A prominent figure in the lettings industry highlights the urgency of repealing Section 24. This regulation eliminates landlords’ ability to deduct various expenses, such as mortgage interest and arrangement fees, from their rental income before calculating taxes.
Allison Thompson, National Lettings Managing Director of Leaders Romans Group, emphasizes the importance of addressing this issue during the upcoming party conference season. She contends that Section 24 directly contributes to higher rents, exacerbating financial difficulties and homelessness. Despite over 29,000 landlords signing a petition urging the government to reverse Section 24, the government has maintained its policy of limiting mortgage interest relief to the basic tax rate. Thompson argues that given the substantial increases in property finance, energy, and building material costs, revisiting this change is essential.
Thompson also underscores the need for politicians to prioritize the establishment of dedicated housing courts. She points out that landlords currently face significant delays in the courts when attempting to reclaim their properties.
Moreover, she highlights that this issue could worsen if the Renters Reform Bill, which replaces Section 21 of the Housing Act with Section 8, is enacted. According to Thompson, a dedicated housing court represents the most effective solution to address this growing backlog.
In contrast, Michael Cook, Group Managing Director of the Leaders Romans Group, takes a more drastic stance, advocating for the outright abolition of the Renters Reform Bill. He contends that the bill is poorly conceived and would harm both landlords and tenants.
Cook argues that the removal of Section 21 is unnecessary, as research suggests it is rarely used for ‘no-fault evictions.’ He cites concerns from organizations like Shelter, which claim that abolishing Section 21 won’t eliminate unfair or no-fault evictions where they occur. Instead, he warns that replacing it with Section 8 would provide tenants with less security and result in more cases going through the courts, leading to increased costs, stress, and substantial delays. Cook also expresses concerns about the courts’ ability to handle effective possession hearings under these new grounds.
Michael Cook points out another aspect of the Renters Reform Bill, namely, the transition of all assured shorthold tenancies onto a unified system of periodic tenancies. He argues that this move would significantly reduce security for both landlords and tenants, essentially bringing an end to long-term contracts and replacing them with just two months’ notice.
Cook expresses concern over the potential consequences of this change, highlighting that it appears to contradict the government’s stated goal of enabling families to establish roots in local communities with the assurance of a one- or multi-year tenancy. He emphasizes that any negative alterations to the rental sector could compel landlords to exit the market, leading to a reduction in housing supply, increased rental costs, and a worsening of the homelessness situation.
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