Rents Set To Sky-Rocket Because Of Osborne’s Tax Grab

Landlords across the UK have already started to increase rents for current tenants as a consequence of George Osborne’s attack on the private rental sector (contained in Clause 24 of the Finance Bill). When a similar policy was adopted in Ireland in 1998, rents increased by almost 50% over the subsequent three years.  Top economist, Professor Philip Booth said that Clause 24 ‘didn’t make sense.’  The reason for this is that landlords will pay tax on interest payments they have paid to the mortgage lender as well as tax based on actual profit; landlords will in effect be taxed on an amount of fictitious profit, and the Government will tax the same money twice, as the lender already pays tax on it. ‘Private’ landlords’ businesses will also face the unique situation in the business world of not being able to offset the main cost of creating a taxable profit. Read more on Property 118.

Peers Win Council Tax Benefit Review

Peers have defeated the government on an amendment to the Local Government Finance Bill.  The bill will abolish council tax benefit and replace it with a grant which only covers 90 per cent of the cost in order to save £500 million.  Now peers have voted to accept an amendment which would force the communities secretary to commission an independent review of council tax benefit reduction schemes within three years. The amendment, tabled by Labour peer Baroness Patricia Hollis, Liberal Democrat Lord John Shipley and crossbencher Lord Richard Best, was passed by 203 votes to 165. Baroness Hollis warned that the council tax localisation policy risks ‘poll tax mark two’. Read more on Inside Housing.

Labour Blocks Move to Limit Council Tax Benefit Cuts

Labour peers have come under fire for refusing to back an amendment which would have spared thousands of benefit claimants from welfare cuts. The Local Government Finance Bill, currently going through parliament, will see council tax benefit scrapped and replaced with grants which only cover 90 per cent of the cost.  Councils will be able to choose how to make up the 10 per cent cut but cannot reduce benefit for pensioners. This means in some areas councils will have to cut benefit for working age council tax claimants by as much as 20 per cent.  Crossbench peer Lord Richard Best has tabled an amendment to the bill which would allow councils to cut the single person’s discount, currently set at 25 per cent. This, argued Lord Best, would enable the Treasury to receive its £500 million savings without hitting the poorest people.  Lord Best said a cut in the discount from 25 to 20 per cent would equate to an 85 pence per week reduction in discount for single people living in the lowest council tax band and £2 per week in the highest band. Read more on Inside Housing.

Lord Best Calls for Council Tax Rise for Single People

Single-person households would pay more council tax to spare millions of working age people from having their benefit slashed under proposals from Lord Best. The government plans to scrap council tax benefit from April 2013 and replace it with a grant that covers only 90 per cent of the cost.  Working-age claimants face much higher cuts than pensioners who are untouched by the reform. Landlords have raised concerns this could lead to tenants struggling to pay their rent.  Lord Best is seeking cross-party support to amend the Local Government Finance Bill in the autumn to allow councils to reduce the 25 per cent council tax discount for single-person households. He believes this would allow councils to redistribute money from non-benefit claimant council tax payers without having to cut support for low-income households.  Read more on Inside Housing.

Consultation on Social Housing REITs Launched

The Treasury has launched a joint consultation with Communities and Local Government on social housing Real Estate Investment Trusts (REIT), as announced in George Osborne's Budget last month.  The chancellor said the Government wanted to explore the role REITs can play in supporting the social housing sector - a move welcomed by a number of housing associations.  The current Finance Bill is introducing a series of measures to support entry to and investment in REITs. This consultation, says the Government, will build on these measures considering potential further changes to the framework to support the establishment of social housing REITs. It’s being viewed by the sector as another way to plug the gap in grant funding – allowing providers to raise new capital to recycle into housing provision.  Download the consultation documents from the Treasury website.