Uncategorized

Chairman asks Chancellor – pause for evaluation

RLA
Written by RLA

RLA Chairman Alan Ward has written to the Chancellor George Osborne to voice the ‘serious concerns’ the Association has about tax change proposals and has asked the Chancellor to ‘pause’ these for further evaluation to be carried out on potential consequences…

RLA Chairman Alan Ward has written to the Chancellor George Osborne to voice the ‘serious concerns’ the Association has about tax change proposals and has asked the Chancellor to ‘pause’ these for further evaluation to be carried out on potential consequences.

The letter, which you can read in full here, is a part of on-going campaign that the RLA is running in response to Summer taxation budget proposals.

You can download and read the letter in full here.

Based on our knowledge and experience of the private rented sector (PRS), the proposals will –

  • Lead to upward pressures on rents, particularly in areas of most demand for private rented properties
  • Dissuade landlords from investing in purchasing properties to let which in turn will exacerbate difficulties for tenants in finding properties to rent
  • Lead to significantly reduced investment in repair, renovation, and improvements to rental properties causing lower standards. As a result there will be less economic activity which in turn will adversely affect receipts for the Treasury.

In the letter Alan has two suggestions to lessen the impact of proposals:

  1. The measure should be re-cast so that the right of deduction is retained even if interest is only relieved on a basic rate.

This would mean that the landlord would only be taxed at the same rate as is applicable to their true profits i.e. as if the interest paid was still deducted.

  1. The measure should only be applied to new fresh borrowings i.e. increased borrowings and not re-mortgages to replace current debt.

This would mitigate our concerns about disruption to the sector as it would not affect current borrowings.

Alan argues that with the extensive duties and responsibilities placed on landlords that the PRS – for tax purposes – should be treated like any other business. Alan has requested, on behalf of the RLA that the Chancellor allow for a detailed evaluation of proposals before allowing them to come into force in October of this year.

You can download and read the letter in full here.

Further Information

The RLA has created a bespoke tax campaign webpage, complete with a tax calculator, and powerful tools to enable landlords to message their local MP quickly.

About the author

RLA

RLA

The Residential Landlords Association (RLA) represents the interests of landlords in the private rented sector (PRS) across England and Wales. With over 23,000 subscribing members, and an additional 16,000 registered guests who engage regularly with the association, we are the leading voice of private landlords. Combined, they manage almost half a million properties.

11 Comments

  • I am a weary landlord. I am in the process of issuing my first run of section 13’s. I will do the same year on year to mitigate the increase tax proposed. I have 40 properties. It is a full time business and I have invested in my portfolio as a pension. I do not have to spell out the cost of running a portfolio, the red tape and additional costs having to monitor the way my tenants live so the I can comply with legislation ie, legionnaires, unsocial behaviour not to mention the property being trashed etc Can I suggest that landlords contact there tenants to join the campaign to increase the numbers so that we can obtain the 100,000 signatures required.

  • The RLA Chairman Alan Ward is absolutely correct in the concerns he has raised as a result of the Chancellors proposals and because of the seemingly never ending stream of new legislation and control being introduced, we as good landlords are starting the process of exiting the private sector buy to let market.

  • Thank you for writing to the Chancellor. This summer has been a worrying time for landlords; many of us have campaigned relentlessly against the new tax and to argue that this is a business that we have invested time and money into, and that the new proposals will place many Landlords in financial difficulty to the extent that many will be wiped out by this extra demand.

  • Excellent proposals, well thought out, fair and sensible given the direction the government is now committed to. Good to see many parts of the PRS working together.

  • I am a one property landlord and the property is currently let to greenwich council to a young mother with three children, who are delightful and care for the property, so I am effectively a social landlord and not some rockafella making vast profit. The rent I receive currently covers my personal mortgage on my own property and suppliments my income working for a cambridgeshire council within adult social care. I hope these proposals do go through as I for one will probably end up selling two properties and retiring to the local housing list!

  • Like other landlords, we are struggling under the ever increasing burden of legislation and proposed increased taxation. For us, the tide has turned with sentiment moving from a wave of hate against bankers to now tarring landlords as the popular hate figure. Add to this the inevitable base rate rises and we have made the decision to make a planned exit from the BTL market. As predicted, if a number of landlords feel like us the PRS will inevitably shrink (we have 20 properties). However, I for one can’t wait to be rid of the headaches!

  • The proposals are sensible and pragmatic. They allow the government the apply the brakes on future BTL without destroying those businesses which have been prudently and responsibly established over the last 20yrs.

    **New Rules on New Debt Only**

  • Excellent well thought out letter so glad to see the RLA that I have been a member of for 25 years accurately hit all of the points and express our dissatisfaction.

  • The letter from the chairman of the RLA to George Osborne makes the point that letting is a business. His suggestion number 1 seems to be that landlords who are in business in a small way, and so only pay basic rate tax, should carry on as before, but that landlords who are in business in a big way should be subject to the levy of up to 25% on their finance costs. This is illogical and divisive.

  • Agree with every point above. My wife and I are very concerned regarding the proposed new tax changes. But I am also surprised how few landlords that will be affected by the tax change have signed up to the petition? Currently 30,553 have signed up. I thought there were over 3 million landlords in the UK? I am guessing that many are not aware of the new tax rule and many may believe it will not affect them until it is too late.
    I have written to my MP and the Chancellor. Maybe the RLA could reinforce the message to as many landlord associations as possible.
    Good luck to all in this one.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.