NLA Budget lobbying update

NLA Budget lobbying update

We are fast approaching the first of the Chancellor’s two Budgets of 2017 and the NLA has been focusing on how landlords can cope in the post Section 24 world.

As members will know we recently met with the Financial Secretary to the Treasury, Jane Ellison MP.  Once again we stated our position regarding Section 24 and presented all our available research and survey evidence.  Whilst she heard our arguments politely, and was keen to see our evidence of more tax payers pushed into the higher tax bracket, it is fair to say the Government are not going to reverse the Osborne Legacy just yet.

The NLA will continue fighting the good fight in terms of Section 24 and we are integral members of the Axe the Tenant Tax coalition. What is encouraging is that this Government are at least receptive to the industry and hearing our views.  We are on very good terms with the Housing Minister Gavin Barwell MP and the representatives of the coalition have met with the Chancellor himself.

However we recognise that to get the Treasury to change its mind will increasingly rely on undertaking research in order to demonstrate measurable changes and effects post implementation 2017 onwards. We have commissioned a firm of economists to undertake research into the projected impact of Section 24 on the UK economy which is due to report soon, however this type of campaign is likely to take some time.

Therefore we have been thinking longer term with our lobbying.  The Government have stated they want to change the investment habits of people away from property and into other savings which could help pay down the Government debt.  In our conversations with officials and Ministers, they seem to favour a PRS dominated by professional landlords with large holdings.

All the feedback from those of our members who are affected has said that they will do one of the following:

  1. Raise Rents
  2. Sell
  3. Incorporate
  4. Re-finance

As a membership body we are duty bound to lobby on behalf of our members interests.  Therefore our budget submission, whilst once again stating our opposition to S24, explores practical measures the Government could introduce achieve their stated policy aims and to help our members plan for the future.

We do so being very realistic about the uphill task we face.  The Government is preoccupied with Brexit whilst the country’s finances are stretched to breaking point with multiple demands and unacceptably high debt levels.

Therefore, whilst drawing attention to our past submissions in which we suggested alternatives to Section 24, in this submission we have only asked for three very specific things.

  1. The introduction a CGT cut or taper: We argue this will to help facilitate the disposal of poorly performing property and diversify people’s financial investment portfolio. We have sent costings to the Treasury which show this need not be as expensive as some fear.
  1. The extension of business asset rollover relief to allow restructuring of portfolios: We argue this will facilitate increased sales of property and greater mobility between tenures, whilst allowing landlords to reduce the gearing of their portfolios, thereby protecting against market shocks and improving stability.
  1. The reintroduction of the Landlords’ Energy Saving Allowance (LESA): New tenancies will not be allowed to be granted for properties with Energy Performance Certificate (EPC) ratings of F or G from April 2018. Following the collapse of the Green Deal we are urging the Government to help mitigate the major capital costs over 300,000 landlords are facing in order to stay in business.

If you keep telling someone they are wrong and then ask them for lots of things, sooner rather than later they will stop listening to you.  We hope that our narrow focus will help us in our lobbying efforts, ahead of both this Budget and others, and help our members overcome or at least mitigate some of the effects of the Osborne legacy and help them live in the post Section 24 world.

7 thoughts on “NLA Budget lobbying update

  1. Dear NLA,
    It might be small step in the right direction, but I think you are missing the point. You do not even comment on the retroactivity of this sick policy. You should be standing for us, small private Landlords, who actually finance you. You do not.

    May I suggest that you contact the relevant people in the government and quote to them the following snippets from Theresa May’s speach in Davos:

    “It means stepping up to a new, active role that backs businesses and ensures more people in all corners of the country share in the benefits of its success.
    And for business, it means doing even more to spread those benefits to more people. It means playing by the same rules as everyone else when it comes to tax and behaviour, because in the UK trust in business runs at just 35% among those in the lowest income brackets. And it means putting aside short-term considerations and investing in people and communities for the long-term.”
    “Businesses large and small are the backbone of our economies, and enterprise is the engine of our prosperity. That is why Britain is – and will always be – open for business: open to investment in our companies, infrastructure, universities and entrepreneurs….”
    “…But, at the same time as promoting this openness, we must heed the underlying feeling that there are some companies, particularly those with a global reach, who are playing by a different set of rules to ordinary, working people.
    So it is essential for business to demonstrate leadership. To show that, in this globalised world, everyone is playing by the same rules, and that the benefits of economic success are there for all our citizens.”

    Perhaps you should urgently contact Philip Hammond asking when he will be repealing Sec.24 in line with the above Theresa May’s statement, (and also equalising of CGT on residential property with CGT on disposal of other assets).
    OR is it just possible this more Government’s populist rhetoric (and hypocrisy) which it has no intention of acting on?
    I would be really interested in their reply.
    NLA Member 081518

    1. Thank you for getting in touch. We have consistently lectured on its retrospective nature since day one – but unfortunately, to no avail. We are absolutely aware, and have pointed out, the hypocrisy of this Government’s approach to business to both Treasury and No. 10. At this point, regrettably it seems as though they know what they are doing and refuse to be swayed. Even so, we will continue to lobby against these policies.

  2. At long last the NLA has actually started to tackle the Govt. re CGT & taper relief & the fact that the change of policies introduced by Osborne were retrospective, especially with the removal of Taper Relief. The NLA needs to be seen to do a lot more for the small landlords, and needs to upgrade its negotiating skills, possibly by employing negotiaters with a higher calibre. The NLA was hoodwinked into thinking that the Tories would support small landlords after the last election and the NLA needs to rectify its failings . Its results that count, not just talk & bulletins, and so far the NLA has failed to deliver.

    1. The NLA is not blind to the fact that the current rate of CGT, and in particular the lack of roll-over relief, is a major issue for many landlords. The NLA believes strongly that the rate of CGT paid in relation to the disposal of an asset should take into account the time that the asset has been held, in order to differentiate between short-term speculative trading and long term sustainable investment. We make this case regularly to the Treasury – but traditionally fiscal concessions are very difficult to get outside of the Chancellor’s annual Budget Statement. It has been on all of our recent budget lobbying wishlists.

  3. Having personally contributed to the Judicial review of section 24, I was disappointed to learn that the review process was disallowed.

    However, I firmly believe that the government will not take U-turn on its decision for two simple reasons: i) As a Country, we are over 1 trillion pound in debt with almost 90% GDP to debt ratio. ii) We have little public sympathy as landlords. With these two facts, why would the government wish to retreat on the decision made? We are easy pickings for generating additional tax revenues, and our concerns will fall on deaf ears of the general public.

    As unpalatable as it is, I now firmly believe the position of the NLA is the correct one, in trying to gain some concessions such as outlined in the blog article.

  4. A levy?! I cant believe you’ve sold us higher rate taxpayers out this way and to think we are funding you! Why didnt you push the idea of s24 not being retrospective? Please come to your members for approval in future before coming up with submissions or you wont be speaking for the landlords you are claiming to represent

    1. Thanks for comment Debbie.

      The Alternative Levy proposal was one of a number of suggestions we first made back in July 2015 in our Budget response when we were exploring whether there was any way to amend the then Finance Bill.

      Whilst this particular measure would unfortunately not help you, it would relieve the impact on many of the 54% of NLA members who are currently basic rate taxpayers, who would be pushed into the higher, or even additional rate, and face losing child and pension benefits in addition to the substantially increased tax bill.

      Our preferred option by far is the scrapping of the tax. But we must also be realistic and offer alternative proposals, such as applying the changes only to new borrowing from Apr 2017.

      Hope that explains our position.

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