Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Monty Bodkin" at "27/03/2017 - 20:24":

One rule for corporates and another for the rest of us.

No different from s.24

Reply to the comment left by "Barry Fitzpatrick" at "27/03/2017 - 23:01":

Funny though, they cite planning regs as how they get around the room size issue. So not are cheaper yet they have legislated the min room size limits, but if you want to rake in more rent and need not worry about size limits why just turn the room into a flat of sorts. And people want to bash HMO's!!.

If you can you should get out of the PRS - either to do something else (like development) or become a Corporate player yourself and do Build to Rent. PRS will be replaced with CRS even if it takes a while.

Reply to the comment left by "Tobias Nightingale" at "28/03/2017 - 09:53":

It's a Government numbers game. The Government just wants to get as many "new homes" as possible to try and convince the electorate that they are doing something to solve the housing crisis. If it requires the selling of their grannies, then it's 'bye bye' granny.

Smaller sized rental units are an inevitable consequence of Clause 24..principally because those who remain in or enter the private rental sector and use finance.. as landlords.. will have to look at sub dividing existing properties and creating either bedsits or very small units to overcome the extreme tax on mortgage interest costs...AND of course the corporate rental businesses will want to invest in high return multiple occupancy city and city fringe apartments...with more units per building and less space per unit. Therefore the government far from helping to end the so called "generation rent"..will actually exasperate and accelerate the developing situation and and turn it into generation BEDSIT. One only has to look at high growth cities across the world to see this trend. We are already seeing the early stages here in the UK with new accommodation for working people similar to student bedsit type developments. And Its ultimate form..already existing in some places...is something like a sleep pod...even smaller than a bedsit...with communal bathrooms and kitchens.

Just thought I would show some correspondence from my MP Ann Coffey for Stockport Cheshire who clearly has no interest in Section 24
At least her position is on record. I have contacted her a number of times over the last 2 years.

Please read in descending order:

Subject: Re: The Conservatives broken manifesto policy of no tax increase, because of Section 24 Mortgage Interest Relief Restriction for Sole Trader landlords only.

FTAO Anne Coffey MP for Stockport Cheshire

Hello Anne,

Further to my past complaints to you about the introduction of this immoral retroactive new tax which is now set to come into effect as of 6-4-17, I notice in the news today that the Conservative chancellor has now done a U turn on their planned NI tax increase for the self-employed sole traders. I ask you to now push the chancellor and the Conservative government to also do a similar U turn for the Section 24 Mortgage Interest Relief Restriction which is also a broken manifesto pledge.

I attach a pdf copy of your formal written response to my concerns which I must say was an extremely poor reply and also took 3 emails and a recorded delivery letter to the House of Commons to get. Can I ask if you agree with this new tax, did you get to vote on it?

Please see some links to information articles about Section 24 its effect and why it is so unfair. https://www.property118.com/broken-manifesto-promises/95377/ and https://www.property118.com/category/budget-2015-campaign/

Regards,

Jim S

Dear Mr S,

Ann has asked me to thank you for your e-mail about changes in the law relating to tax relief for residential landlords. As you know, Ann wrote to you about this in April 2016, explaining that the changes had been passed into law and there was no further scope for Parliamentary scrutiny. As your MP, Ann is unable to force the government to reverse this legislation.

You refer to this week’s U-turn by the Conservatives on national insurance payments for self-employed people. This was a proposed measure, put forward in the Chancellor’s Budget. There was a backlash from Conservative MPs who made it clear they would not support this proposal, and the climb down came therefore because the government could not rely on its own MPs to get this measure into legislation.

So there is a difference here, which I am sure you can appreciate, between the NI contribution U-turn and the Section 24 mortgage relief interest issue – which has already passed into law.

I hope that is helpful.

Best wishes

Bridget Dunbar
Constituency Office Manager
ANN COFFEY MP

Hello Bridget,

Thank you for at least replying to my email, this is a great improvement and most welcome.

1) If you could please answer my original question, where does Ann Coffey stand with regards to Section 24 Mortgage interest relief restriction?
a. Does Ann agree with it or disagree?
b. Did she have any part in voting for it?
2) Would Ann be will to ask Parliament the question as whether Section 24 is a broken manifesto promise? And while I’m at it isn’t increasing Insurance premium tax also a broken manifesto promise?

You will have to forgive my etiquette about political procedures, I have very little understanding about how it all works as I was never educated to this level, I never got involved in Politics at all until theft was introduced by the Government under the name of Section 24. I didn’t even know that you could get your MP to challenge issues you face. I still don’t know what duties they can perform for me. I keep reading that they work for you, but what does that mean?

Your response on her behalf would be greatly appreciated.

Regards,

Jim S

Dear Mr S,

In response to your further e-mail, Ann doesn’t have any further comment to make about the Section 24 mortgage interest rates position. As we have explained, this measure is now being implemented.

We appreciate your enquiry about Parliamentary procedure and the remit of MPs. You can find out more through the Parliamentary website https://www.parliament.uk/ including details of MPs’ voting records, the Hansard record of debates and the progress of legislation. If you would like to find out more about Ann Coffey’s Parliamentary work, please go to her website http://anncoffeymp.com/

As you will know, MPs are elected to represent a particular constituency in Parliament. They are accountable to their constituents through the ballot box at the time of a general election. MPs and their staff do respond to enquiries from constituents – sometimes hundreds each week – although there is no obligation on any MP to take up issues or to engage in correspondence.

I hope this is helpful

Regards

Bridget Dunbar
Constituency Office Manager
ANN COFFEY MP

Sent: 27 March 2017 20:23
To: DUNBAR, Bridget ; COFFEY, Ann
Subject: RE: Your e-mail to Ann Coffey

Hello Bridget/Ann,

Your answer has been received very clearly, I take the lack of response and the fact that Ann Coffey will not speak out about Section 24 to be that Ann Coffey is in favour of Section 24 Mortgage Interest relief (even for existing finance). Everyone is entitled to their view and I respect that! I just want to know that I have done my bit as much as I could to stand up against something that is wrong.

I honestly believe that this retroactive tax law is immoral as it affects people’s lives who made business decisions 10 and even 15 years ago and is designed to only affect sole trader landlords and not limited companies who rent out property, that in itself is discrimination and is wrong. I can survive the new punitive tax but a lot of sole trader landlords will be forced into selling their properties, I can state as a fact right now that homelessness is going to go through the roof over the next 4 years and an awful lot of misery will come about as people are evicted from their rental homes due to sale or increased rent to cover the extra tax.

Regards,

Jim S

Well done Jim. I suspect that the mealy mouthed responses that you have received are familiar to most of us on this forum. You may wish to point her in the direction of the Irish situation where not only are they reversing their version of S24 (less punitive than ours as it wasn't retrospective) but are looking at additional reliefs in order to rebuild the PRS that they created into the wall !!

See https://www.property118.com/ireland-consulting-landlords-future-taxation/96933/

Reply to the comment left by "Jim S" at "01/04/2017 - 11:51":

Now that it has been passed into law and will kick in in a few days, I think we need to accept that this irresponsible tax will be implemented in full. Question is, what to do next?

Do we sell up? Or significantly reduce leverage? Or take the pain and hope that a more enlightened Chancellor reverses this tax?

Given that once taxes have started, they are rarely removed, it would need to be one of the former. If you have a steady nerve, you could hope for a reversal, but this will not be because a Chancellor likes landlords, but only because of some catastrophe. And remember, Chancellors can remain irrational longer than you can remain solvent.

I am going for a mixture of the first two, sell one property and pay off a large chunk of the mortgage on the other.

There was an article in Guardian regarding S24:

https://www.theguardian.com/money/2017/apr/01/mortgage-tax-relief-cut-doesnt-add-up-buy-to-let-landlords

It is worth reading comments - they are disgusting.
Personally I think the article like that should be titled differently - "...does not add up for the Tenants."
Emphasis on Landlords losing out seems to be justified by general Joe Public. Perhaps if the tenants are shown as suffering the most, the reaction could have been a little bit different.
I am not a PR person, but we need tenants on our side.

Reply to the comment left by "H B" at "01/04/2017 - 14:15":

Your other option is to raise rents. As happened when something quite similar occurred in Ireland between 1998-2001, and more recently again in 2009 and is being unwound again.

Some LL's will evict & sell-up reducing the total stock of rental properties, which with a continuing excess demand for properties to rent will push rents up.

Of course, the property market is not homogeneous so this could be a problem in areas where demand is low. But even here there'll be Tenants looking for cheaper as a result of their existing LL's having to increase their rents.