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Campaign News

July 2010, Issue 7

...monthly update from the NLA Campaign Team...

• At a glance...
• FOCUS: On the Budget...
• PRS RESEARCH: NLA Quarterly survey
• Media Round-UP: Press Highlights
• Industry News: NLA ear to the ground…
• Meet the NLA Campaign Team
• Contact
• Download current and past campaign updates

At a glance...

Welcome to the latest NLA Campaign Update.

Irrespective of the FIFA World Cup, June 2010 will likely be remembered by landlords as a month of two halves.

The month began with promise as Housing Minister Grant Shapps announced his intention to scrap the majority of the programme of regulation proposed by his predecessors.

Mr Shapps revealed that the Coalition Government had reviewed the existing programme and judged that it would introduce too much additional red tape. Therefore measures including a National Register of Landlords and compulsory written tenancy agreements would not go ahead.

Speaking in Parliament he said:

"With the vast majority of England's three million private tenants happy with the service they receive, I am satisfied that the current system strikes the right balance between the rights and responsibilities of tenants and landlords.

"So today I make a promise to good landlords across the country: the Government has no plans to create any burdensome red tape and bureaucracy, so you are able to continue providing a service to your tenants.

More good news could also be in store for landlords of shared housing as the Government is preparing to amend their predecessor’s controversial legislation which requires planning permission for new shared houses. More details will follow in next month’s Campaign News

However, the celebration would only last until George Osborne delivered his first Budget on 22 June. Amongst a raft of measures designed to cut the national deficit Capital Gains Tax rates were increased, as was the standard rate of VAT while LHA rates are set to decrease.

In order to represent the interests of landlords in relation to these issues it is essential that we have a comprehensive view of the sector. Please help us to understand the issues facing you by completing the NLA Quarterly Survey here: NLA Quarterly Survey

FOCUS: On the Budget...

Unlike recent Budget Statements, George Osborne’s first visit to the dispatch box heralded a number of changes for landlords. Many of which are likely to be viewed as unwelcome by landlords.

Capital Gains Tax

The current single CGT rate of 18 percent is to be brought closer into line with income tax bands. From midnight 23 June basic rate income tax payers will be liable for 18 percent taxation of their capital gains while those whose income is beyond the rate for higher rate income tax will become liable for 28 percent of their capital gains.

In order to retain the simplicity of the single rate system the Chancellor announced that, after listening to various lobbies, no indexation or taper relief is to be introduced.

Local Housing Allowance

With the current Housing Benefit expenditure at £21 billion, Budget 2010 includes measures seeking to seven percent cuts. Unfortunately all the cuts are due to fall on Local Housing Allowance (LHA) with the Chancellor calling costs ’completely out of control’.

• From April 2011 LHA rates will be capped at:
• £250 per week for a one bedroom property
• £290 p/w for a two bedroom property
• £340 p/w for a three bedroom property
• £400 p/w for all properties with four bedrooms or more
• Also LHA will provide an extra bedroom for disabled claimants who have a non-resident carer;
• From October 2011 LHA rates will not be set on the basis of median local market rates but on the 30th percentile of the local market.

In the longer term, from April 2013:

• Uprating of LHA will be against CPI, rather than RPI;
• For tenants on Jobseekers Allowance Housing Benefit will be cut by 10 per cent after 12 months;

The effects of these measures are likely to reduce choice for LHA tenants as LHA rates become an obstacle to affordability for the majority of PRS properties, pushing tenants to the lower, roguish end of the market.

As tenants’ budgets get tighter, the temptation to use LHA for other costs could see rent arrears in the LHA market rise.

Furnished Holiday Lettings

The previous Government’s proposals to repeal the special tax treatment of furnished holiday lettings will not be implemented.

The Government is to consult over the summer on a proposal to ensure the tax rules meet EU legal requirements in a fiscally responsible way, by changing the eligibility thresholds and restricting the use of loss relief.

The NLA look forward to working with HM Treasury to ensure that landlords interests are fully represented in the process.

PRS RESEARCH: NLA Quarterly Survey

As part of the NLA Quarterly Survey (Q1 2010) we asked landlords their opinions on a number of broad statements about the PRS.

As the table above illustrates the overwhelming majority of landlords contacted indicated that their properties form part of their pension provisions. Conversely, Only just over one half of those responding are able to derive a living income from their portfolio.

Perhaps unsurprisingly, more than three quarters of landlords questioned believe that being a landlord has become more difficult recently. It will be interesting to monitor whether this perception changes as the new Government has time to implement its programme for the PRS.

Media Round-Up: Press Highlights

The Budget, and in particular the expected changes to CGT dominated the media for much of June.

The NLA led the way representing landlords’ views in the media.

Away from the Budget the NLA’s Landlord Optimism Index captured the media’s interest.

Industry News: NLA ear to the ground…

• The Association of Residential Letting Agents (ARLA) - expressed their disappointment at the Government’s decision to discontinue plans to regulate letting and managing agents, claiming that improvement of standards would be further hampered by this decision.


• The Royal Institution of Chartered Surveyors (RICS) cautiously welcomed George Osborne’s Budget stating. “The combination of raising the rate of CGT and VAT may limit growth and cost jobs in the sector. RICS had warned that a significant rise in CGT would threaten the supply of development land and deter new investors from entering the private rented sector. This risk will be tempered by the lower than expected increase”.


• The Social Market Foundation has responded strongly to the range of announced cuts to housing benefit budgets. Director, Ian Mulheirn, expressed concerns that the changes “risked concentrating areas of deprivation and creating Parisian-style banlieues “around the edge of our big cities”.

Meet the NLA Campaign Team

Simon Gordon Head of Communications	Steven Hilton Media Relations Manager	Chris Norris Policy Manager
Vincenzo Rampulla Public Affairs Officer	David Cox Policy Officer

Contact

For further information or media enquiries please contact the NLA Campaigns Team:

• phone 020 7840 8938
• email

Download current and past campaign updates

• July 2010 Campaign Update [ 572KB]
• June 2010 Campaign Update [ 408KB]
• May 2010 Campaign - Special Edition [ 244KB]
• May 2010 Campaign Update [ 424KB]
• April 2010 Campaign Update [ 680KB]
• March 2010 Campaign Update [ 371KB]
• February 2010 Campaign Update [ 400KB]

The National Landlords Association (NLA) exists to protect and promote the interests of private residential landlords. With over 20,000 individual landlords from around the United Kingdom and over 90 local authority associates, it provides a comprehensive range of benefits and services to its members and strives to raise standards in rented accommodation. The NLA seeks to safeguard landlords’ legitimate interests by making their collective voice heard by local and central government and the media. The NLA seeks a fair legislative and regulatory environment for the private-rented sector while aiming to ensure that landlords are aware of their statutory rights and responsibilities towards their tenants.