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My personal belief has always been that Section 24 cannot survive more than 5 years because of the harm it will do to the private rented sector, which is responsible for providing housing solutions to millions of people across the UK.In the past week, some more signs have appeared that S24 may be reversed, so I am curating all my reasons into one thread:1. RICS have spoken out against S24 and warned Government of the consequencesUK rents are expected to climb by 15% over the next five years, as the supply of rental accommodation dwindles while demand from tenants continues to go up, according to a new survey by RICS.
Rents are expected to increase by nearly 2% across the UK over the next 12 months.
Small landlords are selling up following tax changes that have made buy-to-let properties less lucrative. RICS said they are being hit by the withdrawal of tax breaks and the extra 3% on stamp duty on second homes. At the same time, more people are looking to rent, partly because they cannot afford to buy their own homes.Simon Rubinsohn, the chief economist at RICS, said: “The impact of recent and ongoing tax changes is clearly having a material impact on the buy-to-let sector, as intended. The risk, as we have highlighted previously, is that a reduced pipeline of supply will gradually feed through into higher rents in the absence of either a significant uplift in the build-to-rent programme, or government-funded social housing.
“At the present time, there is little evidence that either is likely to make up the shortfall. This augurs ill for those many households for whom owner occupation is either out of reach financially or just not a suitable tenure.”Full/source article Being discussed here on Property Tribes:RICS urging Gov. to end S24 & SDLT surcharge2. Councils offering "golden handshakes"Councils are increasingly offering incentives to private sector landlords to provide properties.One such example - Council PRS incentive to tackle homelessness - but I have heard of other councils doing this.Councils are increasingly desperate for private landlords as they find themselves unable to meet their housing obligations. They are turning up at landlord events all over the UK trying to court landlords with other incentives such as guaranteed rent.
3. The Irish version of Section 24 failed Now the Irish Government is offering "golden handshakes" to get landlords back into the sector.Lessons about the PRS learned from Ireland 4. On-going lack of social house buildingMore than 1 million families are stuck on waiting lists for social housing in England as the number of council homes in Britain slumps to a record low.
Figures from the housing and homelessness charity Shelter show that a total of 1.15 million households were on waiting lists last year, with only 290,000 homes made available, leaving a national shortfall of more than 800,000 homes.More than 56,000 people or families are on waiting lists for social housing in the North East and North Yorkshire alone.Almost two-thirds (65%) of families had been on lists for more than a year, while 27% had been waiting for more than five years.The latest figures show that social house building has hit a new low, with only 5,900 homes completed in 2017 – the lowest proportion of overall housing supply since records began. In 2011 nearly 40,000 socially rented homes were built in England.5. Private Sector accommodation can often be much better quality than social housingAn army veteran has been sleeping in his allotment shed after he and his wife were forced to leave their rented home because the landlord decided to sell up.
Tony Squirrell, 74, said it had been terrible to be apart from his wife, Joan, 64, and claimed that criminals were given better accommodation than they were offered when they were made homeless.
He said: “I have been to war and seen some horrible things but nothing has taken its toll on me like this. I was in the army so I’ve slept in worse, and I take things in my stride. But it’s my wife I’m worried about.
“Veterans in our society are not treated well. In America they do such a lot for them but here we get nothing.”
The Squirrells, who have lived in Bridgwater, Somerset, for more than 40 years, were forced to leave their rented home five weeks ago because the landlord wanted to sell.
About 1,700 people are on the housing list of Sedgemoor district council, which is Conservative-controlled. The Squirrells were among the 36 placed in the gold – high priority – band.The council offered the couple an emergency housing place. But Squirrell said: “We went to have a look and when I looked through the window, I took one look at the beds and thought: ‘My wife isn’t sleeping on that.’
“We’re not criminals but they’re treating us worse – if we had gone out and robbed a bank we would have better beds and three meals a day.”
Joan added: “It was disgusting. There were stains all over the mattresses and we would have had to share a bathroom with other people.”Full/source article
6. Tenants waking up to the fact that private sector landlords provide far more choice of accommodationThe couple above wanted a bungalow due to the wife having problems climbing the stairs, but the council told them that they did not offer bungalows on a social basis.7. More widespread evidence of rising homelessnessAn article in the Guardian from yesterday claims there is a rise in "tented" camps and people sleeping under canvas.Although the number of people in encampments is not fully recorded by existing statistics, the homeless charity Crisis said more than 9,000 people would have spent last Christmas in tents or cars, or on trains or buses, on top of the thousands who sleep rough every night, an increase of more than 57% since 2011.
The official rough sleeper count in England – widely considered a big underestimate – has strict rules about what constitutes a rough sleeper. People living in encampments are not necessarily included in the 4,751 people who bedded down outside overnight in 2017.
The government is expected to release its strategy for tackling street homelessness within the next few days. The strategy aims to halve rough sleeping by 2021 and eliminate it by 2027.In the past year, encampments of varying sizes have been reported in cities and towns including Bristol, Milton Keynes, Cardiff, Manchester, Oxford, Sheffield, London, Northampton, Cambridge, Stoke-on-Trent, Leeds, Glasgow and Exeter.Full/source articleWhen people see actual evidence of homelessness in their communities, it becomes much more real for them:From twitter this week:8. Councils will be unable to sustain emergency/temporary accommodation demandsI am already hearing of local authorities who are renting out entire top floors of hotels to house people. Families are living in one room with no catering facilities.Temporary housing costs in London have risen by half in the past four years, figures show.
Costs rose from £460m to £690m over the period, freedom of information figures from 31 councils show.One example - Newham council is paid £61million in 2016-17 to house the homeless in temporary accommodation. The annual bill has spiralled by 60 per cent in five years.There are 27,228 households on the council housing register and 9,753 Newham council properties have been lost to Right to Buy since the 1980s.Councils have had to look for cheaper accommodation to house homeless residents and often this meant they were being moved outside London.Birmingham City Council has more than 2,000 people in interim housing while applications for a permanent home are processed. They include 500 people in bed and breakfasts - nearly 200 of which are having to be put up outside of the city due to a lack of facilities.
See - 1000% rise in temporary accommodation costs And here's the kicker - The rollout of Universal Credit, which replaces the housing benefit and several others, is also set to make it more difficult for the council to claim the costs back of housing people in B&Bs.Ultimately, the tax payer will have to cough up through increased council tax.9. Build to Rent will take years to gain traction and cannot meet the demandThe Government has cited institutional investment as an answer to the housing market woes. However, it will take many years for BTR to gain traction - perhaps even as long as 15 years - so it is not an immediate solution.Furthermore, the focus on BTR is on city centre blocks, not family homes in the suburbs, so BTR will be limited in how it assists with providing accommodation, as it really only appeals to young professionals and couples, not families.
All of the above shows how desperately private sector landlords are needed. Local government is crying out for landlords and being forced to incentivise them and will be voicing this to central Government. Heavyweight bodies like RICS will be listened to.Look forward to hear your views and if I have missed anything!SEE ALSO - What causes homelessness in the UK?UP NEXT - Homelessness - you ain't seen nothing yet!DON'T MISS - Housing crisis? You ain't seen nothing yet! A "perfect storm" is brewing.NOW WATCH: Video recording from October 2015.
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Hello Mrs. Wonderful, Vanessa,
We sincerely hope so my love, sincerely hope so. I am going to print off want you have written and read it in-depth.
We have been HIT with a HUGE tax bill, still trying to take it all in. We got involved with the - AXE THE TENANT TAX - and - giving to that honourable cause too - and - endeavouring to keep abreast of it all too.
Please do keep up your hard and informative work Vanessa, I love you my darling lady. (By the way - I am a very happily married female - this is for the other PT members)
There are different types of love, I wish the english language could express them all.
Have a fantastic weekend.
Thank you for your kind comments and feedback and sorry to hear you have been affected by S24. You are not alone and their is strength in numbers, so thank you for your support of PT and Axe the Tenant Tax Campaign. It is much appreciated. x
Your points are so clear and make such good reading.
I think what will happen will surely depend a lot on interest rates. If interest rates stay low maybe most will muddle through. If interest rates go up, as they have and with promises of a lot more rises, more and more of us will be taxed on imaginary profits with ever smaller real profits to pay that tax and that just can't work.
On a different note I heard suggestions on LBC this morning that they are starting to think about taxing online businesses on revenue now too, so maybe the accounting rules and common sense are being thrown out of the window permanently.
Reduction in corporation tax and an increase and extension of VAT perhaps?
The pressure is mounting on councils. Their homeless list grows each day
They so need the PRS .
I get more and more e mails from them offering me varying incentives to take their homeless
I`m in touch with 5 operatives there now all vying for my attention .
They don`t talk to each other though so i often get duplicate enquiries . Its a real hot potch
I`ve suggested they streamline their systems but they are too busy with the day to day to look at that
They still struggle to understand how private / public sectors arrangements could work effectively
Their internal processes are woeful - But they try - bless
I feel like an auction house - They ask -
Can you urgently provide a 1 bed for a mum and 1yr old being evicted today?
Kayleigh views in a hurry and burst into tears due to the stress . Its not nice to see that
The business side of me kicks in after they have left as i know I have a product the council desperately want
So I go back to the Homeless Team ...
I will take 2 mths rent upfront £75 above the LHA rate , 6 weeks deposit, a £150 fee and DHP RGI for 12mths ?
Sold - To Sharon at Desk 5 at the back - Sorry Michelle at the front at Desk 1 but you have been outbid
Kayleigh moved in last week and there were tears of joy this time
S24 is causing absolute mayhem and should be reversed
Jonathan Clarke. http://www.buytoletmk.com
Is it S24 or UC causing the problems?
Over 500 properties available in MK currently, if you remove those over a £1,000 it’s still in the hundreds.
Its both S24 and UC ... plus other onerous policies.
UC hasn`t started in earnest yet so less a factor in MK as with other places I guess
When that comes in that will increase the homeless figures even further
The majority of homeless i deal with wouldn`t get past first base on any rightmove properties
If the people you deal with wouldn’t get pass first base on Rightmove properties why do you attribute the problem to S24?
From what you say yours is a niche market and the returns are just not sufficient to attract more landlords, if that’s true the issue is LHA rates.
I think there is a lack of social housing and perhaps those that can afford to live in the PRS shouldn’t be in social housing but with lifetime tenancies that’s not something that will change in the short term.
In my view it was the additional stamp duty that triggered the reduction in landlords buying and I don’t think the government will accept S24 is the issue.
As I say..... Its both S24 and UC ... plus other onerous policies.
Other onerous policies include yes SDLT / LHA freezes / HB caps / 30th percentile / PRA etc
Also the lack of expertise and under-staffing within councils leads to greater homelessness
Its a whole combination of factors of which S24 is just one but a significant one in my view
The returns in LHA are there if you know where to look . But you have to look harder these days
But its the negative perception of LHA which also leads to less entrants to that market now
TV programmes lambasting the benefit culture over the last few years have a lot to do with that I suspect
I think the government knows that S24 will reduce landlords buying
But SDLT is understood more by the masses and S24 isnt so they can hide behind that more as the reason
It was the introduction of the additional 3% stamp duty that had the immediate impact on landlords not buying, a significant percentage of landlords are not affected by S24 but all are affected by the additional stamp duty, if that was withdrawn I think you would see an increase in investment in the PRS.
There is an argument for S24 to stay in place and the money raised to be used where it is most needed in the PRS - to support those that should be in social housing. More likely S24 will stay in place but the money absorb into government funds and not used where it is needed in the housing sector.