Chancellor Osborne hit the buy to let market with tax rises

In the spring budget of 2016 just before the referendum the government decided it wanted to rein in buy to let housing investment. It introduced a 3% extra Stamp Duty on BTL and other second homes, and announced the phased removal of interest relief on purchasing Buy to Let property.

I presume the government is pleased with the results of its tax rises. According to the Investment Mortgage Lenders the ÂŁ25 bn of net investment in 2015-16 collapsed to just ÂŁ5 bn the year after the tax rises. This 80% decline has certainly truncated the successful growth in private rented accommodation, and had knock on effects to the workloads of house agents, builders, renovators and removal firms.

I did not quite understand why policy reversed, as it had been policy of both Laour and the Consevatves to enocurage a larger prvate rented sector to complement social rented and ownership. Many people were fed up with the very low interest returns on their savings held in relatively safe bonds or in savings accounts. They decided to do what the Bank and its Quantitative Easing policy was meant to be about, taking more risk with their savings and introducing some borrowing to their investments to make them more worthwhile. This substantial sum did produce some more homes for people to live in, and helped reduce the rate of rent increases people experienced.

It does make another good example for my series showing how higher taxes do have a direct and often profound effect on behaviour. Here is another great illustration of how higher taxes reduce economic output. The government achieved all it could have wanted in the first year of the tax with such a large reduction in Buy to Let. As a result it also lost a range of other tax revenues on the activity which was cancelled.

172 Comments

  1. mickc
    April 7, 2018

    Cameron and Osborne were against the concept of property ownership for normal people, as indeed is the Conservative party. Naturally they are happy for their own class to accumulate wealth.
    Hitting your core voters on the assumption they have nowhere else to go has cost the Conservatives my vote…and no doubt many more.

    1. Cheshire Girl
      April 7, 2018

      It has cost them my vote too, together with their denial of the problems in the NHS, and their ‘political correctness ‘ that has allowed the current serious crime problems in some parts of London. We have been consistently told that violent crime is falling, while the real problem is now being revealed.

      Oh for a Government with some backbone!!

      1. Dave Andrews
        April 7, 2018

        The London crime problem I reckon is not so much a PC problem, but a society problem of the offspring of casual relationships. Children growing up without a father (usually) end up finding their identity in gangs.
        Expect this problem to get worse until marriage is respected again.

        1. Lifelogic
          April 7, 2018

          The tax & benefit system deliberately rewards and augments this! I suspect it is mainly a problem of criminal drug gangs and infighting between them.

          But then we have no deterrent policing. Shop lifters not prosecuted, 2/3 of burglaries not investigated ….. We essentially seem to have “do nothing policing”. Just issue a crime number and send out a victim of crime letter, until that is someone is actually killed or nearly killed.

          Unless it is someone parking for 1 min over time, putting rubbish in the wrong bin or putting a tyre in a bus lane who can be mugged that is.

        2. Leslie Singleton
          April 7, 2018

          Dear Dave–Is one allowed in this day and age to talk about a father in such a way–that is as if there is the slightest difference between a father and a mother? Does anybody I wonder remember, Wait till your father gets home?

        3. Mitchel
          April 7, 2018

          I believe you right.This all has it’s origins in the Bolshevik revolution(“the family is ceasing to be necessary either to it’s members or to the nation”)where marriage and family were replaced by “disposable unions of affection and comradeship”and traditional women’s tasks like food preparation,laundry and child rearing were socialised and communalised-and easy divorce and abortion on demand(illegal everywhere else in the world) introduced in 1920.Anyone interested in what went on can look up Alexandra Kollontai (first female Commissar)and the Zhenotdel.Stalin rolled back some of these excesses in 1930.

          I hope everyone is aware that when Russia introduced a resolution to the UN Human Rights Council in July 2015:-

          “The family is the natural and fundamental group unit of society and is entitled to protection by society and the state.”

          our government,together with France and the USA,sought-unsucccessfully-to block it.

          1. Prigger
            April 7, 2018

            @Mitchel You go too deep, historically, into this. People in politics change their ” I am and always have been passionately in favour of…” when the object of their “passion” is viewed by the voter as unimportant. Except in some regards those of Jacob Rees-Mogg.
            He does have certain passionate views which like them of not, don’t rust. O no! it is an ever-fixed mark
            He should be part of any party’s Cabinet at least. He is an anchor if not in some minds a passionate one.

          2. WA Laugh
            April 8, 2018

            So, is there or not such thing as society? (No more than 100 lines, please, specially for unreconstructed Thatcherites [you know who I mean])

        4. Lisette Stux
          April 9, 2018

          It has far more to do with budget cuts for the police, for education, and surprise surprise …housing. I am divorced , as are many of my friends, and not one of our children is in any sort of gang, or caught up in drugs. In fact, the majority are in good jobs, fending for themselves, or still studying, or new parents in a strong relationship. Mothers can parent just as well as fathers.

      2. Bryan Harris
        April 7, 2018

        Time for a real right of centre party that sticks to its core agenda… The Tories could still become that party if they were to lose the socialists in their midst, but I suspect nothing will change until UKIP are fully established, and in Westminster…

        1. jerry
          April 7, 2018

          Bryan Hariss; “The Tories could still become that party if they were to lose the socialists in their midst”

          Well yes indeed, but the first priority is surely to get elected and if elected to remain elected…

          “but I suspect nothing will change until UKIP are fully established, and in Westminster
”

          Not sure if you are being serious or just attempting a late April fools joke!

          1. Lifelogic
            April 7, 2018

            Well to get elected and stay elected you should not promise to put taxes up and benefits down in a manifesto. Not have the highest and most complex taxes for 40 years, not waste money hand over fist on HS2, Hinkley C, endless bloated government and the bloated state, relax planning and get out of the damn way.

            Do the things that actually work for the economy for a change. Perhaps start by actually keeping Osborne’s ÂŁ1M each IHT promise (about the only sensible proposal he ever made but ratted upon of course).

            Absurdly high taxes yet over 50% have to wait over a week to see a GP. Not a vet though you can get one of them very easily and promptly! I wonder why could it be the state runs the rationed one and not the other?

        2. Bob
          April 7, 2018

          Hear hear!
          UKIP’s 2015 manifesto was head and shoulders above anything produced by the LibLabCon, which is why Mr Cameron used the nuclear option of a referendum, the result of which his party is now trying to dilute.

          1. Leslie Singleton
            April 7, 2018

            Dear Bob–UKIP were close to sweeping the board and might well have done if a few supposedly right wingers (including JR) had joined them instead of staying with the wretched present Conservatives so-called.

            Reply UKIP was never anywhere near sweeping the board in a GE. I regularly predicted they would never win a single seat in a GE and was right with the exception of Douglas Carswell who managed to cling on to a seat he had first won as a Conservative. The only way to get the referendum we needed was to stay with the Conservatives, and we did it. Now we have to deliver the Brexit we voted for.

          2. Bob
            April 7, 2018

            @Mr Redwood

            “Reply UKIP was never anywhere near sweeping the board in a GE.”

            Why do you think David Cameron risked his career on the EU referendum?

            Leslie is right, if you and your like minded conservatives had joined forces with ukip you could have flushed the current bunch of pseudo Tories into oblivion with the rest of their Lib Dem chums thereby avoiding the advent of the current lame duck govt.

        3. libertarian
          April 7, 2018

          Bryan

          UKIP? Youre having a laugh surely.

          Actually what we need is none of the old left/right/centre nonsense its the 21st century. Its time for some creative and radical thinking amongst the political class. Innovation is whats needed

          We need a party that is run bottom up, not top down. We need a party that encourages and supports people to be self sufficient and responsible citizens whilst using the smaller amount of taxes raised to support those citizens who through no fault of their own need societies help . We need to ring fence what government and taxes are for. Billions are spent on unnecessary departments, quangos, NGO’s, and national and local projects that are of no real benefit or need. Localism and iDemocracy is the way forward. Inspire the next generation by actually operating in this century not the last two

          1. jerry
            April 8, 2018

            @libertarian; “We need a party that is run bottom up, not top down.”

            Good luck with that one Walter, who would organise such a party, or ‘movement’…

            Human nature will always demand leadership, and the leadership will always be top-down, the failure of Communism were ever it has been tried proves so. Without a proper tiered leadership all you get is pure mumbo jumbo, just take a look at the Greens and the idealistic clap-trap they come out with.

            “Localism and iDemocracy is the way forward.”

            Indeed, and we have all seen the result, Mr Corbyn the leader of the Labour Party, prior to mid 2015 it would have been a brave person to put a few quid on such a result, and even braver to suggest that Corbyn would come close to becoming PM as happened in 2017. But if you really want to give Localism and iDemocracy a go feel free, or is that going to be iDemocracy with strings, such as someone deciding what is and is not (so called) Fake News and thus what the mere Plebs are allowed to access?

          2. Bryan Harris
            April 8, 2018

            #
            Do not write off UKIP
 just yet – People are sick of corbyn and the other socialist pareties, and with every concession we give away to the EU, the less people will vote for Ms May – UKIP are the only political force with the integrity to make things better


            JR – the only reason UKIP did not get any seats was down to the fact that most of us believed the tories would do a real job on BREXIT – We won’t be fooled again …

        4. getahead
          April 7, 2018

          It seems clear that there are more socialists than conservatives in the Tory party.
          It’s time for the Tories to split up. The right wing can join UKIP and the socialists can join Cleggster’s hopeless Liberals.
          Perhaps with the amalgamation of the various right wing groups we can find a more suitable name. Not an acronym. Suggestions on a post-card please.

          1. jerry
            April 8, 2018

            @getahead; If being a one nation Conservative, with the values of the post war consensus, makes me a “Socialist” then fine, guilty as charged me-lord.

            All it means is if the Conservative party lurches to the hard right with idealistic dogma based polices, as you and others on this site appear to wish, the vast majority will simply be forced to either sit on our hands, vote Labour, or worse still vote for the LibDems or some such strongly europhile party!

            Only fools become so strongly locked into their political idealism that they lock themselves out of govt…

      3. Peter
        April 7, 2018

        I agree with both Micky and Cheshire Girl. A new party is required. As paleoconservatives pointed out in the USA

        “What paleoconservatism tries to tell Americans is that the dominant forces in their society are no longer committed to conserving the traditions, institutions, and values that created and formed it, and, therefore, that those who are really conservative in any serious sense and wish to live under those traditions, institutions, and values need to oppose the dominant forces and form new ones.”

        The UK needs to address this issue too.

        1. Leslie Singleton
          April 7, 2018

          Dear Peter–Damn right

      4. JoolsB
        April 7, 2018

        “Oh for a Government with some backbone!!”

        Oh for a Conservative Government instead of this bunch of socialists masquerading as Tories.

        1. APL
          April 8, 2018

          JoolsB: “Oh for a Conservative Government instead of this bunch of socialists masquerading as Tories. .. ”

          Wouldn’t that be a thing?

          I remember when the Tory party used to campaign on the ‘Law and Order’ ticket. Nowadays, it’s the ‘brush politically unacceptable crimes under the carpet, and throw British children to the wolves’. ticket.

          Good luck with that one. As a party, the Tories deserve utter oblivion.

          It can’t come soon enough for me.

        2. Bryan Harris
          April 8, 2018

          Jools

          Absolutely ……. !!

          …and the only way that will happen is for a second major right of centre party to make the Tories sit up and notice

          1. APL
            April 9, 2018

            Bryan Harris: “
and the only way that will happen is for a second major right of centre party to make the Tories sit up and notice”

            You could of course vote for the independent Tory candidate, in preference to the ‘Not Conservative and Not Unionist’ candidate.

    2. jerry
      April 7, 2018

      @mickc; How did Cameron and Osborne stifle “the concept of property ownership normal people”, if they wanted to do that we would have seen the largest increase in LA housing stocks since the 1950s, not a massive (by recent standards) increase in private house building, together with schemes designed to help those on low pay or first time buyers get onto the housing ladder!

    3. Lifelogic
      April 7, 2018

      Hopefully they have finally leaned the obvious lesson of May’s “Vote for me and we will will increase taxes, decrease benefits and kick our natural supporters in the teeth” manifesto. But not much sign of this. They just seem like a warm up act for Corbyn, This socialist light before the main act.

      The idiotic sugar tax coming in the yesterday too. Can Hammond not find someone sensible in the mould of Prof Minford, Sir Alan Arthur Walters. Milton Friedman. There are a few sensible right wing economist around after all. Or they could just ring me up for free. I would have avoided the ERM, the EURO, the punishment manifesto and all his very many recent fiscal, energy, policy and spending mistakes.

      1. Lifelogic
        April 7, 2018

        The apprentice levy tax is very foolishly structured too and not working as is the bureaucratic workplace pension nonsense.

        1. Leslie Singleton
          April 7, 2018

          Dear Lifelogic–I continue to have no idea why an employer should have anything whatsoever to do with his employees’ pensions–other than perhaps, fautes de mieux, adding a percentage to wages and telling them to get on with it. Yes I realise that many would just spend the extra but what has that got to do with the employer? If the Government could be trusted (No chance) it could, again fautes de mieux, be made Law that the extra had to be put in to a Government Pension Scheme.

          1. Lifelogic
            April 7, 2018

            Exactly also why should they be responsible if one employee clumsily chats up another? Surely that is a matter for them to resolve between them.

        2. Narrow Shoulders
          April 7, 2018

          A major initiative of auto enrollment is to remove bureaucracy from pensions. It requires minimal set up beyond basic identification.

          The fault line in the policy is not giving scheme members and their employees NI relief for funding their own pensions which will allow the government to withdraw the state pension eventually. It is in effect an additional tax albeit one hypothecated to the individual

          1. Sir Joe Soap
            April 7, 2018

            Remove bureaucracy?
            Have you ever had anything to do with setting up an auto-enrolment policy for employees?
            It enforces enrolment on all employees, then those who can’t (lifetime allowance/below minimum wage/wrong age) or won’t contribute have to opt-out. if you don’t self opt-out before a deadline, contributions are automatically taken, which could lose you your lifetime allowance protection and cost you hundreds of thousands of ÂŁ just for one contribution. Nothing comes close for crazy bureaucracy.

          2. Narrow Shoulders
            April 8, 2018

            I run a scheme for 35 employees and it is easier to administer than the group pension scheme we had previously.

            My objection to it is that it is a compulsory tax and there should be relief against NI for it as it will lead to the phasing out of the state pension.

      2. matthu
        April 7, 2018

        You omitted to provide your phone number … !

    4. MickN
      April 7, 2018

      Mine too. I held my nose and voted conservative at the last GE but only because Ukip had no candidate standing in my area. I am the wrong side of 60 and have seen it as my duty to vote in local and national elections for as long as I have been old enough. I have never missed the chance. I said sometime back that during Cameron’s time I felt that the party had deserted me and my concerns. This has not got better under the current government and in some ways it is worse. I hate the thought of a Labour government be it a Blair type one or the possibility of a Marxist regime as looks increasingly likely next time, but if that is what it takes to get a proper Conservative party again then that seems the only route left. Blair considered that his natural voters had no where else to go to as well.
      I voted to stay in the Common Market at the original referendum, and felt a huge burden lifted when I was able to vote to leave the EU. I smiled widely as I planted my cross on the paper and told myself that I had waited 40 years to right the wrong of my earlier choice.
      Sadly having seen that democracy means so little now in the UK I shall vote no more in elections until we are out of the EU PROPERLY and I feel I have someone to vote for.

      1. JoolsB
        April 7, 2018

        Me too. UKIP shot themselves in the foot when they didn’t put candidates up against Tories supporting Brexit and look how that’s turned out.

        1. getahead
          April 7, 2018

          The Tories, Cameron, promised a referendum. That was worth the betrayal of UKIP. After the referendum the Tories have proven themselves to be untrustworthy. UKIP again has my vote.

          1. anon
            April 8, 2018

            The “powers”- gave in to the referendum..

            Otherwise the alternative may have been an entire loss of control to a 3rd party, possibly a UKIP coalition.

        2. APL
          April 9, 2018

          JoolsB: “against Tories supporting Brexit and look how that’s turned out.”

          The peculiar thing about the collapse in the UKIP vote was that the 7% of the electorate that chose to no longer vote UKIP was almost exactly mirrored by the rise in the Labour vote.

          UKIP wasn’t really a Right wing party. It may have been a Nationalist party. But then so is the Scots National party. But SNP doesn’t seem to have been subject to the same sort of vitriolic reporting from the British government broadcaster.

    5. duncan
      April 7, 2018

      Social class is an intellectual contrivance. A falsity that stain’s the intellect of those who choose to attach any credence to it.

      When Thatcher declared that society was a myth I knew immediately what she meant. The idea of society is an academic exercise designed to afford a degree of order in the minds of those who choose to believe in it. It’s a narrative, nothing more. It is not a reflection of the living, breathing real world in which exist

      I choose to live in the real world. Many politicians, governments and agents of the state prefer to construct narratives, bombard the public with them and present them as fact to replace the world in which we live. Narrative replaces reality.

      Narrative allows political control but more perniciously the control over how people perceive the world around them. That interjection affords leverage over the behaviour of millions of people

      Always question, never accept what you are told as a truth

      Centuries ago people believed the Earth was at the centre of the Universe until one man questioned that ‘truth’. We now know the truth

      May’s now banging the ‘gender pay gap’ drum. We know it is the truth but a feminist narrative but for a politician on the scrounge for votes there’s no depths to which they won’t sink

      1. duncan
        April 7, 2018

        ‘We know it isn’t the truth but a feminist narrative’

        1. Timaction
          April 7, 2018

          Indeed. Most pay scales are the same its about pay points, maternity leave, time out and therefore promotion not suitable, due to lifestyle choices. So the stats are distorted by those with their own agenda’s. Look at the public services and they are way over represented in certain groups by time spent and experience as “nu Labour” changed all the selection procedures to cheat the system and invented positive action to boot. That’s race and sex discrimination in old money but legislated by the legacies to distort the their cancerous PC agenda. Meritocracy no longer exists and now May wants it in the Board rooms of our major companies but not on merit!!!! I won’t be buying shares in those companies!

          1. Timaction
            April 7, 2018

            In fact it’s all fair unless you are now the unspoken true minority : A white heterosexual, married Englishman!

          2. getahead
            April 7, 2018

            I’m now retired but the company I used to work for paid those doing the same job, the same salary. I doubt that this is different among other employers.
            I do not believe there exists wage discrimination. Women, in the majority, opt to do different jobs to males. Smart women will get paid more than dumb men. Dumb men will earn less than smart women.
            The government as in most things, should not interfere.

      2. libertarian
        April 7, 2018

        duncan

        Top post , spot on

        Gramsci is alive and well and a leading member of the Conservative Party it would seem

      3. Lifelogic
        April 7, 2018

        There is a gap because many women sensibly choose different and often lower paid jobs for family/work life balance/logistics reasons. Also very few women choose to study things like Physics, Further, Engineering, Chemisty Maths and Computer Studies – only circa 20% of these are women at best.

        May is either too innumerate to understand the statistics or just thinks there are votes in the dishonest “victim & politics of envy” agenda. Most men give most of their wages to the wife and family anyway! May clearly want active, anti-male discrimination.

        1. Miss Brandreth-Jones
          April 7, 2018

          ‘Most men give most of their waged to the wife and family anyway!’

          Which century are we talking about here?

          1. Sir Joe Soap
            April 7, 2018

            21st

        2. juter
          April 7, 2018

          What do you expect from a childless Geography graduate?

      4. Leslie Singleton
        April 7, 2018

        Dear Duncan–Motto of Royal Society is, Nullius in verba (Take no-one’s word for it).

        1. DaveK
          April 7, 2018

          Except when it comes to Climate Change.

        2. Lifelogic
          April 7, 2018

          I certainly do not take the Royal Society at their word after they went all “political” and ignored the science in pushing the climate alarmism religion/exaggeration.

    6. Prigger
      April 7, 2018

      I’m against the concept of fake property ownership. That is plunging people into debt with a mortgage

  2. eeyore
    April 7, 2018

    The small private landlord may have had his day. Change is coming to the rental market as big property companies build very large developments purely for letting. With economy of scale comes competitive quality and value, and they offer a stable and attractive investment for financial institutions like pension funds.

    1. Lifelogic
      April 7, 2018

      Perhaps, but why are private landlords double taxed on interest and companies not, it makes no sense at all let us have a fair & level fiscal playing field.

      1. Lifelogic
        April 7, 2018

        A fair system taxes a fair percentage of real profits!

        1. Hope
          April 7, 2018

          The Tories are for big business only, hence pro EU view to shut out small businesses. Small businesses and private investors have been hammered by the Tory Govt.

          JR, hits another nail on the head that this chancellor is useless as was his predecessor. Osborn had his way there would be a pasty tax!

          Community charge hike by 5.6 percent, plus flood defence, social adult care, empty green bins, now a management charge of cutting grass in communal areas! All these add on taxes by local government allowed and promoted by central government trying to hide the blame from them. ÂŁ14 billion, a ne record, for overseas aid! Madness. Even Cameron now claiming it should be cut!

          Tax hiking Tories lying about its credentials to keep taxes low. Hammond knew he was lying in his recent statements about low tax Party or he is completely incompetent and does not know what his department is doing. Free university education to EU students, our competitors, while Hammond defers the lifetime of debt for English students until they earn ÂŁ25,000. Idiot. Perhaps Cameron meant he Tories would introduce Evil not EVEL? May thinks the young will vote for her, again, idiot.

          1. Timaction
            April 7, 2018

            Forget the young, how about anyone who can …………THINK and has a heartbeat!

          2. JoolsB
            April 7, 2018

            “May thinks the young will vote for her, again, idiot.”

            Nor their parents or grandparents. Free or heavily subsidised university tuition to everyone except the English. May took us all for idiots when she did her speech on tuition fees standing behind a Britain sign and saying the word Britain dozens of times. No Mrs. May it is only English kids and their parents your Government is kicking in the teeth with the second highest fees in the world.

      2. Peter Parsons
        April 7, 2018

        Not all private landlords are taxed on interest, only those using BTL mortgages and who are higher or top rate tax payers.

        Private landlords operating as companies who borrow using commercial loans still get full tax relief.

        This is actually bad for prospective tenants as what they need is competition in the marketplace, which comes from lots of small landlords, not a few larger ones. There’s no benefit to a prospective tenant viewing 10 or 20 properties if those are all owned by the same 1 or 2 large landlords. If those properties are spread across 6 or 10 or more different small landlords, all of whom need a level of rental income to cover their costs, the prospective tenant has much more negotiating leverage. The domestic energy market has already illustrated this.

    2. oldtimer
      April 7, 2018

      IIRC Osborne’s tax changes did not apply if you owned more 16 properties. It was calculated to reduce competition and protect the interests of the big property companies. So much for the free market.

      1. Lifelogic
        April 7, 2018

        Why sixteen I wonder? How many does Hammond have. It is absurd to have one tax law for below 16 and one for 16+. What constitutes a property a room, a flat or a building?

    3. Sir Joe Soap
      April 7, 2018

      Indeed, that is the other perverse effect of these changes. Rather in the way that large companies make profits on equity trading to re-invest based on the corporation tax rate, but we lower mortals pay higher income and CGT rates to reinvest…

      These changes removing interest payments from tax relief bring property into line with other long term asset investment (despite Lifelogic’s assertions) but they do nothing to help the individual investor generally against the big boys in the corporate property market, who have an unfair advantage.

    4. cornishstu
      April 7, 2018

      I believe that was what the tax was all about push out the small guy and allow the corporates to fill the void.

      1. Bob
        April 7, 2018

        @cornishstu

        “push out the small guy and allow the corporates to fill the void.”

        This applies to so many legislative burdens imposed on businesses regardless of their size. The cost of compliance is disproportionately large for a small businesses.

        The Federation of Small Businesses has grown too large now and seems to exist for its own sake pushing out glossy magazines explaining how to comply with legislation rather than challenging it on behalf of small businesses it’s supposed to represent.

        1. libertarian
          April 7, 2018

          Bob

          Hear hear

          The FSB has become totally detached from its local members. Its now just run for and on behalf of the “leadership & lobby” people in Blackpool and Westminster

        2. Lifelogic
          April 7, 2018

          Indeed similar group organisations for landlords, businesses and certain industries love more regulation. This as they earn their money by guiding business through this maze of pointless regulation. It helps them recruit and sell advertising and essentially parasitic services.

    5. mickc
      April 7, 2018

      I would be amazed if large corporate landlords produced high quality and value. Far more likely that the small local landlord with an interest in the local community will do so as their motivation will probably not be to extract the highest rent but to obtain a reasonable return and stability.

      1. forthurst
        April 7, 2018

        Are you kidding?

        1. mickc
          April 8, 2018

          No

      2. GrumpyDoug
        April 9, 2018

        Spot on – large BTR landlords here are 30%+ more expensive. Fat cat salaries, shareholder dividends, expensive HQ etc. to pay for. Got a problem ? Call the call centre – ” hello Bombay/Shanghai – my boiler’s broken down”.

        Great if you earn a good salary and are happy to live in a city centre high rise. Went to live in a community with a garden for the kids – forget it. That’s where the local Landlord will score every time but Osbo’s taxes are destroying them. Hey ho – interesting times we love in

  3. Mick
    April 7, 2018

    https://www.express.co.uk/news/world/942377/brexit-news-ireland-leo-varadkar-irish-border-eu-uk-talks-exit-deal
    Am I the only one who is a little bit cheesed off with reading nearly every day stories like this or coverage on the tv with the same negativity, isn’t there some media outlet out there that can give a true reflection on Brexit , you can see what the media are trying to do is reverse psychology so that leavers push for a second referendum, well tough we are leaving so get use to it

    1. cornishstu
      April 7, 2018

      I would quite welcome a second referendum provided it is to accept the deal or to leave on WTO terms, as it is quite obvious we are once again being sold out by those we elect to do our bidding.

  4. Lifelogic
    April 7, 2018

    This was his pathetic attempt to reinvent himself as the man of low taxation after giving us the highest, most complex and most idiot taxes for forty years!

    https://www.telegraph.co.uk/philip-hammond/

  5. Adam
    April 7, 2018

    Budget adjustments designed to change behaviour are bound to cause knock-on consequences, even reducing Govt income from the source. Sometimes, the behavioural objective is more important. Other sources can deliver the money.

    Apart from any newly-built housing the policy discouraged, the existing housing would still be owned by someone, & likely to be used as a home. However, the substantive points you criticise demonstrate higher quality perspective, revealing the policy as a failure.

  6. Sir Joe Soap
    April 7, 2018

    After all these years, you’re starting to report what we here have been reporting for many years. It is precisely what Socialists do to have a profound effect on behaviour. The only remaining mystery, on which we are commenting now and you might choose to do the same in a few years’ time, is why on earth you and your colleagues supported this awful “top team” into power in the first place?

    1. Timaction
      April 7, 2018

      I agree as there are very few “conservatives” left in the Tory party! A fag paper between “new Labour” as they were and the Tory’s, and then there is Corbyn and his pals!

  7. Lifelogic
    April 7, 2018

    High taxes, in of themselves, are hugely damaging to the economy. Making many things simply not worth bothering with (other than illegally for cash in hand perhaps). This reduces the tax base for the next year and reduces investment. Is Hammond really too dim to see this? If not why has he given us the highest, most complex and most idiotic taxes for forty years? Interventionist dope T May, in going along with this, is hugely to blame too.

    1. Lifelogic
      April 7, 2018

      You say “Chancellor Osborne’ hits the buy to let market with tax rises – but Chencellor Philip Hammond has had plenty of time to undo this economic lunacy and chose not to. He also has had plenty of time to give us the ÂŁ1Million IHT thresholds each as promised many moons ago.

  8. Dave Andrews
    April 7, 2018

    I wonder too whether the government would see a higher tax take if they lowered employment taxes, as well as business rates. Currently, business is being discouraged like it was a social evil.

    1. Bob
      April 7, 2018

      @Dave Andrews

      “business is being discouraged like it was a social evil.”

      This certainly applies in the case of small businesses that don’t have the benefit of compliance and HR departments.

    2. Lifelogic
      April 7, 2018

      Well if they lowered employment taxes they would certainly see more employment! Also they need to move to easy hire and fire. The bonkers employment legislation is a huge disincentive to taking people on.

  9. L Jones
    April 7, 2018

    Once again, Mr Redwood, you seem to indicate that your patience with today’s Government policies seems to be wearing thin.

    So what’s to be done?

    1. Hope
      April 7, 2018

      Linda, if JR openly writes this then he must be a live that we feel much worse! Let us hope the Tories get trounced in local elections, this might, a slim might, get the dull May to understand the public does not like anything she does.

      There will be millions like me who will not vote unless there is an independent with a bit of gusto about them. Although it is tempting to vote Labour to give May the kicking she deserves.

      1. Lifelogic
        April 7, 2018

        The public does not like anything she or Hammond does and it is all damaging the economy and killing jobs too.

  10. Sakara Gold
    April 7, 2018

    We should build more hostels for the homeless. I am ashamed to be living in a country where people can freeze to death on the streets in bad weather. Mostly they are homeless because of changes in housing benefits or because they had been in care and were evicted once they reached 16.

    However, I felt sorry for one chap on a bench in the gardens outside Victoria station during the cold snap and went and bought him a coffee. He then berated me because it wasn’t a can of Special Brew and tried to tap me for a fiver. etc ed.

    1. Lifelogic
      April 7, 2018

      Indeed they are mostly people who refuse to go to hostels and have drug, alcohol or mental health issues in my experience. Many however are just professional beggars who do indeed have homes to go to (paid for by other tax payers). These types are tend only to be around at peak begging times in busy areas. Many are quite professional in how they go about it. They really should be prosecuted claiming benefits while “working”.

      Brighton for example is full of them.

    2. Edward2
      April 7, 2018

      If only it were as simple as you suggest Sakara.
      Many homeless have complex and multiple problems.
      They refuse any accommodation offered.

    3. a-tracy
      April 9, 2018

      Housing policy in the UK means that men are at the bottom of the social needs chain, if homeless their hope of getting low cost rentals is near zero, young women alone don’t often sleep rough because it is far too dangerous and risky to them, but what real choice to men have in our major Cities, sleeping rough gets them to the top of the housing queue and at the moment fast-tracked, there must be a way of providing hostel (single room) accommodation for both sexes to allow them to take jobs in our major cities at a reasonable cost.

  11. Epikouros
    April 7, 2018

    This tax like philip Hammond’s diesel tax are examples of political interference in the market place which then allows the levy of the accusation of imperfect markets so free market capitalism should be abolished in favour of the socialist state. It also points to the fallacy that price controls favour the consumer as those taxes are acting as such. The consequences of the proposed energy cap will have some of the same disastrous result. Even Argentina has recently dumped her energy price controls as they have proven to be so damaging. In fact most of South America is slowly turning away from socialist policies and practices. They are beginning to realise the error of their ways. It is also an assault on the UK’s ability to raise taxes and has proven the Laffer curve as you have pointed out. A lesson that the left and wet Conservatives would do well to take note of and learn which of course they will not.

  12. Bryan Harris
    April 7, 2018

    #
    Surely the present chancellor understands the problems – why hasn’t he done something about this?

    1. ian wragg
      April 7, 2018

      The present Chancellor is just Osborne Mk2. Deliberately reducing economic output so as to blame Brexit.
      etc ed
      TM refuses to endorse stop and search as it is non PC and is likely to capitulate on FoM thus continuing the current crime wave.
      The government is a disaster and we just hope a true right wing party evolves from the mess otherwise a dose of Corbyn will be the answer

      1. Bob
        April 7, 2018

        @Ian
        The fact that Corbyn’s Labour can be spoken of as a potential alternative speaks volumes about the sheer absurdity of the current Tory Party.

        1. Lifelogic
          April 7, 2018

          Exactly and T May could not even get a majority against the magic money tree, all shall have everything they ever desire Jeremy Corbyn.

          With his blatant attempts to buy voters with worthless promises he could never very fulfil.

          She must go very soon or be given a brain and appoint a new Chancellor!

      2. Lifelogic
        April 7, 2018

        May & Hammond are a dose of Corbyn light. But let us hope we can avoid Corbyn and finally get some sensible Conservative government.

      3. zorro
        April 7, 2018

        Alas, it will need a few years of Corbyn to get a sensible Tory party again and hopefully not one beholden to neocons or the malign influence of certain nations. All we want is a economically literate party, which upholds stable families, clamps down on violent criminality, avoids unnecessarily aggravating foreign relations on very dubious grounds, and promotes competence, and NOT virtue signalling, PPE laden, PC types with no valid experience!

        We must live in hope….. Is there hope in the proles?

        zorro

        1. Lifelogic
          April 7, 2018

          My money is on J Corbyn never becoming PM. This despite May’s stupidity and best efforts. But it is a worryingly close thing.

          Worse still it would be with the SNP tail wagging the old dog. Peter Oborne thinks J Corbyn will be gone very soon well before the next election.

          1. zorro
            April 7, 2018

            How?

            zorro

          2. APL
            April 9, 2018

            zorro: “How?”

            The Russians.

    2. Hope
      April 7, 2018

      To promote Project fear and make his doom laden projections look credible to keep the U.K. in the EU or leave in name only, to promote his modest changes only stance.

    3. William Long
      April 7, 2018

      The present chancellor is a very mixed up person. With one breath he says he thinks it is right that people keep more oof their own money, he does nothing to redress the ridiculous situation where a large swathe of people are paying 62% on the margin over ÂŁ100k of income, and brings in a sharp tax rise on dividend income by reducing the nil band from ÂŁ5k to ÂŁ2k.
      Osborne acted to kill the small landlord, while leaving the corporates alone. Hammond ignores the concept of fairness to all, including those who generate the wealth that the government wastes.

  13. Mark B
    April 7, 2018

    Good morning.

    I did not quite understand why policy reversed . . .

    Because there was a house price bubble and people who wanted to own, could not. Unfortunately, the millionaire George Osborne took a sledgehammer to the nut with resulting circumstances.

    It was not just savings. Pensions under both Tories and Labour have been a great source of money. And once people realise that their money is no longer safe, off they go ! Hitting the pension funds also hit the construction industry and house building.

    As I like to say. You can always tell where government has been. By the trail of mess it leave behind

  14. Narrow Shoulders
    April 7, 2018

    If the government truly wanted to raise more money from housing it should have built more hes than we need. (Pincer movement of enough hoes for current situation and greatly reduced immigration going forward).

    The sales of these houses would bring in much revenue and at the same time the supply would address pricing issues.

    This will not happen for various reasons driven by vested interests who are more interested in margin than volume.

    1. Narrow Shoulders
      April 7, 2018

      More houses than we need

      enough homes for current situation.

      Apologies

  15. acorn
    April 7, 2018

    Strange that a Thatcherite is promoting Buy-to-Let! You are supposed to be promoting “Owner-Occupier”! The prospect of one household, owning and renting out property to its next door household; is one of Ted Heath’s “unacceptable faces of capitalism”.

    1. mickc
      April 7, 2018

      So on that rationale, capitalism is the unacceptable face of capitalism….

      1. acorn
        April 7, 2018

        There has been more capitalistic experience in history overall as it is an older phenomenon and more extensive implementation was made, particularly in England and North America. But pure capitalism was never quite reached.

        Socialism is a much more recent historical development with significant advances only since the 19th century. It’s the ideology that the means of production should be controlled collectively by the people and not monopolised. There have been no implementations of socialism in history. There were a few aborted attempts but they all turned into authoritarian state capitalism, such as the Soviet Union, Cuba and North Korea.

        The values behind socialism have however deeply influenced history in several very positive ways, like worker’s rights and human welfare.

        (Bruno Rivard, Scientist and Political advocate of the alienated intelligent precariat.)

    2. Lifelogic
      April 7, 2018

      The tax system should largely be neutral on letting or buying we need both. There is not point in buying a house for a six month contract or if you cannot find one suitable for a decent stay. Especially with the idiotic anti London stamp duty rates we have.

      I suppose the real question is:- Is Hammond just the play thing of the dopes who run the Treasury. Who just want more money to waste hand over fist and fund to the outrageous state sector/private sector pension apartheid or is Hammond actually really so dim that he is the one pushing all these bonkers tax increases and tax complexity? He did read PPE after all so I assume the latter.

      Almost everything he has done has been totally wrong headed so far and has damaged the economy and confidence massively.

      Wiki also says he acted as an adviser to the government of Malawi. They must be mad to have taken him on!

    3. libertarian
      April 7, 2018

      acorn

      Oh boy you get more off beam by the day. Thatcherism is about free markets, if people choose to buy or rent its up to them. No one has been prevented from buying a home

      1. acorn
        April 7, 2018

        As long as you have got the money, one is not prevented.

        If you know of a “free market” anywhere, please let me know; I have never found an example of an unregulated by a government, market, that hasn’t self destructed.

    4. stred
      April 7, 2018

      It seems odd that social democratic countries like Germany and Sweden have no problem with private rentals and many people prefer them. In addition, as confrmed by a German landlord with property here and in Germany, he cannot believe the difference in the behaviour of tenants here and in Germany, where the properties are rarely damaged and tenants stick strictly to the agreements, handing back property in the condition it was in when the rental started. Here, tenants can exploit the law to damage and leave without paying six months rent. Another reason to get out of the business.

    5. Lifelogic
      April 7, 2018

      Thatcher gave tax relief, let the market decide no point in buying until you are fairly settled especially with stamp duty are such bonkers rates.

      1. acorn
        April 7, 2018

        So, which one do you want; tax relief or market decides? Or, do you want me to explain the difference?

  16. Chris
    April 7, 2018

    Our government needs a strong lesson from Trump on economics, and urgently. The wealth and jobs being created in the USA are quite remarkable but it is hardly reported in our mainstream press.

    1. Bob
      April 7, 2018

      @Chris

      “Our government needs a strong lesson from Trump on economics, and urgently. The wealth and jobs being created in the USA are quite remarkable but it is hardly reported in our mainstream press.”

      They’re more interested in puffing up any tittle tattle that could undermine him.
      I notice that the story about the Russians fixing the election result has gone quiet, now it’s Facebook or Stormy Daniels, the latter being treated with veneration by the BBC. Their desperation to undermine Mr Trump is palpable.

      1. Timaction
        April 7, 2018

        ITV and Sly News are no better!! The American correspondent on ITV almost has a bad news item daily. Never positive about Trump. But like non existant global warming time will out them all!!

    2. Leslie Singleton
      April 7, 2018

      Dear Libertarian–But maybe they should have been–Or maybe they should be forced to change to renting (Nobody said it would be easy). If that were done Nimbyism and worrying about one’s equity would disappear and fracking could at last get going.

    3. Leslie Singleton
      April 7, 2018

      Dear Chris–Yes I like what Trump is doing (for his people) and the way he is doing it–At least he is doing something. Have you noticed the spelling mistakes (even in American) in his tweets which to me means he is saying what he means without it’s being filtered through and diluted by layers of diplomats and civil servant types by which time over here we would be left with a camel, that is a horse made by a committee.

  17. graham1946
    April 7, 2018

    Long term renting is a disaster. In the end when you retire you will still be paying ever higher rents and relying on the landlord not to chuck you out of your home with just a few months notice. There is virtually no certainty for the renter except higher rents. You will never have any wealth behind you and if you no longer can pay the rent after retirement what then? The government will have to step in to pay the difference at vast cost to the tax payer as they could not permit wholesale homelessness of the elderly. If we had low rents it would be different, but we don’t.

    If you pay rent you can probably afford to buy – often mortgage payments are cheaper but the silly system of high deposits is what stops people and if you are renting you will probably never be able to save enough. Once the mortgage is paid off you have a secure rent free home and even some capital behind you if you want to downsize or take equity release.

    It may be that short term economic out put is reduced slightly but in the long term it is far better to own than rent and the government will save on the benefits bill as well. I think JR is being very short-termist with his argument here.

    1. Leslie Singleton
      April 7, 2018

      Dear Graham–I think otherwise–In the end you are usually right but many people either die first or spend their lives as slaves to their mortgages or there is a property crash.

      1. graham1946
        April 7, 2018

        People spend their lives as mortgage slaves chasing ever higher priced housing which they see as investment rather than a home, which is wrong. Owning a suitable house which can be paid off in a working lifetime should be the aim. What property crash? There won’t be one whilst the present balance remains. Even the losses from the negative equity of the eighties have been wiped out. and I am sure the majority of people do get to retirement age without dying first and so can have at least 20 years of rent freedom and something to leave if they wish. If you do die, Insurance pays out and your heirs inherit.

    2. stred
      April 7, 2018

      Buying in a falling market is also a disaster. Fall into negative equity and with rising interest rates and the banks will have you out faster than any landlord, and bust with it.

      1. graham1946
        April 7, 2018

        Seems like a fair risk to me as against the fact that you will never own a brick renting for a lifetime. That is certainty. Perhaps you are too risk averse to be in business.

        1. Leslie Singleton
          April 8, 2018

          Dear Graham–You can’t take bricks with you

  18. Rien Huizer
    April 7, 2018

    This tax clearly worked well and appears to have the blessing of the government. Buy to let did not add to supply and hence offered no solution to the shortage of affordable housing. It should have been restricted to a certain price range and only new construction. Elementary!

    1. anon
      April 7, 2018

      A fair comment. I agree.

      Unfortunately the removal of borrowing incentive for buy to let was introduced late in the cycle (at the top) when PE ratios were already too high.

      This also only affects individuals not company vehicles.

      Where as you pinpoint, only new build or effectively new builds should get a tax deduction on interest costs. Taxation should be amended to enable this.

      We should also ensure we have anti-trust investigations on all large volume builders, to investigate if price fixing is in place, by restricting volumes. Planning pemission should have a large financial sting in the tail if build targets are not met.

      Still its better than before.

      Some “labour” for sale serfs, may be able to purchase now without being outbid by would be rentiers.

      Mr Corbyns lot would of course change the rules but would seek to a real client state. Instead this helps some voters become more self reliant.

      It helps more voters than it hurts.

    2. stred
      April 7, 2018

      BTL resulted in many derelict properties being refurbished, re configured and extended to house more occupants. It also made developments of new housing viable. Now the development of flats in London has become uneconomical, with many unsold.

    3. Timaction
      April 7, 2018

      Is that along with 5 year tractor production targets or more legislation from the EU to do as we are told!?

    4. Edward2
      April 7, 2018

      I know buy to let developers who took run down detilict properties and refurbished them and got them back into good order.
      Some were split into smaller units and rented out at decent rates to those on waiting lists.
      So they actually increased the availability of homes for people.
      Not always a negative.

  19. stred
    April 7, 2018

    I live in SE England and know of 3 small landlords who are getting out while prices are high. One has had to accept a much lower price than the estate agents bid. I spoke to a letting agent in SW England yesterday and he has 3 of his landlords selling, while lettings are also very slow, with potential tenants bargaining for rent reductions. Income is being squeezed with higher council tax, energy taxes and pensions. Big business rentals may be coming on stream and are favoured by the government.

    The result seems to be a trend, starting in London, for house price reductions. The government encouraged investment by small savers, then mugged them, as Brown did with pensions. Presumably, they do not value the votes of older investors and think that CGT stripped from their ‘pension’ in bricks and mortar will be a nice earner. After a few elections they will be gone and they have no choice between liberal socialist and Marxist socialists.

    Time to start a new Conservative Independence Party for small business and traditional conservative and Labour voters who are sick of the present lot and their civil service masters.

  20. duncan
    April 7, 2018

    Contemporary politics is pervasive and authoritarian in nature. Osborne chose to hammer BTL simply because he could. The state’s involvement in our lives is now pervasive, omnipresent and sclerotic

    The BTL is an opportunity for the private citizen to exercise his capital for better returns. It also allows the creation of new and renovated properties onto the market.

    And then the state steps in. Yes, this political entity has a role to play but its involvement is now almost familial, like a parent’s constant presence

    We are not play-things for politicians and governments. We are human beings in our own right.

    How dare politicians treat us like political capital to be harvested at will. That’s Marxism

    Only Thatcher embraced humanity. Her emphasis on merit and personal responsibility was so important. She tried hard to weaken the grip of the state over our lives by cutting the politicisation cord that the state uses to keep us in line. Depoliticisation prevents authoritarianism. We need another Thatcher to smash the power of the state

  21. ian
    April 7, 2018

    That hope MPs on all sides of the house got the nod.

  22. They Work for Us?
    April 7, 2018

    As the American backwoodsman said “I avoid all contact with government whenever I can because it only brings me expense and hassle”.

  23. Prigger
    April 7, 2018

    Private landlords, buy to let , and those lending to them have made a mint. An endless flow of migrants requiring accommodation at any price, landlord agents turning a blind eye to “friends” of tenants staying “a night or two” and a stream of failed asylum seekers “on the run” rotating from one tenant’s accommodation to another for “a night or two.”
    The police search for them. ..ask neighbours if they have seen these people “next door” and show them overused black and white photos, very poor photocopies. It is a good little earner for the agent and even the now foreign owner. Been there, heard it, seen it, with my own eyes and ears. Pc prevents me from expanding on this theme.
    Then when a young migrant in a highly priced rental property becomes pregnant, the Local Authority has a problem, as does the TAX -payer and the benefit clerk and the local Councillor and the local MP!!!!!!!
    Of course the rent is paid for them to the rich landlord and the rich buy-to-let lender, and benefits, and a paid translator, and ,and and, and.

    The Buy-to-Let schemes should be stopped immediately. Yes there will be a greater housing problem. It is like the agonies of withdrawal from a drug…the drug of government freebies.
    I have not mentioned gangsterism, big time, in connection with the above, merely relatively petty crime, nor bribes and threats to certain people in positions. A blockbuster movie may one day be made of it…based on real life in the UK

    1. graham1946
      April 7, 2018

      I don’t see why there will be a greater housing problem if there was no BTL. The houses will still be there for occupation and will be actually owned by someone who wants a home, not just a profit off the backs of other people, mostly less fortunate who probably have a struggle to pay ever increasing rents. So many people pay a huge percentage of their wages in rent leaving less to be spent in the wider economy.. When the council houses were sold off this was the argument used. Lots of them have become BTL.

  24. Prigger
    April 7, 2018

    Buy-to-let nurtures misdeeds by various parties.

  25. lojolondon
    April 7, 2018

    Thanks for mentioning this John, I note that the current Chancellor has had several opportunities to reverse this ludicrous policy – which will only ever reduce the numbers of homes for rent and thus drive up the cost of rents – but he has missed every opportunity to take the actions of a true conservative.

  26. Anonymous
    April 7, 2018

    A non property owning population tends towards socialism. That’s why this was done.

    1. Lifelogic
      April 7, 2018

      Hammond and May are socialists!

    2. Prigger
      April 7, 2018

      No it doesn’t

      1. Anonymous
        April 7, 2018

        Then what was Margaret Thatcher on about ?

        1. graham1946
          April 7, 2018

          I agree Anon. My old dad used to say that when a socialist gets to own two pairs of socks he votes Tory.

  27. NHSGP
    April 7, 2018

    Without explicit consent, it is just financial rape.

  28. NHSGP
    April 7, 2018

    ====
    I did not quite understand why policy reversed, as it had been policy of both Laour and the Consevatves to enocurage a larger prvate rented sector to complement social rented and ownership.
    ====

    So why did you vote it?

    At least you are honest. ie. I’ve not got a clue but I’ll do what the whips tell me.

  29. Andy
    April 7, 2018

    Again – another sensible tax.

    Aimed at pensioners who were denying young people the chance to get on the property ladder by buying 2nd, 3rd, 4th or even 5th homes for themselves.

    This wouldn’t be so bad but it is largely the same pensioners who object to building new properties – as they don’t want to spoil their views.

    This Brexit voting generation is almost entirely responsible for the housing crisis – yet largely blames it on immigrants.

    I guess that politically it is easier to blame foreigners than grannies.

    1. Lifelogic
      April 7, 2018

      No one blames the “foreigners” as you put it, they blame the government for having an open door immigration policy (regardless of need or merit) and not making sufficient provision for all that follows from this.

    2. Prigger
      April 7, 2018

      “..property ladder..” ???? Sink me, we have a Pound Shop bucks fizz socialist!

    3. Martyn G
      April 7, 2018

      Andy, I find it amusing that you like blaming pensioners for being the cause of Brexit and the housing shortage. In fact many of those who voted to leave were young to middle-aged, often because they could see their jobs going to lower-paid immigrants together with their basic in-built dislike of our UK government having to obey the Directives of an unelected and unaccountable EU bureaucracy.
      As to the housing shortage, the majority of pensioners are unlikely to qualify for a mortgage and overall cannot be blamed for the shortage. It is a fact that over the past 5-10 years house building had slowed right down, the reasons that being so included difficulties in implementing local and national planning Laws, with many developers sitting on land awaiting it to increase in value. One also cannot ignore the fact that the additional 6 or more million people who entered the UK drove up demand for housing. But I suppose it is easier to blame pensioners for everything rather than face the facts.

    4. Edward2
      April 7, 2018

      Most buy to let landords are in their 40s and 50s
      Fact
      Hardly pensioners
      Yet again Andy your bias results in incorrect statements

      1. Andy
        April 7, 2018

        Not according to the Council of Mortgage Lenders – who produced a comprehensive report last year which clearly states that over 60% of landlords are over 55. And the majority of tenants are young.

        Facts are awkward, eh?

        1. Edward2
          April 8, 2018

          They are plainly still working Andy
          So not pensioners.

  30. acorn
    April 7, 2018

    “showing how higher taxes do have a direct and often profound effect on behaviour”. That’s what taxes are meant to do. Taxes do not fund per-se, Treasury money creation (government spending).

    Taxes enable the government to slow or stop its private sector doing something the government doesn’t want it to do; or, it wants something diverting into the public sector at a price it wants to pay, for public good.

    Hence government could easily force a public sector build for rent or subsidised sale; just like Singapore https://en.m.wikipedia.org/wiki/Public_housing_in_Singapore

    It just takes a government that knows how to run a fiat currency economy for the collective good of all its citizens; unfortunately we don’t have one and are not likely to get one.

  31. bigneil
    April 7, 2018

    Off topic – -I have just read – -right or wrong I don’t know – -that the Money given away in Foreign aid has now risen to TWICE what is handed out to Police Forces for their budgets.

    If this is true, then clearly our govt thinks better of the 3rd world than it does it’s own people. Hand out billions to the 3rd world, who then come here and our crime rate soars. Why does the UK govt hate it’s own taxpayers so much?

    1. Andy
      April 7, 2018

      It doesn’t. The point is that if you spend money overseas tackling the inequality that leads to terrorism, extremism and epidemics then you prevent the problems coming here in the first place.

      And aid works. The hard right and angry pensioners like to claim otherwise but it is far more effective than military action, it is far cheaper and it is far better in the long run.

      Plus helping the world’s poorest children is the humane thing to do. Those of you who call for aid to be slashed are, almost literally, calling for children to die. I assume most of you would not physically strangle a child yourself, but your callousness when it comes to aid basically has the same effect. We are fortunate in this country. We have a moral duty to help. And some of us still have morals.

      1. anon
        April 8, 2018

        Fair trade works better.

      2. Edward2
        April 8, 2018

        The main objection is with the legal requirement to spend a certain percentage of GDP.
        It leads to poor funding decisions especially towards the end of the financial year as we rush to find ways of spending the required amounts.

      3. Bryan Harris
        April 8, 2018

        Andy – Tell me, just how long have we been sending our money abroad to “tackling the inequality that leads to terrorism, extremism and epidemics”.

        Clearly it has not been successful, because the epidemic has reached EPIDEMIC proportions….

        …another socialist led policy that starves us of cash at home while doing little abroad… The EU is keen on waelth transfer, and look at our infrastructure compared to Poland and Spain, for example.

    2. acorn
      April 8, 2018

      Under the Osborne – Hammond “zero deficit austerity plan”, you can’t have tax cuts without spending cuts to get to zero deficit. Fortunately, this stupid neo-liberal policy, is currently, ten years behind schedule and is only slowly killing the economy.

      Take one result so far. Spending on the police decreased by 17% (real terms) from 2009/10 to 2016/17. There are 14% fewer police officers in 2017 than in 2009. Lots more examples at: https://www.instituteforgovernment.org.uk/publication/performance-tracker-autumn-2017/law-and-order/police

  32. Ian Pennell
    April 7, 2018

    Dear Mr Redwood.

    At one time the main USP of the Conservative Party used to be Tax Cuts; which were both popular and lead to higher economic growth. Understandably, after a decade of stagnant wages and then Austerity the British Public voted in large numbers for Jeremy Corbyn’s populism – more money for the NHS, schools and student loans being paid off. The Conservatives’ reaction has been about possibly raising taxes to make sure that the NHS is better funded. But there is another possibility:

    How about halving Foreign Aid to boost spending on the NHS? How about a reduction in Green Subsidies to put more Police on the streets? Are there any Quangos that really need looking over- and cutting? The money could be used to reduce the Budget Deficit. Then if one is really radical there is the possibility of a well-organised Tax Amnesty programme lasting six months and covering all taxes which, if the success of State-level USA programmes are anything to go by could raise up to ÂŁ300 billion for the Exchequer. With that money you could reduce the National Debt by 10% and still have enough over to raise the Income Tax Free Allowance to ÂŁ15,000 for the next five years. The cut in taxes would put more money in people’s pockets and foster stronger economic growth – this would make these tax-cuts largely self-funding.

    You could also sell off the remaining stakes in part-nationalised banks to kick-start the building of an extra two million high-quality homes for first-time buyers for just ÂŁ50,000 each by 2025. This would be largely self-funding and it would be extremely popular with younger people – and a selling point to encourage many more folk to join the Conservative Party.

    This is the way for the Conservatives to defeat Jeremy Corbyn, so that we get a signed-up Brexit-supporting Majority back in Parliament.

    But just why would folk want to vote for a milder version of the Labour Party- they’d go for the real thing.

    Ian Pennell

  33. Bryan Harris
    April 8, 2018

    “Reply UKIP was never anywhere near sweeping the board in a GE. I regularly predicted they would never win a single seat in a GE and was right with the exception of Douglas Carswell who managed to cling on to a seat he had first won as a Conservative. The only way to get the referendum we needed was to stay with the Conservatives, and we did it. Now we have to deliver the Brexit we voted for.”

    JR – the only reason UKIP did not get any seats was down to the fact that most of us believed the tories would do a real job on BREXIT – We won’t be fooled again 


  34. Stephen
    April 8, 2018

    If you decide to give landlords a generous tax break, you also need to give owner-occupiers the same tax break. Stop being so unfair towards owner-occupiers, John. Argue for the reinstatement of MIRAS. Borrow-to-Let buyers will still be at an advantage to owner-occupiers with basic rate tax relief, which is not fair.

    1. Owen
      April 9, 2018

      If MIRAS was re-introduced then it would be logical to allow tenants to be able to get tax relief on at least part of their housing costs.
      ….and considering that the owner occupied sector is many times bigger than the private rental sector – then wouldn’t this just be another upwards pressure on house prices ?

  35. Winston Fahrenheit
    April 8, 2018

    John you are wrong on buy-to-let (btl), there is room for a private rented sector but the exponential and uncontrolled growth of btl is of major concern. The knock on effect has been pushing up house prices and excluding two generations from home ownership. Not to mention rises in homelessness and the multitude of the unproductive “rentier” class. btl is a speculative investment and much of it is funded by the tax payer in the form of housing benefits, that is unacceptable. I also don’t buy your argument re: “knock on effect” on house building, removal companies, builders, renovators painters and decorators – that is total rubbish. Property firms are land banking, that is preventing house building and puting bricklayers, roofers and plumbers etc. out of work, for a simplistic argument. People will also move when houses are affordable, when they are able to buy or move into reasonably priced rentals. So will they not also then pay a removal company, decorate and paint, buy new furniture etc. House prices are heading for a collapse, interest rates are heading for a rise, and in my opinion it cannot come soon enough.

  36. Arnie from Newington
    April 8, 2018

    Couple of points:

    Osborne called an emergency budget straight after the election to announce these changes.

    The changes were not in the manifesto so landlords many of whom would be voting conservative did so not knowing that the Conservative party were our to get them. I think it was the betrayal of the traditional Conservative voter that resulted in May losing the majority.

    The policy was tried for new landlords in Ireland and has been a disaster and is now being repealed.

    How do you make the housing crisis worse? Tax it. Ultimately the cost of this tax will be paid by tenants in increased rents.

    I actually have no problem with the additional stamp duty for landlords but section 24 is a dreadful tax.

  37. Ron Olden
    April 8, 2018

    Capital Gains Tax is paid when you cease to be an investor in the property not whilst you are still letting it.

    If someone is treating this investment as a gamble on continued property price inflation funded by borrowed money, that’s not what most is us see as an ‘investment’ to be encouraged by the tax system.

    There is no point in having Tax incentives to invest in things where the supply of the sole asset is near static. All it does is causes asset price inflation. That’s exactly what’s happened here, and it was predictable.

    Any market in which investment decisions are governed by the prospect of Capital Gains, is an unhealthy. Proper investment focuses on income and income growth.

    I’m also wondering what these figures from ‘Investment Mortgage Lenders’ actually represent. It looks to me that they are talking about their own net lending figures. Perhaps however, people are buying with cash they have in the bank, or simply paying down their debt.

    The vast amount of money which has gone into Buy to Let, has almost all gone on forcing prices up and reducing the chances of people being able to buy homes. Hardly any has gone into new building.

    The day of reckoning is still to come, not least in the form of people under the age of 40 who might previously have become Conservative voters saying ‘what the hell’, and voting for Corbyn instead.

    Even these figures however show that ÂŁ5 Billion MORE new borrowed money was present in the Buy to Let property market by the end of 2016/17 than there had been in the market at the end of 2015/16. The reason the figure didn’t rise as fast as it had the year earlier was because property prices didn’t rise as fast.

    The likely reason for any fall in actual Buy to Let purchases in the past year or two, is the higher risk of loss, now that prices are so high, and lower levels of potential windfall profits.

    I wouldn’t invest in Buy to Let with borrowed money now, and neither, unless they had a deposit of at least 40% of the price would I lend to anyone to do so. But that wouldn’t have anything to do 28% tax on windfall profits in years to come. It would be to do with the fact that I don’t believe there’s any more easy money in it.

    But in any case, the purchase of a property from someone else, doesn’t add a brick to the sum total of property potentially available for occupation. It’s building property, or the letting of property that’s been empty for years, that adds to Housing Stock.

    Buy to Let investors have been fed with cheap money at the expense of savers who receive little or no interest on their savings, and on money printed by the Bank of England.

    They have also had their rental income, underpinned by the Housing Benefit which is paid for by taxpayers, their windfall gains delivered to them by shortages of property caused by Councils’ and the Government’s planning restrictions, and have been fed a continuous flow of tenants in the persons of migrants and British people, who despite earning good money, can’t possibly afford to buy any more. Buy to Let has also been an ideal home for criminal assets from all over the globe.

    28% Capital Gains Tax on these windfall profits is still far less than people have to pay on their earned income, or which Higher Rate Taxpayers have to pay on all their other investment income.

    Why should this least risky and least productive investment, which can be funded with near free money, be taxed less than any other forms of income.

    CGT on Buy to Let should be raised further, and the winners should be required to pay some of the Capital Gains Tax up front every five years, or so, rather than wait till they sell.

    reply Buy to Let investors buy some new homes or buy off others who buy new homes. Its not all second hand home trading.

    1. Rob Ellis
      April 10, 2018

      Well done Ron, you’ve ably demonstrated your ignorance in almost every sentence. My favourite mistake of yours is not knowing that the English Housing Survey/DCLG stated two years ago that between 1998 and 2013 83% of all new housing created in this country came from private investors, either by funding new builds, renovating derelicts, or converting offices/hotels/pubs/barns into dwellings. I know a BTL investor who gets constant criticism from the uninitiated for having 75 BTL properties – but he built or converted every one himself. I don’t know why you think BTL is taxed less than other investments – it isn’t, it’s taxed more. CGT is 18/28% against 10/20% for all other investment gains. Your income is taxed at 20/40/45% – mine starts at these rates but goes up to mathematically infinite territory. You get free or cheap SDLT – I get ‘plus 3%’ on all purchases. The UK is also the – or possibly one of the – most taxed property regimes in the world when compared to all other developed nations, according to all the leading economic bodies. And your idea that landlords are all selling because prices are so high is just laughable – you should go to their meetings, read their social media, speak to their estate agents. It’s definitely the extreme taxation.

    2. GrumpyDoug
      April 12, 2018

      Just finished renovating a dump that no-one wanted ….. now a great house to rent that has been added to the housing stock. I think you’ll find there are landlords up and down the country who have put in the graft and money to do the same. Have to say though, that this kind ofactivity is much lower – Section 24 kills off the incentive to do so – and this a Conservative Government …. allegedly! We live in interesting times ..

  38. Greenbay
    April 9, 2018

    the section 24 is an appalling tax tactic, if it was done retrospectively it would have been a bit more digestible….!

    My rent has gone up as a direct result

    Lost my vote now.

    Welldone mr Redwood good to see you can see the consequences not just us common folk….

  39. Owen
    April 9, 2018

    Firstly can I welcome the fact that the impact of section 24 is being discussed by both yourself, Kevin Stewart MSP & Lord Flight.

    I do think we are looking down the wrong end of the telescope by considering the impact on the overall economy first, which would imply we can wait and see a little before making changes – instead we should examine the impact on tenants since this illustrates how urgent and pressing the matter is – eviction notices are hitting doormats across the country right now.

    Being a landlord requires a very long term view and investment, it can easily take over 10 years to acquire, develop rent out and dispose of a property in manner that actually yields a decent profit, due to the high transaction and disposal costs. It’s not like trading in shares where a share can be bought and sold in a millisecond.

    This is why the recent onslaught of both tax and regulation changes has been particularly draconian since it has been brought in with little notice.

    If someone is investing just for capital gain then they are speculating on property, they won’t be focussed on delivering a landlord service to their tenants and their business is not sustainable over the long term. You can’t go to Tesco and buy a loaf of bread with an unrealised future capital gain !
    The government is not assisting with the creation of long term sustainable businesses that would promote long term stable tenancies, in fact it is using capital gains speculation as an excuse for further costs and regulation increases. https://www.gov.uk/government/consultations/domestic-private-rented-sector-minimum-level-of-energy-efficiency
    (within the consultation the government suggest that the cost cap has a lesser impact since they believe the expenditure will be offset by further capital gains resulting from the work – where the money is supposed to come from in the mean time I don’t know)

    The political aim to place brakes on the BTL market is understandable – however the net effect of all the current changes has not been just putting the foot on the brake. It is stamping on the footbrake, pulling the handbrake – and throwing an anchor out of the window all at the same time, and will also result in some of the best landlords leaving the market – instead of encouraging the worst to leave.

    Taking the changes one by one :-

    Lending criteria changes:
    Changes to lending criteria mean that existing landlords may be unable to remortgage for the same cash amount, let alone increase LTV ratio in order to borrow money to pay for capital gains tax bills or other restructuring costs.

    Additional stamp duty:
    This is reasonably well targeted, in that it slows down expansion but does not effect existing tenants – apart from making it even more expensive to replace a property like-for-like if a sitting tenant wished to purchase their home.

    S24:
    This is the killer because it effects existing landlords harder than new market entrants.

    For new entrants to the market they can incorporate from the outset or larger landlords will already be incorporated. If widespread this would ultimately lead to increased rents since LTD co mortgages are typically 1% more expensive with much higher legal and arrangement costs. If the interest costs of a property are ÂŁ750-1000 more per year by having a ltd co mortgage that increased cost has to come from somewhere eventually…

    For the smallest landlords with one property a.k.a ‘accidental’ landlords the effect is also more limited, because they are much more likely to have either inherited a property, or be sharing another property with a partner meaning they either have no finance costs / reduced living costs / another income stream from which to supplement increased costs from.
    These landlords are also likely to be the least professional, be that through ignorance or neglect, purely because they are focused on their day job and family, with being a landlord an ancillary activity to their lives.
    Many of these landlords won’t even be aware of s24 yet, it won’t be until January 2019 when they do their tax return will the impact become apparent to them.

    In between we have the medium scale landlords with 10-50 properties, they are likely to be fully professional and engaged with running their business correctly because it is their sole income – yet small enough to have individual personal connections with their tenants and locality where they operate, these landlords will be hit the hardest.

    Because they are engaged they will be aware of the changes, worked out a plan and already be implementing it before the “accidental” landlords wake up to the situation.

    If they have been operating for some time the capital gains tax implications will make it impossible for them to incorporate, not to mention the one off costs involved.

    They will have analysed the full effect come 2020 and worked out which of their properties will have gone from profitable to loss making on a day-to-day cash flow basis. Since they are having to live now on their rental income they can’t afford to have any cash flow negative properties – you can’t buy food with a future capital gain.

    Now let us look at landlord behaviour. The mainstream media tells us that rents are higher than ever and unaffordable, yet the official ONS data is that outside London rents have gone up at HALF the rate of inflation for a decade. How can both be true ?
    The media reports focus on rents for new tenancies – ONS data covers both new and existing tenancies. So there are a huge number of landlords who have let sleeping dogs lie when they got a tenant and done either no or low increases for existing tenants who are as a result paying well below the current market rate.

    So the very first thing these LL are going to do is look at the current market rent and see if that makes the property cash flow positive – then think if that tenant can afford it – and then start increasing rents over the next 3-4 years to get to that point.

    There are other additional legislation changes at work in Scotland – but section 24 must also be part of the reason that 44% of Scottish renters have seen their rents increase this year. https://www.landlordzone.co.uk/news/scottish-letting-market-reacts-new-tenancy-laws-rent-increases

    If after the projected rent increase the property still isn’t cash flow positive the landlord is going to have no other choice but to evict the tenants (or hope they leave in next two years) and sell the property – otherwise a few bad properties could rapidly drive them into bankruptcy, which would leave all their tenants homeless.

    There was a perfect illustration of this the other day with a landlord asking for advice online. Tenant had been in the property for 10 years, had a disabled child and LL had not put the rent up which was now 20% below market. Tenant could not afford market rate. Landlord could not afford to keep property after tax changes, but otherwise without the tax changes would have been perfectly happy to trundle along making not a lot of money from the property. Section 21 notice had been served and tenant had applied to council for housing.
    Despite council’s being specifically told by the housing minister to treat people as homeless and process them from when they get the section 21 notice the council told them to go away and basically wouldn’t do anything until they turn up with suitcases on the pavement.
    The landlord was intending to gift the tenant all the domestic appliances in the property to help them on their way – but potentially tenant would loose all their furniture and these appliances if the council waited for them to turn up with suitcases before acting. Landlord was asking for advice on how to get council to take rehousing action sooner so tenant was not left on the street.

    This is the effect section 24 is having on tenants lives today – and it’s not just one case, there is medium sized landlord after landlord saying the same thing, either getting out completely or drastically downsizing now, before the accidental landlords start doing the same thing.
    These are the best, most professional landlords who want to provide a personal service to their tenants, who we should be encouraging to stay in the industry – but instead we are driving them out.

    On the flip side – if someone is a rogue landlord and not declaring their taxes, then what bigger motivation could you have for continuing to stay under the radar than section 24 ? The ‘accidental’ landlords are the most likely to not be tax compliant.

    Newham is a case in point. For all things property related London is an outlier, and within London Newham may be a further edge case, but when selective licensing was brought in about 50% of properties did not appear to be declared to HMRC. https://www.theguardian.com/business/2017/aug/13/half-of-landlords-in-one-london-borough-fail-to-declare-rental-income
    Do HMRC have any comparable data for Wales and Scotland off the back of the compulsory landlord registration in those areas ?

    
so we’ve created a policy that hits tax compliant landlords hard – further motivates rogue landlords to stay that way, and causes the best landlords with long term tenants to evict and leave the market !!

    How about we motivate the best and compliant landlords to stay in the market – and go after the tax evaders instead, which might actually generate more revenue overall and promote better standards in the industry.

    I would welcome a national landlord registration scheme similar to Wales / Scotland – with HMRC aggressively using the data to go after tax evaders – coupled to the repeal of section 24.
    The value to the government of the data collected would far outweigh any cost associated with running such a scheme, bring the best landlords along, help detect and punish the rogues and avoid widespread tenant evictions.

  40. Rob Ellis
    April 10, 2018

    Well done John Redwood for being one of only two Top Torys who can see the truth of this ridiculous policy! You’ve got to laugh at the post by Ron Olden though, who has made so many factual errors of judgement and repeated so many untrue cliches that one really wonders where he gets his information.

    This ludicrous tax on the supply if rented property – which can create tax rates not only of 100%, but infinite rates as you can now be taxed on a loss – has an appalling knock-on effect to the consumer (tenant) where in mild cases rents go up to cover some of the additional expenses, or in more severe cases, the tenant is evicted for the house to be sold. It was widely predicted that homelessness would rocket because of this folly, and it has. Ask councils everywhere WHY landlords are now being forced to evict social tenants in ever greater numbers and why landlords cannot supply the desperately-needed new property. Peterborough and West Lothian are the first to go public on how these tax changes are affecting their costs and ability to house their newly homeless.

    You have lost my vote forever, and I am a 30-year Tory activist. I can point you in the direction of two other party activists local to me who are now resigning over this, and nationally I know of two local party chairmen, two councillors and many more grass roots members who no longer recognise the party they worked for so long that they have quit or are quitting because of this.

    The Tories are fools. High-tax and anti-business in a way no socialists would ever dare to be. Tories and 70/100/200% tax rates? Whilst costing hundreds of millions in more expensive temporary housing?? You really couldn’t make this nonsense up.

  41. matchmade
    April 10, 2018

    The Government’s supposed rationale for the Section 24 increase in taxes was to ensure that “landlords with the highest incomes no longer receive tax relief on their finance costs at a higher rate than those on lower incomes”. In addition “income tax relief for finance costs is not available to ordinary homebuyers and not available to those investing in other assets such as shares. By restricting the relief to the basic rate tax, the Government is aiming to reduce those distortions”. See https://www.property118.com/treasury-response-to-section-24-report-by-dr-rosalind-beck, and the link to Dr Beck’s excellent report.

    I also read somewhere that another reason was that the Bank of England was worried about high BTL lending and concerned that could cause instability in the housing market when interest rates rise. That at least was the excuse, but no doubt simple short-term revenue-raising ambitions and political posturing played their part too: landlords, like property developers, are the softest of targets for almost all politicians as well as special interest groups like Shelter. Unfortunately, as JR points out, Section 24 is leading to a reduction in tax revenue for the Government, and that doesn’t include the increased expenditure that will come in as rents and housing benefit costs are increased and more tenants need support as they are made homeless.

    Somehow the BoE got the impression that BTL landlords are skittish and would be the first to try and sell in the event of a housing market downturn, potentially increasing the likelihood of a crash. This incredibly simplistic notion was the work of a single junior postdoctoral fellow (or similar rank), whose “dodgy dossier” report has been given far too much credence. Countervailing evidence that landlords are more, not less, stable owners of property than owner-occupiers (OOs), and less inclined to rush to sell during a slump – for example because they on average have much higher initial deposits, and often buy for cash; or that their tenants’ rent helps them cope more easily with rising interest rates; or that landlords have more income flexibility than owner-occupiers, because they can cut rents to more affordable levels in a recession, whereas OOs are on relatively fixed salaries and are vulnerable to losing their jobs – was ignored or not even considered.

    As Dr Rosalind Beck points out too in her report and her response at the URL cited above:

    1) Section 24 will not affect landlords with the largest incomes but rather those who owe the most in finance costs. The wealthiest landlords, those with unencumbered portfolios or very small mortgages, are unaffected. Landlords with mortgages, however, those from the striving and aspirational middle classes, can no longer deduct their real-world mortgage interest costs from their income to establish their actual level of net profit. Uniquely among all types of businesses in the UK, they are instead being taxed on their *turnover*. As the Institute for Chartered Accountants of England and Wales pointed out;” we can think of no other business where the cost of funding the capital of the business is not tax allowable . . . The idea that landlords will be taxed on the profit of their businesses, but not be allowed to offset the costs of creating that taxable profit is absurd, unjust and unsustainable. It overturns a fundamental, centuries-old principle of taxation.”

    2) this supposed concern with “levelling the playing field” between landlords and owner-occupiers only applies to the treatment of income tax. Landlords have to pay capital gains tax when they sell a property, so why not owner-occupiers too?

    3) the policy will supposedly only affect 1 in 5 landlords, but no figures were supplied to support this estimate and it’s patently ridiculous anyway: any landlord with a moderate salary above ÂŁ30K and just a single rental property is highly likely to be thrown by this measure into the higher-rate tax bracket. And no consideration has been made about the impact on tenants: 1 in 5 landlords means around 400,000 people, and the ones most likely to own multiple properties. One survey estimates this could impact up to 4.6 million tenants, as landlords seek to recoup their losses either by raising rents or by selling up and forcing their tenants to seek accommodation elsewhere. The Treasury included no allowance at all for tenants in its impact and risk assessment of the Section 24 policy.

    4) The tax is retroactive

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