One thing seems clear from the various budgets and statements coming out of the Treasury recently – they have a down on the small private landlord.
First we learn that the tax system is to be changed to be less advantageous – in fact so much so that some landlords are considering leaving the country as their profits on their investments will be totally wiped out
Then there is the massive increase in rules and regulations – in particular the unpopular right to rent checks (where, if the new Immigration Bill is passed, landlords could face a prison sentence if they fail to comply) and the changes to section 21.
These changes are often good in many ways, but this does not alter the fact that the landlord’s job is being made harder and more risky. Plus fines in the Magistrates Courts are now unlimited.
Then the most recent budget has increased stamp duty on buy to let and second homes for everyone EXCEPT larger organisations with more than 15 properties.
What IS going on?
Just for fun, I have put together a list of all the possible reasons I can think of on why Government is hammering the small landlord, mostly ‘conspiracy theory gone mad’ theories.
I am not saying I agree with any of them, I just present them to you for your consideration. And amusement.
However there is probably at least a small seed of truth in all of them (and maybe much more than that) …
1. Increasing home ownership to avoid future care costs
This was something I discussed in my post here. It is the idea that government want as many people as possible to own their own home, as then when they get old, the cost of their care will come from the equity in their property rather than be paid by for the state.
I can see why Gov’t would want this, as if no-one owned their own home and the state paid for everything, the cost would be astronomical.
It could easily bankrupt the country (assuming we are not already bankrupt, see 6 below).
2. Discouraging the amateur landlord – as an alternative to mandatory accreditation
This is the idea that people who own just one or two properties are more likely to make mistakes through ignorance.
Discouraging / eliminating these small landlords would be cheaper than setting up mandatory accreditation and training (as they are doing in Wales and which looks set to be considerably more expensive than everyone thought).
It is also based on the premise that the bigger landlords are always better ….. Ha!
3. Targeting landlords because ‘no-one loves them’
Government need more money and it has to come from somewhere.
Reducing benefits has got everyone up in arms so they are dropping that and instead going for unpopular targets who few are likely to support.
4. Back scratching help for bigger companies
The Tories being the party of business and business interests, are only interested in helping big business and corporations (of course).
This means making it impossible for the smaller businesses to survive as they are not ‘one of us’.
Why should millionaire Tory ministers be bothered about the interests of the ‘man in the street’ (who could have just invested his inheritance from Granny in a small buy-to-let) anyway?
Small investors are just the scum beneath their feet. Even Jeremy Corbyn cares more about them …
5. There is a plan to make all rented housing dominated by big business
This is a lesser form of (4) and takes into account the dismantling of our social housing system, currently well underway.
If true, it would result in everyone who cannot afford to buy (an increasingly larger proportion of the population) having no alternative but to rent off large corporations.
The problem with this theory is that few of the big corporations have in fact (so far) invested in the private rented sector. Maybe this is coming, once the small investor has been driven off.
6. Forcing smaller investors to invest in electronic assets for easier takeover
This is the idea that it is easier for a cash-strapped government to take over your assets if they are in electronic form rather than in bricks and mortar. Should they need to do this, e.g. if the economic situation reaches critical.
For example I read a financial report only the other day, which pointed out that our national borrowing exceeds our net value and in real terms the country is more or less bankrupt. Financial Martial Law is (the author claimed) in the long term, inevitable.
The next step (if there is anything in this) will be Government limiting the amount of gold, silver, diamonds etc or indeed cash, which individuals are allowed to hold ….
(Tip – Consider stocking up on dry goods, candles, valuable items suitable for barter and investing in an off the grid power supply …)
7. Forcing ordinary investors to invest in lower yeilding investment funds
This, a varient on (4) above, is the theory set out here where the author says
I believe … The City of London has its greedy eyes set on the residential property market in most parts of England. What they can’t stand is that people with any spare capital rightly prefer to invest their cash direct into property rather than get ripped off by investment vehicles with their outrageous fund management charges. —
They are waiting for all the small-time landlords, driven out of business by Osborne’s iniquitous tax reforms to come to them and invest in rip-off Residential Investment Funds, where instead of getting up to 8% on their investment, people will end up with say 3% or so – and we know where the rest will go!
8. Making Britain an unattractive place to live in, to discourage immigration
If there is no more rented accommodation available (poor immigrants realistically can only live in the private rented sector), particularly if benefit entitlements are dramatically reduced (and if the criminal landlords they would normally resort to have been closed down), this may discourage the hordes of immigrants who are currently jostling to come and live here.
9. Bribing the people
This is that money for first-time buyers and shared ownership is simply a bribe for your votes. Like Thatcher did (although Osbourne has less to give away, as most of it has already gone).
The idea being that people will vote Tory in the hope that they and their children will have a chance to share in the spoils.
However, the real result of this sell off is that fewer resources are available for the rest of us. As we all know, about 30-40% of these properties end up in the hands of landlords anyway (although now this will be the larger landlords holding more than 15 properties and not the small investor).
What conspiracy theories do YOU have about the attack on landlords?