x
By using this website, you agree to our use of cookies to enhance your experience.
Graham Awards

TODAY'S OTHER NEWS

The War On Landlords - a reader writes…

Landlord Today receives a number of unsolicited contributions from readers. These are always welcome but few are as well argued and impassioned as one we received recently from Dr Peter Marshall, a former foreign correspondent and long time journalist and author. We are reproducing it in part below, with thanks to Dr Marshall.

——

The right of a sole trader to be treated the same as other forms of business

Advertisement

Since time immemorial it has been enshrined in our way of life and in our norms, institutions and laws that business in our society has been legitimately conducted in three alternate forms – the sole trader, the partnership and a limited company. 

The sole proprietorship has always been regarded as the most appropriate form where there is only one proprietor and the partnership or the limited company, where there is more than that. In fact, individuals in business on their own, cannot incorporate, as the latter requires a minimum of two shareholders. 

Furthermore, certain kinds of businesses were not permitted to become limited companies in the past and mortgage companies would not lend to the latter entity. Many will not do so even today. The important point I am making is that the sole trader business is and always has been just as acceptable and just as much a legal entity as a limited company, under UK law and, therefore, has and deserves the same rights and privileges.

The right to set all business expenses against tax

The long established and legally accepted business model in our society has always been that expenses are deducted from revenues to arrive at profit, and that the tax is charged on the latter – revenue minus costs incurred in generating those revenues.

The denial of rights

A few years ago, George Osborne, then Chancellor of the Exchequer, declared war on one sector of UK society and set out to deprive them of their rights and privileges, driving them out of business by rendering their businesses financially unviable and forcing some into bankruptcy. That sector is private landlords operating as sole traders.

He did this by disallowing them to deduct their main costs from the revenues to arrive at the calculation of profit, therefore effectively taxing them on their costs as well as any residual profits.  The other sector of the population, those landlords who had incorporated themselves into limited companies, were not treated the same; they were allowed to continue to deduct their interest payments from the revenues before tax was computed. This amounts to unequal and discriminatory treatment of sole traders.

Even worse, he then prevented sole traders from joining the incorporated sector by slapping a 3% premium on Stamp Duty Land Tax, if they did, thus making it financially impossible for them to do so.

This move was not only cruelly and unfairly persecuting one sector of the population, it greatly advantaged the other sector - the incorporated landlords, for some of the private landlords had to sell up, which reduced the number of houses available to let in the market. This had an inevitable upward force on rental prices, benefiting the incorporated landlords. 

Furthermore, those private landlords who have been able to keep afloat and chose not to sell up had to increase their rents very significantly, to cover the interest payments and this benefited the incorporated landlords even further. All of the increase for them amounted to extra profit, while for the sole trader landlords it only covered the extra outlay.

Motives

The government argued that this was done to provide a fairer system, in the interests of tenants, but it certainly did not do this. Quite the reverse, it led to a huge hike in rents and even that benefited only the incorporated community landlords, which were and still are overrepresented among the politician-landlords and upper middle classes.

So why did the government actually launch the war on private landlords, if not to benefit tenants. 

One theory I would put forward is that it’s a matter of scapegoating. Throughout the centuries, whenever the country was in a major economic, social or moral crisis, governments have looked for scapegoats, upon which  to focus all the anger of the population. 

We have had several national scapegoating movements since the 16th century ... involving different objects of focus and now that our society is in one hell of a seemingly, unresolvable mess, the government has found a new scapegoat to turn all the blame onto – private landlords.

In so doing, it has and is using all the tools of manipulation by propaganda. You will see, if you look at the reports, that most of the news reports of major faults, rendering homes, uninhabitable have begun with social housing. Immediately, then, the problem tends to be spun onto private landlords, who, in reality, would simply not get away with, the conditions reported in the original reports relating to social housing. 

The councils would be onto them like a ton of bricks, but not the social housing organisations. They commit the offences and the private landlords just get the blame.

Another theory of mine is that, despite all of the lip service to levelling up and social mobility, our class ridden system in the UK has always unconsciously resented and resisted social mobility. There are forces to ensure the rich stay rich and the poor stay poor. The old money sector hate the idea of new money and private landlords represent the march of social mobility more than any other sector, for it has provided a means for those who have had no other chance of becoming wealthy doing so. 

I think there is a good argument that it is this unconscious force that would explain it. This would explain why New Labour, under Tony Blair, actually encouraged buy-to-let, as did Conservative, Margaret Thatcher, for both stood for aspiration, while the current Conservative government, populated by billionaires and largely members of the old money sector are trying to destroy it, cutting away, the rungs of the ladder of social mobility. 

Why have the government been wilfully alienating a large sector of voters, though, most of whom would have, in the past, been pretty certain conservative voters. I think they were misguidedly thinking that, as there is a greater proportion of renters in the UK than there had been for a long time, the government could attract many of these by attacking landlords. 

I believe they were wrong in thinking this, though, as many of them were and are staunch Labour voters. In contrast, the ones that they are alienating - the landlords - would have largely been safe Conservative voters. 

Well  I think they know that they are out of office from the next election for at least twelve years, so the emphasis is on serving the old money sector’s interests - keeping the rich rich and the poor poor.

Want to comment on this story? If so...if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.

  • icon

    This is so damn spot on there is almost nothing I can add. Only to say that in Australia, Labour is catching on and trying to do the same absolute disaster that the UK government has been doing to landlords for the last few years. And of course, this not only not helping renters but making it a lot worse. I hope these stupid governments open their myopic eyes for once and actually help the people, ALL the people and not just their fat greedy selves for once. I doubt it very much though...

  • icon

    Exactly what I have been shouting about for years now.

    Total Discrimination against Private Landlords to drive us out for the Big Boys take over favouring them at our expense.

    Time for The Housing Secretary to go who is the main instigator delivering all this.

    Shelter, Polly. Alison, James Cowling, Generation Rant etc, take note, the lies have been exposed for what they are.

  • icon

    Spot on and expertly and succinctly put!

  • icon

    Spit on and unjust. Can this not be turned into a Class Action?

  • icon

    A great article, I can see the new to come Labour government just carrying on and even getting worse 😱

  • Peter  Roberts

    Yet another reason to Sell Up and move on.
    They will be sold even quicker now due to the Government’s latest reduction in CGT allowance.
    Massive issues coming up for Government and Councils when the lack of PRS LLs and Properties will mean Families constantly at their offices looking for accommodation.
    They don’t have accommodation to give them as they don’t build anywhere near enough Social Housing and have alienated the PRS LLs who are selling up in their droves.
    The Government says that this isn’t happening but we all know it certainly is.

  • icon

    My view on things....

    Firstly I'll zoom out' to landlords’ 'favourite' so-called 'charity' - Shelter. When S24 was announced several landlords wrote to the then CEO Campbell Robb. They forecast the significant contraction of the PRS, rising rents, rising homelessness and people having to move to smaller homes. All of which has come true.

    The response we got back from Robb was extraordinary as he said that Shelter supported S24 as most people want to own their own homes. He had within a couple of sentences shifted the perception of his organisation from one that supported the poorer people trying to keep a roof over their head, to one that backed wealthier families and individuals that had aspirations of owning their home. Interestingly though, his policy blogger John Bibby wrote a piece that is still on their website where he explained why Shelter supported the tax change but made no reference to his boss's reasoning. Instead he said that the tax would not affect many landlords but admitted that it would likely cause an increase in rents! He said that the additional tax revenue raised 'could' be used to increase housing benefit. He gave no reasoning why he thought this might happen. It was complete baloney!

    So why is all this relevant???

    One of the biggest Build-To-Rent companies (B2R) in the country is Legal & General. Someone can be born in one of their properties, spend their whole life in a L&G house and then end up in one of their retirement homes. They would benefit very significantly from less competition and the subsequent rent inflation. So isn't it interesting that they were corporate sponsors of Shelter and the 'charity' stated in their annual accounts that L&G 'collaborate' with them on policy? Shortly after this was spotted and people started posting about it in various places, Shelter removed L&G's logo from their list of sponsors.

    As a corporate, L&G would not be hit by S24 which is a pernicious tax attack on the private rental sector.

    Moving on......

    For a period 2016/17 a senior manager at L&G by name of John Godfrey had a sabbatical when he ran the policy unit at No 10. He then returned to L&G.

    At the time S24 was announced, the second most senior Treasury Mandarin was a man called John Kingman who was later knighted in David Cameron's infamous exit honours list. Shortly after Cameron and Osborne left office, Sir John also found new pastures as the Group Chairman of L&G. What an extraordinary coincidence! He more than doubled is salary in doing so.

    Then we come to Osborne who I though had been 'played' by being persuaded to introduce S24. A meeting that took place between him, a constituent and what was then the NLA showed he didn’t really understand the implications of the tax change but he said that he wouldn’t go back on it because he would lose face.

    Now I have no doubt that he wanted to achieve some fame as the one to pay down the country's deficit because he was planning on selling off many of the taxpayers profitable assets such as Land Registry, Air Traffic Control, Ordnance Survey, etc, etc, etc. Raising additional tax revenue by attacking landlords (for which he was likely to get little criticism) would help in his goal, but there's another interesting little coincidence to consider. Another huge player in the residential rental market is Blackstone, in fact it's the biggest commercial landlord worldwide.. You can read about the company if you google 'Guradian Blackstone rebellion', and whilst the article is lengthy it is well worth a read.

    Isn't it interesting that when Osborne left office one of his many jobs was working for Blackstone one day a week on an annual salary of £650k?

    Is this all coincidence???? You decide.

  • icon

    the problem we have is that Labour have everyintention of making it even tougher for landlords.. and the Liberals have no chance of winning anything they have no coherent plans or policies that will bring anything other than strife to the country...

  • icon

    how do we change things...its time for the people to fight back..

  • icon

    The end conclusion, this all spills over in to massive rent increases, just what tenants don't want .

  • Peter Why Do I Bother

    Fabulous article Dr Marshall,

    Surely it would be better for the government to embrace landlords and give them tax breaks in return for bringing more properties to the rental sector. In return tighten legislation so it is easier to get rid of rogue tenants and also rogue landlords. Too much time on paperwork or red tape is preventing landlords from giving great service.

    I have 11 properties and currently 2 of them have tenants who decided they will not pay rent, having to serve notices on them and all the costs that are now associated with it. Any tax breaks for this? No...

  • icon

    Dr Peter Martin is spot on, but sadly no one in Government is listening.

  • George Dawes

    They're following orders from the wef , who are a front for the real power...

    The government ( or their backers ) will own everything and you'll be happy ... or else

  • George Dawes

    Also a bit of interesting info , the so called opposition leader Keir is a member of the trilateral commission , funded by the Rockefeller foundation

    SMH

  • PossessionFriendUK PossessionFriend

    One of landlords biggest problems, is the extent of apathy amongst a majority, sadly. You only have to look at the low numbers who have signed the petition against Sec 24
    ( about 40,000 - out of 2.5 Million landlords )
    ' Preaching to the converted ' on this forum, of course.

    icon

    Correct, and the government know it .. and love it.

     
  • icon

    Great article.
    "led to a huge hike in rents and even that benefited only the incorporated community landlords, which were and still are overrepresented among the politician-landlords and upper middle classes."
    Saw recently a sizeable number of MPs rent out property (I recall over 100 of them), and not all just Tories.
    Presumably most of them incorporated, from what he says; which may explain how the attacks on unincorporated landlords got through Parliament.
    Don't know though how proposed abolition of Section 21 No Fault Stated evictions is going to get through Houses of Commons and Lords, as I cannot see why most landlords would support it, including the big Build To Rent ones. Unless I have missed something.

  • icon

    Very good article but it needs to be in the mainstream press not just a forum for Landlords who know all this already. Hopefully it is, or will be.

icon

Please login to comment

MovePal MovePal MovePal
sign up