Clause 24 Rent Increase letter to tenants template?

This Tax over four years is a 20% increase. 5% a year. Why don't we all, That is all UK Landlords up the rent by 5% a year on the 1st April each year. All on the same day, all by the same amount?

Reply to the comment left by "Graham Chilvers" at "11/01/2016 - 09:07":

i like your thinking but the actual amount of increased tax payable will be a lot more than 5% for most landlords as the effect will be to breach the threshold into the next rate or even leap frog.

The effect is shown in my calculator at asklandlords.uk. Which appears to be the only calculator available that automatically shows how the tax increase is affected by increasing interest rates, giving the results, not only numerically but graphically as well. Having spent many hours constructing this 2 dimensional spreadsheet, I fully understand all the wriggles involved in this tax change.
But if you want to take a thumbs guide. A typical Landlord currently receiving 40% tax relief on his interest payments. This will be reduced to 20% over four years. That is a change in 5% steps per year. So given static interest rates, your tax will increase by 5% of your interest payments for the next 4 years “sort of!” Personally I expect the base rate to be up by at least 2% in the next four years and would do my calculations on at least that.

Has anyone actually sent a letter(s) to that effect to their tenants? How did it go? Have you increased your rent by 5% or more? I would be interested to know. Thanks.

Its a very complicated subject and the tenant might not necessarily fully understand the issues, or even care, or be arsed.....need i say more we've had them! Here is the letter i drafted for my tenants, but also giving them an outlet to complain to their MP about it also, so they sit on your side of S24....

FORM 4

Landlord’s Notice proposing a new rent under an Assured Periodic Tenancy of premises situated in England.

Housing Act 1988 Section 13(2), as amended by the Regulatory Reform (Assured Periodic Tenancies) (Rent Increases) Order 2003

Dear Tenant,

As you may be aware from the news, there has been a material change by the Government to increase taxation of rented properties (deemed as the ‘Tenant Tax’) in the Private Rented Sector which came into force from April 2017.

The taxation will be based on taxing ‘Turnover’ or Rental income instead of paying Tax on the Rent minus the costs/expenses of running the property ie: Mortgage costs, Insurance, Agent fees etc.
This will have a very dramatic effect of any profitability that comes from the property that helps pay for ongoing improvements and repairs.

Rent: £750
Here are your Current Property Monthly Costs; £630
After Tax (40%) Remaining £72

Under the New Taxation this will change too;
Property Monthly Costs; £630
After Taxation (40%) Remaining £-180

As a result of these changes, there will little/no money left-over or even a Loss, to be able to look after the long term refurbishment and maintenance of the Property, as a result it is very likely that rents will have to rise to help pay for the government taxation that has now been introduced.
I will be looking at what is required as a potential increase in order that it is still viable to run the property expenses, any large costs of repairs such as kitchens, bathrooms, boilers etc, or if this isn’t possible the only other course of action would be to sell the property.

I will keep you informed in the coming months as to what course of action will be required.
I fully support you complaining about the Tenant Tax to your MP for Parliament, as I have already done this with my MP.

Kind Regards
Mike
http://www.tenanttax.co.uk/videos
sajid.javid.mp@parliament.uk

The notes below give guidance to both landlords and tenants about this notice.

To: ........................................................................................ [Tenant(s)]
of: ......................................................................................... [Address of the premises
.............................................................................................. subject to the tenancy]
..............................................................................................
From: .................................................................................... [Landlord(s)][Landlord’s agent]*
*delete as appropriate
............................................................................................... [Address for correspondence]
...............................................................................................
...............................................................................................
............................................................................................... [Contact telephone number]
1. This notice affects the amount of rent you pay. Please read it carefully.

2. The landlord is proposing a new rent of £..................per [week][month][year]*, in place of the existing one of £................per [week][month][year]*
* delete as appropriate

3. The first rent increase date after 1st September 2017 is ...............................................................................................
(see note 11 below)

4. The starting date for the new rent will be ..............................................................................................
(see notes 14 to 18 below)

6. If you accept the proposed new rent, you should make arrangements to pay it. If you do not accept it, there are steps you should take before the starting date in paragraph 4 above. Please see the notes over the page for what to do next.

Signed: ............................................. [Landlord(s)][Landlord’s Agent]* (see note 13 over the page)
* delete as appropriate
Date:...............................................

Reply to the comment left by "Mike D" at "23/06/2017 - 15:04":

Great letter, but I calculate your post tax position to be -£8 not -£180.