Clause 24 Rent Increase letter to tenants template?

How about this.....

Dear Tenant,

Please take some time to read this letter as I am afraid that I have some very bad news, which will affect most people renting property in the UK over the next few years.

Despite our best attempts at fighting a particularly ill thought out piece of Government legislation, we are going to have to increase your rent to pay for a new type of levy on Private Landlords, that will as usual be simply passed on to our long suffering tenants.
i.e.: You!

Please allow me to explain what is happening in the paragraphs below.

This particularly stupid Chancellor of The Exchequer has listened to a bunch of financial morons in the country and introduced a particularly stupid piece of legislation called 'Clause24'

It discriminates and ends the age old proven method of calculating taxation for Private Landlords, that all other businesses in the UK can use and pass on to their customers, in the form of lower prices.

It is Discrimination based on 'Grudge Politics'

Allow me to illustrate its effects on you as a tenant.

Do You Believe Discrimination in Any Form is Bad?

Then allow us to introduce you to one of the most 'Vexatious' & 'Discriminatory' Tax changes since The Poll Tax!

It is Called "Clause 24" and was developed by Rather Stupid Academics, who have little idea of its effects.

Clause 24' is the 'Discriminatory' way of treating 'Particular' people differently in the UK, by taxing them with 'Punitive' Tax Rates based upon 'False' Prejudice but not their actual ability to pay the tax.
Some would call that the Politics of 'GRUDGE'

As one of our tenants, you already know that we have never increased our rents since you took up residence in one of our properties.

That is now going to have to change thanks to the Tory Government currently in power.

The tax hike we are calling 'Clause24' has been set up to penalise all Private Landlords that have finance costs with their bank.

This new taxation is for Private Landlords only, it ignores Limited Companies, Housing Associations, Landlords without Finance and Holiday Lets.

Its sets a precedent and it could soon spread to ANY group of 'individuals' that a current UK Government takes a 'dislike' to.

For Example:
Who does Jeremy Corbyn Dislike? (Labour)
Who does David Cameron Dislike? (Conservative)
Who Does Tim Farron Dislike? (Lib Dems)
Who does Nigel Farage Dislike? (UKIP)
Who does Natalie Bennet Dislike? (Green)

What about Polish Bricklayers, Jewish Priests, Scouse Mechanic's, Garden Centre Cleaners?

Is that The Sort of Taxation You Want in the UK?

If you want to introduce Tax 'Levy's - at least do it across the whole Industry - Don't Tax 'Individuals' within the same industry differently!

Unlike every other business in the UK, that can claim their 'Business Finance Costs' as a 100%, full legitimate 'Business Expense' , Private Landlords, such as ourselves will be specifically 'Excluded' from doing so and it is being reduced from 100% to 20%.

That means that the remaining 80% will become taxable and it is going to cause mayhem in the Private Rental market with massive increases of rent over the next few years, to pay taxes on assumed profits that don't exist.

Our business has been at the forefront of fighting this ridiculous proposal via your local MP, who has proved to be utterly useless and your local councillors, who are simply sticking their fingers in their ears and hoping they will find somebody to blame when it comes into effect.

The rent increase required from Private Tenants, promptly followed by Social tenants will be staggering and in your particular case will be in the range of £5000 per year! (Put your own figure here).

The Government have once again shot themselves in the foot as they would prefer to listen to their cronies than the people who run a rental business such as ours.

So please find attached two letters:

One is how to contact your local MP and criticise their total stupidity in letting this nightmare piece of legislation pass without killing it off.

The other is the Official Notification called a 'Section 13' that gives you one months notice of the impending rent rise.

This stupid, pathetic piece of University Graduate Style of Taxation Theory that has now become law is totally without merit, will affect the poorest in society and will simply line the richest and wealthiest Landlords in the UK with more profit.

We shall continue to fight for all our tenants, but so far we are unfortunately not making much progress.

The legislation is viewed by many as utter madness and is to be sent for Judicial Revue, but if that fails, your rents will have to be increased just to pay the extra tax that the Government wishes to raise through the back door by blaming Private landlords.

Please contact your local MP and complain, as most just don't understand its implications and effects.

All Landlord taxes are Paid By You The Tenant, not your Landlord

Kind Regards

Luke

Thanks Gary,

Quite direct but I may utilise some of the content.

I have started two letters from two different angles...

The first was just straight in with 'Regretfully we write to inform you that there will be an increase in your rent' (followed by the reasons and referral information).

I figured most of my tenants would read the first line, groan and then not bother with the rest of it, so I have started a second letter...

'This is an important letter. Due to changes by the Govt....(reasons and referral info), closing with 'Therefore your rent will increase'.

At least with the second there's more chance of getting them to digest some of the heavier stuff first...

I would say it is important to increase rents to market levels not just because of clause 24 but the likely rent control which IMO is next.

Hi, a great idea and some good comments, however, could I suggest that you work more along the lines of "I am giving you advance warning of future rent increases (that you could help to stop)".

The Clause, if it goes through, would not come in to play until 2017 when it will start to be phased in. As such, any landlords who are saying they are putting up rents now due to (but more than a year in advance of) it coming in would be giving the media more fuel to continue their theme of 'money grabbing landlords'. Personally, I will not be making changes to rents until we know the full outcome, however, you are right to act now as this is the opportunity to influence that outcome. As such, the letter is a great way of gaining awareness but, I would suggest talking about increases of the 'future' rather than increases now.

I have only given it a little thought but I would take an approach more like this:

Dear,

As you may be aware, although our contract allows for me to do so, I have not tended to increase rent during ongoing tenancies with valued tenants.

New tax measures introduced by the Tories in the summer 2015 budget mean that small independent landlords will no longer be able to treat monthly mortgage interest paid to the banks as a business cost when calculating their tax. Corporate landlords are not subject to this change and will continue to be allowed to treat interest as a business cost.

In short, this means that for every £1 which I currently pay to the bank in interest, I will also have to pay an additional 20-25% to the government. Given the size of my mortgages, this is a considerable sum of money which will be due even if I am not making a profit.

As a direct result of this new taxation, I have taken the decision to regularly monitor rents to ensure that they increase in line with market rates. This means that from [date] your new rent will be £ representing a % increase. I appreciate that this will be disappointing but assure you that the increase in rent only reflects a fraction of the increased costs which are being imposed.

It is the strong belief of many (including tax lawyers and accountants) that the government's discrimination against small independent landlords and in favour of large corporate property owners may be illegal. Consequently, the new rules are set to be challenged by Judicial Review. I assure you that if this Judicial Review is successful in overturning the changes, I will reverse this increase from the date on which the tax is abolished.

Sincerely,

Gary

A Very good and direct letter however I would just be worried by pointing out to tenants that it effects private landlords ONLY (which we know it does) and specifically doesn't effect Ltd Companies, landlords without finance and larger entities which may actually encourage tenants to look at these types of Landlord in future rather than us private Landlords which is I'm sure what the government wants anyway.

I have already written to some of my tenants and have drafted a letter like this which is straight to the point and that it is the government that is effectively increasing their rent due to increased taxation

Dear ...

You will be aware that you have been paying the same rent since ../../.. (in most cases it has been at least 3 years )

However due to increased costs and in particular the governments recent tax grab on Landlords commonly known as clause 24 which will increase substantially the amount of tax we have to pay (even if we make a loss on our rentals) we have found it necessary along with our fellow Landlords to have to increase rents to all our tenants

I am writing to you therefore to inform you that I propose that the rent be increased from (Date) to £... PCM and the relevant notice is attached

I have considered your excellent record and your long standing at the property but unfortunately due to this substantial increase we can no longer absorb this cost

If this is acceptable please would you adjust your standing order for ..... onwards

yours faithfully

Reply to the comment left by "Rebecca Hill" at "06/01/2016 - 15:55":

But if rent control measures come to fruition between now and then, we may have missed our opportunity to raise rents at all...

The rent officer for the region, with whom I have a good working relationship, will soon be receiving my updated rental figures, which will include these new, higher rents.

This is an excellent point Luke, one I haven't seen mentioned before. It is information taken seriously by Government.

Every landlord should be reporting their rent increases. Especially now when rents will be rising at their fastest ever.

The VOA collects this information;

NSOhelpdesk@voa.gsi.gov.uk

They establish if you are a genuine landlord then send you a simple form to complete for your local area.

Thanks for your input everybody,

I like the avoidance of a rant in some of your suggestions.

I have also considered going along the lines of copying what the Councils do, when they issue their yearly Council Tax demands, which is to put more than just the bill in the envelope.

They normally put in a local parish leaflet, a fire service, Police Service and explanatory pamphlet of why they are increasing the tax or justifying where the money goes.

Perhaps we should put in a bar chart showing how our tax bills will be in comparison to a Ltd Company and any other UK Private Enterprise before and after the changes and how rents will be affected, a list of all the favourable web links that show us fighting the proposals and stuff like that.

As for rent controls, until the Government promise not to issue them, I would suggest that it is mentioned as a reason for immediate increases, to avoid going bust on the receipt of our first tax bill.

Scottish Tenants are already in line for these types of controls aren't they?

Agree it needs to be shorter and not sound like a rant or 'protest' increase, it might be quoted and come back to bite you and LLs generally.

Also with bar charts provided, great care might be needed to prove any information given, and could vary from one property to the next depending on the LTV on that. However:

I was thinking of breaking down the rent figure into how *I* have calculated it from basic rent (unchanged or in line with RPI if lease allows) + a TTT Treasury Tenant's Tax element of £X + Regulatory Compliance charge R2R checks, and effects of SDLT.

Is this legal?

The SDLT will affect property value, if purchasers haggle for a reduced price due to tax. So another cost affecting returns adversely.

At the end of the day, it is supply and demand, Marris et al think we charge the highest price the market will bear (sic), but many property's are below commercial values.

Anyone can be a busy fool. I have just increased a £120,000 property to £510 pm, then after insurance and repairs, not many folk will accept such a poor return, would they? But this is not London or Wolverhampton. ?