In a bid to raise awareness of the negative impacts of the Tenant Tax amongst Government officials, Steve Bolton, Founder and Chairman of Platinum Property Partners and co-claimant in the Judicial Review against Section 24, met last week with Gavin Barwell, Conservative MP for Croydon and Housing Minister since July 2016.
He was joined by other local landlords and property professionals who are part of the Axe the Tenant Tax campaign; Graham Lyon, Gary Elliott and Martin Skinner.
The purpose of the meeting was to open a two-way dialogue and highlight the serious repercussions for tenants and the Private Rented Sector if Section 24 is allowed to come into effect in 2017 - in the same way that a similar policy in Ireland had a devastating impact in the 1990s and was later abolished.
Whilst the tax does not affect Platinum Property Partners directly, Steve was representing hundreds of thousands of individual landlords across the country who will see their tax bill significantly increased by 2020.
He explained how Section 24 of the Finance Act (No. 2) 2015 is bad tax policy, punishing investors who made decisions based on tax structures at that time, and how it is unfair to make policy changes that affect the past and not the future.
As a result, this could lead to significant rent increases for tenants. The failed implementation of such a tax in Ireland, which saw a 50% increase in rents over a three year period in the late 1990s, was used as an example. And research from numerous organisations such as SpareRoom and the Residential Landlords Association (RLA) has already demonstrated how a large proportion of landlords in the UK will be forced to raise rents to keep their property businesses profitable, or even sell their buy-to-let properties, further restricting supply.
Corby-based landlord and letting agent, Gary Elliott also used his own situation to evidence this. He has already increased his rents by 5% in anticipation of the rising tax bill - which will see him pay £45,000 in tax compared to £20,000 - and plans to do so for every year for the next four years. Before Section 24 was announced, he had not increased rents for existing tenants for six years.
Mr Barwell was concerned that the tax increase would be so high for Gary and others like him. The point was then made that the more tenants a landlord provides homes for, the more likely Section 24 will have a devastating impact.
For Mr Barwell, the supply of new homes and how Section 24 would impact this situation was of utmost importance. It was agreed that the lack of supply of new property is the fundamental cause of the housing crisis and this is a key issue for him to address in his role as Housing Minister.
However, it was made it clear that buy-to-let investors were critical to supply. Data from the English Housing Survey supports this. A 2015 report detailed how a staggering 83% of the increase in housing stock between 1996 and 2013 was private rented accommodation.
Steve Bolton commented: "We were impressed by how Gavin handled the meeting. He took notes, listened intently and asked clarifying questions when he felt he needed to. At the end, he summarised well, asked us to rank in order of priority/concern all of the issues that we discussed and then he put his points across well. At times he agreed with us and when he disagreed, he explained his reasoning.
"He also spoke off the record with views that cannot be shared but left us with the impression that he understood the situation and was 'unofficially' supportive of many of our points of view.
"Gavin provided us with some useful recommendations on areas that we should be focused on and the arguments that will give us the most leverage to change opinions."
Arrangements for a follow-up meeting are now underway, which could include a site visit to one of Martin Skinner's Croydon developments.
A full summary of the meeting with Mr Barwell can be found here: https://www.facebook.com/clause24/
In the meantime, a permission hearing on the Judicial Review against Section 24 is due to take place in London on Thursday 6th October.
Landlords and supporters are invited to be the first to hear the outcome and next steps in the fight against the Tenant Tax at the Property Investor Show on 7th and 8th October at the ExCel, London.
You can register for your free place here: http://www.propertyinvestor.co.uk
