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  • Section 24 HQ

    Section 24 harming levels of house building!



    A major house builder has blamed, in part, recent tax increases on private landlords as a reason for not increasing its housebuilding.

    Berkeley Group said today that a fall in demand by domestic buy-to-let landlords was one of a number of reasons why it would be impossible to boost housing supply, beyond its current plans.

    It cited especially the decision to restrict mortgage interest relief to the basic rate of income tax and the 3 per cent stamp duty levy on the purchase of new homes to rent out.

    It noted the importance of supporting landlords who, it said, “buy early in the cycle and provide security of cash flow to enable complex, capital intensive developments to be brought forward.” 

    It comes at the end of a week in which the Office for Budget Responsibility warned of “subdued growth in residential investment.

    Recent research by the Residential Landlord Association’s research exchange, PEARL, has found that of the almost 3,300 landlords responding to its survey, 69 per cent said that the stamp duty levy, introduced in 2016, is putting them off investing in further rental property.

    David Smith, Policy Director for the RLA, said:

    “We have long warned the Government of the dangers of its tax raid on the private rented sector. Now we see its impact, with investment in new homes slowing and house builders not confident to up their levels of house building.

    “Rather than taxing new homes, it is time for smarter, pro-growth taxation that recognises the rental market as a crucial part of addressing the housing crisis.”

    SEE ALSO  -          Tax rises are slowing housing investment say RLA

    UP NEXT -              Three quarters of Landlords will sell - claim

    DON'T MISS -         1st "concrete" signs of impact of Section 24

    NOW WATCH:

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    well well well.

    Who'd have thought it?

    Just about everyone outside of government!

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    No; no Govt knows best

    This must be fake news.

    No way can the stupid lefties that mostly  espouse  their ridiculous  views in the Guardian accept that LL have been a vital catalyst to generate new house building.

    Private  LL are by their very nature evil and contribute nothing to the housing problems  in the UK.

    They stop everyone buying apparently

    Of course we all know that the Guardian etc talks absolute ######ks!

    The Treasury is run by a bunch of nincompoops.

    They cannot even understand how a major industry such as housing operates.

    Even Osborne didn't have a clue and he was the Chancellor in charge of the country's finances FFS!!

    It simply beyond belief that Govt refuses to accept basic industry paradigms.

    Who is now going to provide the start up capital to facilitate housing developments?

    It seems the banks are not prepared to fund such development which must be worrying for Govt as it needs them to build.

    Logic would suggest as has been suggested that removal of the SDLT surcharge and S24 would immediately  generate interest from LL willing to stump up deposits for off plan sales.

    But Govt isn't logical.

    It is inherently stupid when it tries to impose political non realities on industry realities.

    Govt never learns and as such is contributing  to the housing problem by retaining the bonkers S24 and SDLT surcharge

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    I know Steve, you really couldn't make it up ... 

    Chickens coming home to roost one by one ....

    Rents rising

    Supply decreasing

    Housebuilding stalling

    Increasingly reliance on temporary B & B and emergency accommodation at tax payer's expense

    Increasing homelessness.

    I have the fear that the Government may increase CGT to stop landlords selling their investment properties.  

    They have meddled with far too many levers as it is, and the situation is only going to get worse unless they repeal Section 24.

    The writing really is on the wall but they are not seeing it!

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    @Vanessa

    Now that is a very scary thing you have conjectured.

    Increasing CGT on LL selling up to escape S24.

    You've got me really worried now

    I need to escape the PRS and I need to retain what little gains I have achieved to date.

    Increasing CGT as you suggest is very; very worrying.

    Considering your knowledge and experience  in all things PRS the risk of an increased  CGT for LL selling up now is of great concern to me

    I may have to bring forward my offloading of what will be dud properties as S24 and SDLT increases.

    Looks like I won't have the luxury of selling a property per year to utilise the annual CGT allowance.

    I simply can't afford to be trapped into the PRS by increases in CGT.

    What you suggest may not come to pass but it might!

    I'm now a very worried LL who was hoping to slowly escape the PRS.

    I don't want to be a prisoner of it.

    I dread to think what the Autumn  Budget will bring.

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    On the other hand - a potential population drop post Brexit could substantially relieve the housing crisis by slowing demand.

    If the UK economy becomes a basket case after Brexit that would also act to slow immigration (new EU migrants are down 40% already)

    Whilst we cannot assume any joined up thinking in the Govt anti PRS measures - Govt must have desired a drop in investment in BTL per se - as well as many LLs exiting the sector.- so as to switch the bias to FTBs.

    The news about falling new build rates was something I doubt they anticipated - so boosting new build rates back up now relies almost entirely on Social Landlords - who in aggregate built only around 30,000 homes in past 12 months - with a good portion of those being for private sale/market rent

    We are also told that there is neither the materials nor adequate labour to generate any major increase in new build rates.

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    I'm still a very worried chap.

    I simply don't have the luxury of time to recover from any price crash or increased CGT.

    If I had 20 or 30 years then maybe I could hang on

    But S24 and increasing IR are unsustainable

    My current investments would simply be unviable at normal interest rates.

    I have only stayed due to the low IR climate.

    It seems Govt is deluded enough to believe the economy is improving so that it can commence to increase IR to relative former norms.

    I suggest the BoE haven't a clue what they are doing.

    IR need to remain low for decades.

    Unfortunately  I can no longer take the risk of so much exposure unless I massively reduce leverage which would leave me with only 1 or 2 properties.

    I prefer to avoid S24 and take on lodgers by using the sale proceeds to buy one big house.

    However it will be the case that once I have bought my PPR for cash I will be travelling the world returning occasionally to my home.

    I will be maximising lodger income which will be the same as I am currently  receiving net not factoring in S24.

    With my lodgers I won't be paying S24 taxes  nor any other taxes for that matter apart from on my pension.

    Officially my lodgers will be paying no more than £7500 between them.

    Whether I am actually paid more than that I just don't know.

    But cash can be a very useful instrument on occasions!!

    I just need to escape the PRS in my present circumstances.

    Time is not on my side

    Nor is my credit rating; but that is another story!!

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    Excellent news!  Whilst we all knew this would happen it needs the building industry commenting on how it is slowing housebuilding to make government really believe.it. 

    The government has made a big issue about how it is going to ensure more homes are built and this sort of thing is exactly the ammunition we need to fight government policy, not that I expect any sudden U-Turn at thisstage.

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    and I used to think that it was the labour govt that were incompetent........

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    Yep I reckon a lot of us are having the same sentiments  as you!

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