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A new report by the Resolution Foundation has proposed further taxes to support affordable housing and first time buyers being able to get onto the property ladder.The report says the tax system should be changed to discourage second home ownership, reducing stamp duty for people who own one home and increasing surcharges for second home owners.
It also calls for "light touch" stabilisation policies to limit rent increases to the rate of inflation over a three-year period.Full/source articleThe RLA have responded to this as follows:RENTED HOUSING REPORT SHOWS PERFECT STORM FOR YOUNG PEOPLERESPONDING to today’s report from the Resolution Foundation which suggests that up to a third of young people today could be renting homes into their retirement, David Smith, Policy Director for the Residential Landlords Association said:“Today’s report shows the perfect storm that young people face. With home ownership remaining difficult for many to access, demand for homes to rent continues to increase. This is at a time when Government tax increases are discouraging many landlords from investing in new homes to rent out.“Ministers need to make pragmatic changes to their approach to private rented housing, with a series of policies that support, rather than attack, the majority of private landlords who are individuals to invest in the new homes to rent we need alongside all other tenures. This includes greater support and encouragement for those prepared to offer longer tenancies but who are concerned about being locked into agreements where tenants might be failing to pay their rent, not looking after their property or committing anti-social behaviour.”Recent research by the RLA has found that 69 per cent of landlords are being put off investing in further homes to rent as a result of the Government’s three per cent stamp duty levy on the purchase of homes to rent out.The RLA is calling for a number of reforms to support those in rented housing, including:
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**
Another stupid lefty organisation trying to control the market
Rent controls always result in higher rents on the black market and reduced supply as LL give up.
This is basic economics.
People will always turn to criminality if forced to restrict prices needed to maintain a viable business.
When Thatcher changed the Housing market rental supply increased to meet burgeoning demand.
That is how a market economy behaves.
But not even private LL can keep up with the demand caused by uncontrolled mass immigration let alone increasing organic growth
There is simply no way I would comply with rent controls.
There are more than enough tenants to ensure that I could charge a proper market rent.
If that makes me a criminal then I simply don't care and neither will the tenant.
They just want a property ahead of another tenant.
He who offers the required rent will win the property
Those offering controlled rents simply won't achieve a tenancy.
The only real way to enforce controlled rents is to have regulated tenancies again.
If that ever happened the PRS would collapse.
It makes some sense to discourage second home ownership, it does reduce the supply of housing. Whereas every Buy to Let home still provides housing for people, second homes often sit empty.
As for the rent cap it does not but if my memory serves me right rent increases have been below inflation for some time.If anything this could cause rents to rise further.
RLA Pearl Index: "Rental price growth weakening for Great Britain, with the latest rental index showing rents had increased by 1.1% in the 12 months to February 2017"
I think inflation over same period was 3.10%.
_________________________________________________________________________The above post is not financial advice, its often me rambling - passing time on a coffee break.If you are looking for the Best BTL Mortgage? Call the Specialist Team at Bespoke Finance._________________________________________________________________________
Ons statistics are that outside London rents have gone up at half rate of inflation for 10 years.
Ons collect data on both existing tenancies and new ones - whereas letting agency data is usually just new tenancies.
DISCLAIMER just my personal opinion - for legal advice consult a qualified professional grown-up.
In the two generations the reports compare, the more recent generation are much more likely to have spent 3 years at uni, which unsurprisingly delays their house buying....
I'd put good money on the reports authors not controlling for this obvious social change in their analysis.
( not saying this is all of the effect - but is a super obvious factor to control for - unless of course making a political point is more of their concern... )
The problem with all of this thinking is that it does not differentiate between the ownership of second or holiday homes and owners who let their properties either as Buy to Let Landlords or Furnished Holiday Lets and before anyone comments I know there are other areas of business activity in property but these are the two main areas.
The commercial letting of property fulfils a social need for people who either cannot get mortgages or simply do not want to own property. This need is highlighted by the increase in the number of people having to sleep rough on the streets. If the Government persists in attacking Landlords then it will be left with no alternative than going back to the days of Local Authorities building Council Houses and letting them at below market rents which would be ludicrous and a complete waste of taxpayers money.
If the Government wants to simply stop the ownership of second homes then the obvious solution is to follow the same regime as operates in Canada where as I understand it unless you have lived in a property for a continuous period of 12 months as your main residence then any gain on that property is taxed at 100%. Along side this rather than reduce the Council Tax on second homes as is currently available they could increase the Council Tax to double or treble the normal rate. This would discourage second home ownership and release property for other owners.
Nigel Reynolds FCCA CMgr FCMI
Property Tax Specialist
Reynolds and Co
Who will listen to this report ???
Its simple The Govt or the Future Labour Govt
We cant win on this Topic
This is why I have great reservations about investing money in more BTL
More Taxation and Regulation will stop or hinder the Investment
There is more on the way I have no doubt about that and it will slowly kill BTL in coming years
I always Said Rent Control will come because that's what Genanartion rent want
More Taxation for Landlords will follow especially if an investors is investing in there own name
and Maybe the Company Landlord will pay more in taxes than now
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
I agree with you DL. We are such an easy target to raise revenue without losing many votes that I fear tax increases and more regulations/licencing etc. will follow. That is why I can't bring myself to invest further funds in standard BTL now, even with your excellent idea of using pension drawdowns for deposits.
If I didn't have a BTL I would probably still buy some though as it still a very good wealth generator, just not as good as it used to be.
I still haven't worked out how to send you a PM on here so if anyone can advise please do.
That's a pretty wishy-washy response from RLA, again. No mention of S24, how rent controls increase rents, that (as Adam said) rent inflation is below the national inflation, nor that there are already 70+ licensing schemes in addition to various accreditation schemes and the rogue landlord database. I'd also challenge the 20 weeks to evict statement as my understanding is that it's more like 42 weeks (and they don't mention the costs and stress associated with it). They also didn't highlight the fact that it's more about the total lack of housing available/being built which is the core issue, not how many landlords there are.
What "better protection" do they want? LLs keep good tenants and only evict them if it's absolutely necessary to their business (do they really want to tell me that I can't sell my own property to pay for my retirement/my resi mortgage/health care etc?) Mortgage companies prevent longer tenancies which is out of our control. Rents only go up by what the market will allow.
The woman in her 20s who lives at home and has a job admits she sometimes spends more than she earns - I would suggest THAT is the reason she's struggling to save, regardless of how much a property costs (unless her parents are rogue landlords charging exorbitant rent!) It took me about 8 years of saving hard for my first property which I bought in 2000, so I'm struggling to find sympathy for her.
I'm a bit confused by the graph, tho' maybe I'm just being dense. It shows (at a guess) about 4.5m households in 2003, down to about 3.75m (down 1.25m) and about .75m households renting in 2003 up to about 1.9m (an increase of 1.15m) so where are the other 100,000 households living? Also, in mid 2004 the population was 59.8m and in 2018 it's 66.5m so an increase of 6.77m - where are they living?
Why can none of our representatives speak in a louder voice?
They have recently split out the repossession statistics between RSL and PRS, whereas before there was only the average for both sectors.
So average for both sectors is as you say 42 weeks (+ either 9 or 2 weeks waiting for initial s21/s8 notice to expire)
But the new separate PRS average is about 24 weeks - it seems that RSL take a super long time over the process (but actually do it a lot more often than PRS), my gut being that PRS attempt to resolve without issuing proceedings and that court is the last straw - whereas RSL issue proceedings as soon as arrears hit the s8 level, but then take longer over the process.
(and more interesting virtually no time difference between 'accelerated' s21 process and s8 process.)
This is a more interesting article which highlights the negative impact of rent caps (see excerpt below):
"Very reluctantly, we came to the conclusion that there was little future for the private landlord in this country," Norwich Union's chief estates manager, John Darby, told the society's newspaper in 1976. "The institutions have been practically forced out of residential ownership by the policies of successive governments since the war. I think this is a great shame."
Part of the problem was limits to the pace at which they could put up rents. Landlords and investors argue that if they can't put rents up as fast as their costs increase, the investments become unviable.
The new generation of build to rent investors fear that history may repeat itself. The 2017 Labour manifesto promised to limit rent rises to inflation - which would limit the investment returns, and the viability of new projects.
Michael Allen, director of build to rent at Quintain, the Wembley Park developers says: "There is clear evidence that where rent control has been imposed, this has led to a decline in institutional investment in the private rented sector.
"Meanwhile, in places like Boston and New York where rent controls are on the decline there has been a strong resurgence in institutional investment."