It would appear from the various budgets and statements coming from the Treasury recently that the government has it in for the small private landlords. Not only is the tax system to be altered in order to make it less advantageous, but the huge increase in rules and regulations means that any landlord could be sent to prison if they fail to comply with the much maligned “Right to Rent” checks, if the new Immigration Bill is passed. Then there is the increased stamp duty on buy to let and second homes for anyone with less than 15 properties.
So why is all this happening? Tessa Shepperton, a lawyer specialising in residential landlord and tenant law, who I have much admired for many years for her vast experience and witty blogs, has come up with a list of conspiracy theories as to why this is happening. She says she doesn’t necessarily agree with them but is presenting them for a consideration, and “amusement”. I have to say there is probably more than a seed of truth in all of them. They are certainly food for thought.
1. Increasing home ownership to avoid future care costs
The idea that government want as many people as possible to own their own home, as then when they get old, the cost of their care will come from the equity in their property rather than be paid by for the state.
2. Discouraging the amateur landlord – as an alternative to mandatory accreditation
This is the idea that people who own just one or two properties are more likely to make mistakes through ignorance.
Discouraging / eliminating these small landlords would be cheaper than setting up mandatory accreditation and training (as they are doing in Wales and which looks set to be considerably more expensive than everyone thought)
3. Targeting landlords because ‘no-one loves them’
Government need more money and it has to come from somewhere.
Reducing benefits has got everyone up in arms so they are dropping that and instead going for unpopular targets who few are likely to support.
Like landlords.
4. Back scratching help for bigger companies
The Tories being the party of business and business interests, are only interested in helping big business and corporations (of course).
This means making it impossible for the smaller businesses to survive as they are not ‘one of us’.
5. There is a plan to make all rented housing dominated by big business
This is a lesser form of (4) and takes into account the dismantling of our social housing system, currently well underway.
If true, it would result in everyone who cannot afford to buy (an increasingly larger proportion of the population) having no alternative but to rent off large corporations.
The problem with this theory is that few of the big corporations have in fact (so far) invested in the private rented sector. Maybe this is coming, once the small investor has been driven off.
6. Forcing smaller investors to invest in electronic assets for easier takeover
This is the idea that it is easier for a cash-strapped government to take over your assets if they are in electronic form rather than in bricks and mortar. Should they need to do this, e.g. if the economic situation reaches critical.
For example I read a financial report only the other day, which pointed out that our national borrowing exceeds our net value and in real terms the country is more or less bankrupt.
7. Forcing ordinary investors to invest in lower yielding investment funds
This, a variant on (4) above, is the theory that The City of London has its greedy eyes set on the residential property market in most parts of England. What they can’t stand is that people with any spare capital rightly prefer to invest their cash direct into property rather than get ripped off by investment vehicles with their outrageous fund management charges.
8. Making Britain an unattractive place to live in, to discourage immigration
If there is no more rented accommodation available (poor immigrants realistically can only live in the private rented sector), particularly if benefit entitlements are dramatically reduced (and if the criminal landlords they would normally resort to have been closed down), this may discourage the hordes of immigrants who are currently jostling to come and live here.
Maybe.
9. Bribing the people
This is that money for first-time buyers and shared ownership is simply a bribe for your votes. Like Thatcher did (although Osborne has less to give away, as most of it has already gone).
The idea being that people will vote Tory in the hope that they and their children will have a chance to share in the spoils.
This list was first published on Tessa Shepperon’s “Landlord Law” blog on 30 November 2015. You can read the full article here: www.landlordlawblog.co.uk
What’s quite scary is that all of these are quite believable. The current government does appear to be on a mission to destroy the small landlord. And by small I mean in terms of portfolio, rather than those that are vertically challenged.
Richard Lambert, chief executive of the National Landlords Association was quoted by the BBC as saying:
“The chancellor’s political intention is crystal clear; he wants to choke off future investment in private properties to rent. If it’s the chancellor’s intention to completely eradicate buy-to-let in the UK then it’s a mystery to us why he doesn’t just come out and say so”.
What the actual result of all the change in legislation and tax cuts for landlords will be remains to be seen. But I think it’s fair to say that Mr Osborne is not going to be inundated with Christmas cards from landlords this year.