X

Sign Up

or

By signing up I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Sign Up

Sign Up With Facebook, Twitter, or Google

or


By signing up, I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Log In

or


Don't have an account? Sign Up

Forgot Password

To reset your password just enter the email address you registered with and we'll send you a link to access a new password.


Already a PT member? Log In

Don't have an account? Sign Up

  • Section 24 HQ

    Academic calls for S24 to be abandoned



    Hot off the press - from our colleagues at the Residential Landlords Association:

    TENANTS FACE RENT BOMBSHELL ...

    A leading academic has warned that tenants face potential rent increases of twenty to thirty per cent as a result of tax rises hitting the private rented sector says a former independent member of the Bank of England’s Monetary Policy Committee.

    Since April 2016 a three per cent surcharge has been added on the purchase of homes to rent out and from April this year the Government will begin restricting mortgage interest relief for landlords to the basic rate of income tax.

    In a frank assessment, David Miles, Professor of Financial Economics at Imperial College London calls for the planned changes to be “abandoned”.

    Professor Miles warns that generally “rents would need to rise between twenty percent and thirty per cent” to offset the impact of the Government’s tax rises.

    Addressing the argument made by the previous Chancellor that the tax changes are about making it easier for first time buyers to enter the market, Professor Miles writes that “aspiring first-time buyers are hardly helped by squeezing the supply of rental property and driving rents up.”

    He concludes by warning that: “it is strange to believe that having households channel more of their savings into US government bonds or into equity issued by German companies is to be preferred to their investing in providing rented accommodation in the UK.”

    The analysis backs up research by the Residential Landlords Association (RLA) which has found that a majority of landlords will be negatively impacted by the tax changes.

    The RLA is calling on the Government to use the unexpected extra revenue from its stamp duty levy to halt the implementation of the mortgage interest changes, or at least apply it only to new borrowing for new housing.

    David Smith, Policy Director for the Residential Landlords Association commented:

    “Professor Miles’ assessment proves that current tax policy will be counterproductive in making rents affordable and increasing supply to meet the growing demand.

    “It is time for the Government to think again.”


    Find out more about the work of the RLA 

    The Association of Residential Lettings Agents (ARLA) have also submitted their thoughts to the Government ahead of the Spring 2017 Budget.  They too have asked for Section 24 to be axed.  

    13. Policies such as the increased Stamp Duty on additional property purchases and the changes to Mortgage Interest Relief will not, as the previous Chancellor of the Exchequer claimed, lead to more First Time Buyers. Indeed, it is likely to result in fewer. This is for two reasons. Firstly, landlords do not buy the same types of properties as First Time Buyers. Landlords operating in the student market look for larger four and five bedroom homes they can rent as houses in multiple occupation (HMOs). First Time Buyers are unlikely to be looking for large family houses. Landlords looking to let to young professionals look for city-centre luxury flats; the value of such properties being outside the reach of most First Time Buyers.

    14. Secondly, increasing the taxation burden on landlord’s results in these costs being passed back to tenants through rent rises. The increase in both legislative change and taxation has resulted in rents increasing at a much faster rate than wage growth over the last few years. This means that the amount tenants are able to save on a monthly basis from their salaries decreases as they have to spend more of their income on rent. Should house prices remain static, this will result in it taking longer for those tenants the former Chancellor wanted to get onto the property ladder to save for a deposit. However, house prices are ever growing and therefore as house prices go up and the amount tenants can save goes down, the gap between what they need for a deposit and what they can afford to save is ever-increasing; putting the dream of home-ownership, and the former Chancellor’s policy intention, further out of reach for the very people he was trying to assist. Indeed the result of this policy will be to have the opposite effect of its intended aim.

    15. Therefore, to achieve this Government’s aim of improving affordability for tenants and increasing the number of First Time Buyers and home-owners, then ARLA’s strong recommendation would be to ease the burden on tenants by scrapping both the recent 3% surcharge on SDLT for landlords and revoke the Mortgage Interest Relief changes brought about in Section 24 of the Finance Act 2015.

    Read ARLA's full submission >>> here.

    Reminder:  Our "Section 24 Survival Guide" produced in association with Bamboo Auctions is now available.

    The guide is a simple and easy to understand download, which is free for anyone to access.


     CLICK HERE TO GET YOUR FREE SURVIVAL GUIDE 

    SEE ALSO  -         Tenant Tax team met with Chancellor Hammond

    UP NEXT -             Tory MP joins campaign against Section 24

    DON'T MISS -        I Met With My Local MP To Discuss S24

    NOW WATCH: 



    0
    0