Section 24 is the reason for rocketing rents – not landlords

There Is a growing trend of putting taxes and regulations on businesses rather than the "end consumer".
These impositions get passed on to the consumer and the consumer blames the provider while the government gets away scot free with with thier loot without the blame. In fact because the provider gets the blame, the government can do so even more damage because there is no sympathy for the provider any more.

Well said @Mick Roberts.

Absolutely loved your “brickie” illustration.

Of course as well as the punitive s24 tax there‘s also the slight matter of government both national and local totally failing to build social housing over the last 30+ years and Thatcher selling off what there was.

Just wait for all the new fines and double
Rent Repayment Orders of the upcoming. Rent Reform Legislation.

Of course Section 24 is the problem.
At rock bottom interest rates it was masked but as mortgages come off their low fixes and payments soar Section 24 is a huge problem.
If the monthly mortgage payment increases by £500 a month then assuming the landlord could actually increase the rent £500 wouldn't be enough to cover it. The landlord has to give the mortgage lender an extra £500 (plus whatever they were previously paying). Then the government wants 40% (£200) of the rent increase before giving back a 20% (£100) tax credit.
In order to fully cover the mortgage increase and Section 24 the rent has to increase by £667 per month. The landlord hasn't received a penny of that and it has left nothing to go towards other increasing costs such as insurance or maintenance.

For medium size portfolio landlords it can be even worse as increasing the rent to try to cover the increased costs may push their fictional profit (taxable income) to over £100K in which case rent would need to be increased by £1000 a month to cover a £500 mortgage increase and Section 24 tax. Again the landlord hasn't received a penny of that money.

Section 24 doesn't just affect the properties with the increased mortgage payments. A portfolio landlord will spread the increases across their entire portfolio in order to make them manageable.
Basic rate tax payer landlords often set their rents at market rent, which is derived from all rents and is heavily influenced by the impact of Section 24.

It could be argued that a relatively small number of landlords pay Section 24 tax but it should also be pointed out we house a large percentage of tenants. It would be impossible to quantify exactly how many tenants are directly or indirectly impacted by Section 24 but my guess would be well over 90%.

Spot on. Have been saying this for years. A lot of landlords with finance costs are selling up as making a loss

A one bed flat renting for £450-£475 in Sandwell West Midlands B64 Postcode 3 years ago has just gone up at £785. Why? Because the three remaining smaller landlords
( including me ) in that block of twelve have sold up because of Section 24 and the increasing hostile environment. No competition. Reduced supply= higher rents.

Acorn basically want LLs with mortgages to be a loss making provider of housing. They bleat about high rents. They bleat about Section 21. They want rent caps and more regulation like EPC " C" and paying for a tenant to move out.

You can't rent a property out due to regulations

You can't sell it due to abolition of Section 21

If you do rent it, then it's at a loss.

Eleven down. Two to go. Acorn and it's brand of marxist idiots can go swivel.

Reply to the comment left by Fed Up Landlord at 14/11/2024 - 11:25
And, to rub salt in the wound, it was a Globalist-Marxist, masquerading as a Tory, George Osborne, who put in Section 24 to start the Socialist confiscation of PRS properties, under the guise of taxation.

The problems with the PRS are multi faceted and the wholly illogical S24 is up there near the top.

I’m afraid my former employers and their ilk also have some blood on their hands in relation to lending policies which permitted (in my opinion) over leverage. 90% LTV at 100% rent cover at its height doesn’t look too sensible in hindsight, and of course led to PRA regulation, the cost of which lands on the lender and ultimately the borrower.

It didn’t help that this sort of proposition also attracted customers with a higher attitude to risk and lower financial resilience. In good times rent surpluses were often ploughed into further leveraged acquisition or became part of disposable income rather than amortising the debt or creating a capital buffer against headwinds.

Reply to the comment left by Downsize Government at 14/11/2024 - 10:06
This is the same as increasing employers NICs. The additional cost is met through staff cuts and/or is passed to the consumer. But who will the employee blame when they face a pay cut or lose their job?

Reply to the comment left by Des Taylor & Phil Turtle, Landlord Licensing & Defence at 14/11/2024 - 10:13
I know it's easy to blame Thatcher for everything, even today, but I'm not convinced by the council house sell off argument.

A council house is occupied by a family. That family buys their council house and becomes a home owner. There is no loss to the overall availability of housing, except it is no longer available to the council when that family moves on. But that rarely happens, and if it does, they take up a property elsewhere. Again, no loss to the overall housing availability. Where it went wrong was councils didn't replace the housing which was sold off.

The answer could have been what happened to us as a family in the 70s and 80s. We [4 kids] lived in a housing association 5 storey Georgian townhouse, but when we left to buy or rent our own homes, Mum was left rattling around in this huge house. It was crying out for another large social housing family, but mum had no incentive to move.

The housing association paid her to move out. Sufficient for her to put a deposit on a small house. Win/win!

S24 has destroyed my ability to rent my properties. I cannot earn enough rent to cover my mortgages, service charges and expenses without the tax relief. I am trying to sell but the market has become too expensive.