get anywhere near that figure. When they do build, as they have done very nicely in Maidstone they set record new rent levels to high class tenants – never a threat to the normal landlord.

There’s going to be a massive widening of the gap between supply and demand and it is not going to get better soon or ever with your policies.

You spent 3.5 Billion over 5 years on emergency housing – squandering our money on the ne’er do wells for lack of proper organisation.

No landlord in their right mind now houses people on Universal Credit – the recipients don’t spend the money on rent ! We’ve got rid of all bar three of ours now and won’t ever take any more on. Why should we ?

Maidstone Council are out shopping right now for houses to buy or bribe landlords with £2400 to take on UC claimants – they sold them all in 2004 – can you believe it ?

What a mess and you are making it so much worse.

Why can’t you see the damage you are causing ? This was all tried in Ireland (in a more modest format) and it has now been withdrawn as rents rose by 50%. We’ve only managed 11% this year but are now working on more next year – no choice – you have doubled my tax bill on the same profit. You charge me tax on the interest I pay to banks for my debt (madness).

Please answer me just one question. If I sell my houses to first time buyers then where will my tenants live ? Really where ? The ill, the poor, the students, the immigrants, the retired, the career movers, the new couple, the divorcees – none of these want to buy even if they could – where are you going to house them when you force landlords to sell. WHERE ?

REPLY

Thank you for your email of 2 December about housing supply and demand, in particular your concerns that not enough is being done to ensure that there are sufficient rental properties to meet the growing need and the difficulties placed on your business specifically as a result of the announced tax changes.

When the Conservative led Government came to power in 2010, house building was at its lowest rate since the 1920. Under the last Labour Government the number of people on social housing waiting lists nearly doubled and the number of homes available for social rent decreased by 420,000. We’ve inherited huge problem that we are now trying to address.

I don’t think you can be in any doubt that the Government wants to solve the housing crisis First and foremost, we are trying to give everyone the opportunity and security of owning their own home. That is why we’re embarking on the largest state backed housing programme of any government since the 1970’s. The Autumn Statement committed £1.4bn to deliver 40,000 new affordable homes and a further £661million has already been committed to a build-to-rent fund which should, over the life of Parliament, guarantee a further 6,000 homes.

I want to help small businesses thrive and support a strong and thriving professional rented sector. But this needs to be balanced against the interests of the wider economy including home ownership rates.

While in some countries it is normal to live in a rented property without aspiring to own, in Britain we consider owning a home important. It’s part of people’s sense of security, identity and belonging. While making sure people who want to rent can rent, I want to see more young families being able to buy their own homes. Building more homes and getting the balance of incentives right between renting and buying are both necessary to enable this.

I understand that you disagree with the Government’s policy and are concerned both about it’s impact on landlords and the wider implications for housing. I have made the Minister aware of your concerns and he must be hearing the same from other landlords. I am afraid there is little more I can do at this point.

Thank you for getting in touch. I hope you have a good Christmas.

On the positive side at least it is a personal view without all the crap from the Treasury. On the negative side still just not listening, naïve at best, economically illiterate at worst. I’ve all bar given up on the MP now.

2017 – evictions to facilitate strategic sales and/or clearing out all UC recipients, second run of now annual rent reviews, incorporation, vote UKIP at next general election. Sit back and watch the disaster unfold.

PS Love the bit at the end -‘ hope you have a good Christmas’ – well yes we will notwithstanding the government I voted in doubling my tax bill – nasty.

From the Axe the Tenant Tax Facebook page:

"AXE THE TENANT TAX ANNIVERSARY
A very important announcement...

Boxing Day 2016 marks the first anniversary of the Axe the Tenant Tax campaign. To celebrate this special occasion, we have a major positive announcement to share with you.

This announcement will outline how our campaign is set to step-up several gears in 2017 and beyond.

What we will announce is under embargo until midnight on Boxing Day. However, what we can share with you at this stage is that it is a BIG first for the property sector. And we believe that many new and positive things will come from it.

In the meantime, please share your own thoughts and ideas regarding practical suggestions for 2017 that would support the process to Axe the Tenant Tax.
What would you like to see happen?

It only remains for us to wish you a very happy Christmas and extend a big thank you for your support in 2016.

Steve Bolton and Chris Cooper

PS – The announcement will be shared via this Facebook page at midnight on Boxing Day. It will also be sent by email to our supporters. Please be ready to share it far and wide over the festive period. Thank you."

From the Axe the Tenant Tax Facebook Page:

"BIG & BREAKING NEWS FROM AXE THE TENANT TAX
TENANT TAX COALITION UNITES MAJOR INDUSTRY BODIES AND PROMOTES COORDINATED ACTIVITIES IN 2017

Dear Supporter,

This is an important and long post outlining a major step forward for the Axe the Tenant Tax campaign.

Boxing Day 2016 marks the one year anniversary of the Axe the Tenant Tax campaign. To celebrate this achievement, we are very pleased to announce a new and exciting initiative to take us forward into 2017 – the formalisation of an industry-wide ‘Tenant Tax Coalition’.

TENANT TAX BACKGROUND
As you know, we launched the ‘Axe the Tenant Tax’ (ATT) campaign specifically to fight against Section 24 of the Finance (no. 2) Act 2015. Whilst the campaign launch-pad was a legal challenge via the Judicial Review process (which was denied in October 2016 at the High Court), we were always fighting this battle on two fronts; legally and politically.

The ATT campaign has succeeded in gaining substantial media coverage, with more than 1,000 articles being published and national media coverage achieved. Our supporters have met with scores of politicians and a number of MPs have started to use the term ‘Tenant Tax’ or the ‘Axe the Tenant Tax’ in their communications. We have also created a growing list of MPs who are supportive of our cause.

Our proudest achievement to date is the fact that a wide and growing range of organisations have supported the ATT campaign. Many have chosen to put aside any differences and they have worked together for the greater good. This is to be applauded. In 2016 alone we received support from almost all landlord and letting agent representative bodies, property related media channels and more than 3,000 individuals and organsiations who support our goal to Axe the Tenant Tax.

We are very pleased to announce that this industry-wide collaboration has now been formalised. By encouraging and supporting individuals and organisations working both independently and more closely together, we believe that we can and will make an even bigger impact in 2017 and beyond.

TENANT TAX COALITION CHARTER
Coalition Definition
A coalition is defined as “an alliance for combined action.” Below is the Tenant Tax Coalition Charter…
Our Primary Goal
Our primary goal is to Axe the Tenant Tax, or to see Section 24 being amended so that the retroactive nature of the tax is removed.

Coalition Membership
All individuals and organisations that have supported our campaign to date automatically qualify as supporters of the Tenant Tax coalition. New supporters are welcomed and can join by one of the following means:
1. ‘Like’ our Facebook page -
https://www.facebook.com/clause24/
2. Make a donation to the coalition campaign - http://bit.ly/1TXGKwG
Core Coalition Stakeholders
Due to the fact that the Axe the Tenant Tax campaign continues to be a grass-roots, not-for-profit, volunteer-driven movement, we approached the largest representative bodies and asked them if they would engage with us and support us to an even greater degree than they have done over the last 12 months.
We selected organisations who have at least 1,500 paying landlord members and/or who have at least 500 letting agent paying members, to ensure that we had a critical mass of support from the start. We also needed to select a manageable number of Core Coalition Stakeholders, because it is no easy feat aligning interests and coordinating efforts between, in some cases, competing organisations. Huge credit needs to go to all Core Coalition Stakeholders for engaging with us and agreeing to increase their level of contribution and involvement with the Axe the Tenant Tax campaign.

We are very pleased to confirm that the following organisations are the Tenant Tax Core Coalition Stakeholders:
National Landlords Association (NLA)
Residential Landlords Association (RLA)
Scottish Association of Landlords (SAL)
Association of Residential Letting Agents (ARLA)
UK Association of Letting Agents (UKALA)
Together, these organisations represent more than 150,000 private landlords, who in turn provide homes to more than 1 million tenants. They also represent the largest number of professional letting agents in the UK.

In addition to the above, thousands of other individuals and organisations have been supporting the Tenant Tax Coalition and the Axe the Tenant Tax campaign to date. This support can and will continue in a variety of roles; including sponsors, supporters, donors, patrons, media partners, researchers and coalition members.
The Core Coalition Stakeholders above have agreed to support the campaign in the ways that are best suited to each organisations desires and circumstances. Individual and independent activities will continue but the Core Stakeholders will now also work together on some or all of the campaign proposals listed below:
1. Core Stakeholders support the primary goal, which is to ‘Axe the Tenant Tax’ or to see Section 24 being amended so that the retroactive nature of the tax is removed.
2. Core Coalition Stakeholders will share their outline plans for activity in relation to the Tenant Tax with each other, so that better visibility and co-ordination can occur and greater impact is achieved. The intention and goal is to ensure a more joined-up approach to the individual and collective media, lobbying and research efforts.
3. All Coalition members, including the Core Stakeholders, are encouraged to use either the terms ‘Tenant Tax’ or ‘Axe the Tenant Tax’ when referring to Section 24. This will support greater awareness by acting as a focal point for communications and referencing.
4. The Axe the Tenant Tax team will share communications from our supporters regarding the names and correspondence received from MPs and other influencers who have expressed their support for our campaign, with the Core Coalition Stakeholders.
5. An updated Tenant Tax website will be created with input from and links to valuable research and documents created by the Core Stakeholders to date. Key research from other organisations will also be considered for inclusion and can be submitted here info@tenanttax.co.uk
6. A summary of the key activities carried out by the Core Stakeholders to date in relation to their individual efforts to Axe the Tenant Tax will be provided and shared publicly via Tenant Tax communications channels.
7. Existing resources and research completed to date will be shared via the Tenant Tax website, with links back to the relevant Core Stakeholder organisations websites.
8. PR, Media and Social Media efforts carried out by the Tenant Tax team and all Coalition members will aim to drive far greater awareness from landlords, letting agents, tenants and other industry stakeholders who are not currently aware of the Tenant Tax. It is estimated that more than 90% of landlords are not members of any form of landlord organisation and are also likely to be unaware of the potential impact of the Tenant Tax to them personally.
9. Core Coalition Stakeholders have discussed the list of proposed activities and initiatives shown below. Core Stakeholders will choose to support in whatever way they believe that they can add the most value. They may engage with all of these activities, or choose a ‘pick and mix’ approach.

PROPOSED AXE THE TENANT TAX ACTIVITIES FOR 2017:
1. Westminster MP and Tenant Tax Coalition Dinner or evening reception. A dinner or reception hosted in the Westminster area with invitations sent to supportive and swing MPs. Core Coalition Stakeholders can be represented and have some time to share their views with MPs. This will be in addition to all of the past and ongoing lobbying efforts that have being carried out by Core Coalition Stakeholders and others.
2. Extensive Tenant Survey. Axe the Tenant Tax have agreed with SpareRoom that an extensive tenant facing survey on the implications of the tax changes and the knock on consequences to tenants will be sent to thousands of tenants in early 2017. The resulting findings can be used for PR and also to add weight to our combined lobbying efforts.
3. Mortgage Lender and Broker Engagement. Axe the Tenant Tax will be communicating with the Council of Mortgage Lenders and some of the largest individual mortgage lenders and mortgage brokers. The goal is engaging greater support and raising greater awareness to the vast numbers of landlords who are still unaware of the Tenant Tax. Core Coalition Stakeholders have agreed to lend their support to these communication efforts.
4. Research reports and lobbying efforts. The production of impactful research reports and follow-up media releases by the Core Coalition Stakeholders and other coalition members will continue. These will be shared via the Tenant Tax communication channels. Future collaboration on some of these efforts will be discussed.
5. Meeting with and writing to your MP – New Resource Pack. Axe the Tenant Tax will provide a clear and easy to use resource pack that will encourage landlords to contact their local MP. This resource pack will include the ‘best of the best’ resources from the Core Coalition Stakeholders efforts to encourage their own members to lobby MPs. It will also include suggestions regarding letters and responses to letter as well as Tenant Tax campaign documents that can be sent in advance and used as ‘leave behinds’.
6. March 2017 Budget Lobbying and PR. All Core Stakeholders and ATT will be lobbying government and producing numerous media releases in the run up to the March 2017 budget. The ATT campaign will support the efforts of Core Stakeholders and share relevant and appropriate activities and progress reports. (It should be noted that it is not in the best interests of our Primary Goal to share all lobbying efforts and there should be no expectation that this will happen for this reason.)
7. Axe the Tenant Tax Awareness Week – 3rd to 9th April 2017. Axe the Tenant Tax Awareness Week will consist of a series of PR, political and social media activities to link in with the planned start date of Section 24 on the 5th April 2017. This is based on a working assumption that the Tenant Tax is not abolished or changed in the March 2017 budget. Widespread social media campaigns, live events, webinars and direct communication to landlords, tenants, other stakeholders and the media will take place.
8. Raising Greater Awareness. All Coalition Stakeholders, supporters, sponsors and donors will be encouraged to share Tenant Tax links and materials and drive greater awareness towards the estimated 90% plus of landlords who are not aware of the Tenant Tax.
9. Funding and Resources. All Core Stakeholders have and will continue to provide financial support to the Axe the Tenant Tax campaign, either directly or indirectly. Significant costs and investment have and continue to be made by these organisations in the form of staffing, research and both direct and indirect costs towards the campaign to Axe the Tenant Tax. To support this investment and enable an even greater range of activities to be undertaken, the ATT coalition crowdfunding campaign will continue to be live and donations can be made here - http://bit.ly/1TXGKwG
The above is not an exhaustive list but it provides a strong indication on our direction of travel.

We hope that you are pleased with our progress and that we are marking our one year anniversary with a fitting announcement – the launch of an industry-wide Tenant Tax Coalition. We might have lost the legal battle but we will do all in our power to win the war! As the old Mexican proverb says:
"They tried to bury us. They did not know that we were seeds.”

NEXT STEPS
You can help us in one or more of the following ways:
1. Share.
Please share this post far and wide with friends, family and associates.
2. Donate.
Please add your financial support to our cause - http://bit.ly/1TXGKwG
3. Comment.
Please provide us with your ideas, comments and feedback here:
Facebook: https://www.facebook.com/clause24/?ref=bookmarks
Email: info@tenanttax.co.uk

It just remains for us to thank you once again for your support, past, present and future and to wish you and your family a happy, healthy and successful New Year.

Let’s continue to ‘Stand Together, Be Inspired and Make a Difference’ in 2017 and beyond.

Together, we can Axe the Tenant Tax.
Best regards,
Steve Bolton and Chris Cooper"

The Awareness Week sounds like something we can all get involved in and potentially lots of fun.

C.L. Thanks for sharing this. As I was out Christmas shopping I was accosted by a rep. for a legal firm targetting older folk ( I guess I fitted the target group by appearance alone and was too slow to avert my gaze. I had several very good reasons to have a ponderous look about me, last minute shopping without a carefully thought out list of requirements because have been to busy fighting section 24 and worrying about my tenants). She was offering a free 1 hr consultation to discuss what I might be able to do to stop the government seizing my home to fund my impending likely need for institutional care. They're taking 1,000 a week at present is I think what she said!!!

She was standing under a sign advertising discounted Fireworks for the New Year! I made some facetious remarks and frantically got on with my shopping before my weary legs and will to live gave up on me.

Of course the government want us to own our homes otherwise they will have nothing to take from us if we dare to become a burden on the N.H.S. and Social Care services that no longer are able to afford care from cradle to grave.

I did not engage. Why should I tell this stranger that I am worried about the other dozen or so that are being taken from me now and complicate it by mentioning tenants who will have nowhere to go.

Waiting for the penny to drop may be preceded by a currency change.

In many ways, Chris Novice, your tenants are the lucky ones - when they need institutional care, they will have nothing for anyone to seize and will receive everything gratis. Whereas you will have to pay with money that you have worked a near lifetime to acquire. You almost think, what's the point?

Home ownership is encouraged so that the state does not have to pay for your old age care.
Tenant deposit schemes are there so that HMRC knows when you let a property and how much you are charging.
The biggest drug baron in the UK is HMG (Tobacco and Alcohol).

. . . or am I being cynical?

Reply to the comment left by "Gareth Wilson" at "25/12/2016 - 17:28":

Bravo Chris & Steve!

An interesting discussion on PT about the marginal rates of tax which shows why the government are not going to be able to count on the PRS to supply family housing in the future.

I've copied the corrected table from Aya showing how additional purchases quickly become non profitable with any increase in interest when you are at 40% tax rate.

Lenders currently asking for 145% rent to mortgage coverage simply won't work any more as you will actually run at a loss with this coverage. As you can see below, with a mortgage payment of £600 against rent of £1000 you will have £0 net profit as you will be paying 100% tax. Any lesser coverage than this on additional purchases will mean you make a loss. So either we have to obtain eye watering levels of rent or we can't supply the extra rental housing that will be needed in coming years,

Rent £1,000 £1,000 £1,000 £1,000
Mortgage £300 £400 £500 £600
repairs/voids £200 £200 £200 £200
Tax £320 £320 £320 £320
Tax credit £60 £80 £100 £120
Net tax £260 £240 £220 £200
Profit £240 £160 £80 £0
Marginal tax 52% 60% 73% 100%