National Rent Rise Day 5 April 2017

Hi there,

There are so many things wrong with this suggestion, it's hard to know where to begin. But here's a start:

a). The legalities of price-fixing which has already been discussed above.
b). Not all landlords need to raise rents as many will not be affected heavily by S24. Why would they risk losing good tenants? Won't tenants be asking why many landlords are not charging the "Tenant tax"?
c). I am not an expert on these things but I'd be extremely careful about referring to any component of the rent due as a "tax". The extra tax due to S24 is payable by the *landlord* as it is their income, not the tenant, and I very much doubt that it would be legal to impose any kind of tax on your tenants (which is what it looks like if you are referring to a "Tenant Tax"). I stand to be corrected on this...
d) Rightly or wrongly, landlords are already extremely unpopular with the general public. This kind of behaviour exactly illustrates why this is the case. As far as I am aware, the S24 tax changes are specifically INTENDED to discourage reckless borrowing in BTL. Any hint of cartel-like behaviour will, I am sure, be jumped upon quicker than you can say "rent controls"...

Put the rent up if you need more money (and your tenants are prepared to pay it!!) but coordinating rent increases and/or itemising rent and specifying a "tenant tax" is a terrible idea IMO. Good luck with it if you try it! Sorry :-/

Reply to the comment left by "Tony Atkins" at "11/10/2016 - 14:26":

Are you thinking of IR35? ...if so, that isn't a problem. So far as I know there are no rules of any sort that dictate that a limited company must have more than one client (and have in fact operated such a connection for over twelve years both with and without a payroll) but plenty that say that even with several the "employees" may reallybe the employees of the client, the realtionship is a matter fo fact.

Can you give an example of a particular concern?

Reply to the comment left by "H B" at "11/10/2016 - 20:52":

Hi HB

Thank you for enlightening me about the rules on "price fixing" by cartels. I'm pretty sure that raising rents on a set date due to additional costs (tax increase) becoming effective on that date would not be "price fixing" as the increases would all be different (as every landlord's situation (and tax burden) would be different), there is no discussion or collusion about actual rents charged, and there is a legitimate reason why the rents would go up on that date. Thus I believe that putting the rents up on that date is both legal, and fair.

You have stated "But I will be happy to raise rents as appropriate, taking into account my costs. I will put the rents up, but not on a day organised by others." On the basis of your statement about putting rents up as appropriate taking account of your costs, I agree entirely, and this is exactly what I am saying, if costs go up then the landlord may need to take account of the increased costs and raise rents accordingly. The amount each landlord may need to raise the rent will vary from landlord to landlord and from property to property (as some may have higher LTV mortgage ratios than others, or be or profitable/loss making than others).

As for such rent increases not being on a day set by others, well it is the government that has set the day by making the tax (increased cost to the landlord) effective from a set date, so if landlords are to adjust the rent taking account of the date when costs go up, then it is reasonable for them to increase the rent on that date. - This is of course an individual decision, and some landlords may choose to bear the increased costs themselves (if their properties are sufficiently profitable) and keep the rent levels the same, for for many landlords the profit margin is very slim (or non-existent) so they will need to pass on the increased costs to their tenants in the form of rent increases from the moment those extra costs (tax) become effective.

Reply to the comment left by "James Robertson" at "12/10/2016 - 01:00":

Hi James

Just a quick comment in relation to one sentence in point d) of your post.

If s24 was really about discouraging reckless BTL borrowing, then there are no doubt better ways of doing it, AND it would only apply to NEW borrowings, not be imposing an additional tax burden on existing borrowings. s24 is clearly a way of hammering more tax out of small scale individual landlords, and deliberately putting many out of business.

Why not make it retrospective? While landlords still owe enormous amounts of money, with little equity, they are a risk to the economy and the banking system. As the old saying goes, "If you owe £1000, you have a problem. If you owe a million pounds, your bank has a problem".

Reply to the comment left by "James Robertson" at "12/10/2016 - 09:06":

I'm not sure that taxing individual landlords more and making some of them bankrupt will reduce the risk to the economy!

Reply to the comment left by "James Robertson" at "12/10/2016 - 09:06":

Evidence please for the "little equity" point. It may have been rhe case that many were geared to 90% but I suspect that the current highest is 80% or less. Our maximum borrowing on any one property and our overall LTV is around 62% and would be falling faster but for GO's stupidity.

Reply to the comment left by "Gennie Nash" at "11/10/2016 - 21:53":

Gennie.

Yes - it does store up problems with longer term tenants. Mine are usually between 2-3 years so not such an issue.

I know people who were recently outraged by a 50% rise,and the example was publicised as a case of greedy landlords. Even with the 50% rise the rent was below market value. It had simply not been put up in 10yrs. Obviously far from being greedy but left themselves open to being pilloried as such.

No one gave a moment's thought to how much had been saved over the ten years

Based on the apathy of this thread, I am seriously considering consciously disengaging from the Tenant Tax campaign. I'll just sort my own affairs out
and no longer offer my assistance to the wider campaign for all. Content here demonstrates to me that we are never going to be coordinated in our approach -in general term, I mean (not specifically a National Rent Rise Day).

It would appear a great number of landlords aren't that bothered and especially with comments such as, "Cutting costs is an equally effective way of protecting your bottom line, and there are plenty of tax planning options available.' What a load of nonsense. It's only a short jump to include limited companies in this tax and this is about fairness, not finding a barely palatable solution to the Government's unjust, un-British, retrospective changes! Why stop there...why not lobby your MP for MORE taxes? There's always plenty of options, right?

We were wondering where the 1.8M landlords are, and there here...lurking in the background of these threads, rarely raising their heads except to almost support the Government.

Whether directly affected or not, the gravity of this change is enormous. But then it would seem that some amongst us will always believe that others (no matter how genuine or big of a problem being faced) just make a fuss over nothing.

Reply to the comment left by "Gennie Nash" at "11/10/2016 - 21:53":

Gennie Nash, what's so perplexing about not increasing rents? We've just gone through a recession and in some areas market rents haven't increased at all. I set some rents 7-8 years ago and until recently they were still at market rents. If I had increased these by 3% or 4% a year they would all be empty now as they would be severely uncompetitive. I had no reason to increase the rents until S24 reared its head anyway, my costs had not increased significantly and I am not a "greedy landlord" who profiteers from my tenants.

My tenants will now get a modest increase to cover the first phase of S24 introduction, followed by annual increases until 2020.