0:05 AM, 14th November 2024, About a month ago 64
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Tenant group Acorn claims that rent caps are the solution to curb rising rents.
The group also believes “landlords have no guidance on what rent should be”, despite many landlords using the market rate in an area as guidance for setting rent.
Mick Roberts, one of Nottingham’s largest landlords housing benefit tenants, slammed Acorn’s call for rent caps, saying Section 24 is the real cause of high rents.
Keziah Hall, chair of the Acorn Brighton Union, told BBC Radio Sussex that several factors including second homes, a high student population, and an influx of commuters are all pushing rents up in Brighton.
However, Ms Hall argues that introducing rent caps could help curb these increases.
“The reality is, there’s no cap on rent,” Ms Hall said. “Landlords have no guidance on what rent should be. Ideally, rent would be tied to the living wage, but there’s nothing like that in place.”
The presenter of the radio programme hit back at Ms Hall, saying a rent cap could make it hard for landlords with mortgages to keep renting out their properties.
Ms Hall replied: “There needs to be something put in place for renters. Many people in Brighton and Hove are being pushed out because the rent is so expensive, and they can’t afford it.”
Despite Acorn’s call for rent controls, evidence from Scotland suggests they have had a negative impact, with rents rocketing by 14.3% in just one year.
Mr Roberts says rent caps will make it impossible for tenants to secure a home and scrapping Section 24 is the answer to stop rent increases.
Section 24 was introduced in the Finance Act 2015 by the then Chancellor George Osbourne which removed a landlord’s ability to offset their mortgage interest, from rental income before they calculated the tax liability and allow a 20% basic rate deduction.
Mr Roberts tells Property118: “Instead of pushing for rent caps that could make it impossible for landlords to stay in business, maybe it’s time to ask, “Why is rent so expensive?”
“One of the main reasons is Section 24 Tax, which is hurting tenants.”
He added: “Here’s an example, if a landlord is charging £800 a month in rent, their tax bill could be £320 a month. That leaves them with £480, which is less than the £500 mortgage payment, meaning they’re losing £20 every single month — £240 a year, per property.
“The government doesn’t want landlords to deduct mortgage interest before paying tax, unlike every other business.
“Before 2015, landlords could deduct mortgage interest like any other business, which made sense. However, the government brought in this anti-landlord measure to get votes and collect more tax, and now we’re seeing the consequences: a housing shortage and higher rents for tenants.”
Mr Roberts adds that it is completely unfair that landlords are not treated the same as other businesses when it comes to tax deductions.
He said: “Under the old system, a landlord charging £800 rent and paying a £500 mortgage would have £300 left over. After a £120 tax bill, they’d make £180 profit, which is enough to cover maintenance and repairs. That’s how every other business works.
“To put it in simpler terms, imagine a bricklayer who can’t deduct the cost of bricks as an expense. If they earn £500 for a job but spend £500 on bricks, they still have to pay tax on the full £500, even though they’ve made no profit.
“That’s how Section 24 is hurting landlords, and it’s one of the reasons rents are going up.”
NewYorkie
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Sign Up12:28 PM, 10th December 2024, About 2 weeks ago
Reply to the comment left by Beaver at 10/12/2024 - 10:49
It's not only small businesses which have been attacked with the NI increase, it's also the large corporates, where we are already seeing large-scale redundancies e.g. car makers, who are also having to cope with the net zero quota nonsense.
There are no jobs for those who have been accustomed to decent earnings for skilled work.
Consequently, the welfare budget, which is already under pressure through all the long term sick, feckless scroungers, and immigrants, will see a dramatic increase, with fewer workers to pay for it.
This is certainly a government of change... for the worse!
Beaver
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Sign Up15:50 PM, 10th December 2024, About 2 weeks ago
Reply to the comment left by NewYorkie at 10/12/2024 - 12:28
You are correct. Large businesses have also been attacked and in the end this NI increase is an attack on employment generally, including both small and large businesses. In the recession of 2008 large businesses shed large numbers of employees and we saw growth in unemployment of 674,000.
https://purehost.bath.ac.uk/ws/portalfiles/portal/138015757/Small_Business_Performance_in_the_UK_Recession.pdf
Even if large business doesn't shed jobs they are going to have to hold employees wages down to pay for it.
After the 2008 recession growth in the UK economy came from small and medium sized businesses. Any government that does not understand that an attack on small businesses is an attack on the UK economy is incompetent, dishonest, or both.
Pretending that growing the economy by just investing in the public sector is sustainable is dishonest: It's a lie that's already been disproven. Investing public sector jobs in disadvantaged regions can help level up the economy but overall you need growth in the economy as a whole to pay for that 'levelling up agenda'.
But the NI increase also attacked the public sector and made public sector services less sustainable. And it didn't just make public services less sustainable; it also increased the cost of building residential accommodation and made it more difficult for people to afford the mortgages to finance buying their principle private residence because their wages will be held down. It is an anti-growth stealth tax and not possible to reconcile with statements saying 'we are going to grow the economy'.
NewYorkie
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Sign Up16:25 PM, 10th December 2024, About 2 weeks ago
Reply to the comment left by Beaver at 10/12/2024 - 15:50
The government is betting the shop on growing the economy, but everything it's done so far is anti-growth... and anti-British
There was an excellent article in the Sunday Times by Matthew Syed... 'The West is living in a fantasy land of free money. Our friends watch on horror, our enemies in delight.'
https://www.thetimes.com/article/153f0f46-3be6-4b90-8131-e8d0315a9f90?shareToken=49594f5fead725eec006abad91eecb78
Beaver
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Sign Up17:27 PM, 10th December 2024, About 2 weeks ago
Reply to the comment left by NewYorkie at 10/12/2024 - 16:25
I think that you are absolutely right. I am sure that Vladimir Putin watched the 'fantasy land of free money' and thought "...this is a really good time to invade Ukraine because fools won't have the money to defend it."
There never was any prospect of stopping the Covid outbreak. From its detection in 2019 we always new that it was an RNA virus. We always knew that the virus was going to mutate and spread and the best that could be hoped for was to slow it down until effective vaccinations (effective in the sense that they would stop most of the vulnerable from dying, not that they would stop its spread) became available.
When they were in opposition, this bunch that are in power now bleated incessantly at the conservative government trying to get them to spend more on stopping the Covid outbreak. The Vladimir Putins and President Xis of this world don't need effective vaccines; they can just lie to their citizens. They can lie about the efficacy of their vaccines knowing that the mortality rates from the disease are low and in the end (because they don't have free speech) they can cover up, control the media and suppress everything that doesn't suit their narrative anyway.
I have no doubt that Putin looked at the debacle going on across Europe and decided that it would be a good time to take advantage of it. When the people in power are messing up your economy, one of the unfortunate consequences is that in the end you cannot afford to defend yourself. The dictators and despots of the world know that.
An attack on small business is an attack on the UK economy and in the end it makes us all vulnerable. The people currently in power are every bit as responsible for the current deficit as the government that came before them.