Ride the Wave of the Short-Let Sh*t-Show
Monday 1st August 2022
MP’s and the media endlessly hand wring about landlords and second-home owners doing ‘holiday-lets’, driving local people into far flung hovels or to sofa surf, while holidaymakers surf the waves.
In the next breath private long-term landlords are reviled as evil money-grabbing tyrants.
The Treasury too has a visceral hatred of ‘mom and pop’ landlords who happen often to be pleasant, hard-working people who take care to make sure their long-term tenants are well looked after and happy. They favour corporate build-to-rent landlord companies. Sadly, they are not building enough or in the right places.
There are a multitude of reasons why landlords in city hotspots and coastal locations have turned to holiday-lets rather than long-lets, but there is one key reason which the Twitterati seem to miss.
Tax.
George Osborne, when he had just the one job as Chancellor of The Exchequer, - but really it was the T-pots of the Treasury behind him, who decided to stop recognising long-term letting landlords as businesses. Rent was subsequently treated as ‘investment’ income.
They stripped the ability for these landlords to offset their mortgage interest payments against income before paying tax, thereby making it a far less viable investment for many.
No wonder many landlords turned to holiday-lets, now popular all year round since Corona Chaos and the newly understood merits of staying in the UK for holidays - note the French belligerence at the border causing M20 hell.
Not once have I seen an MP state, or the press report, that a significant cause of landlords turning from long-term letting to holiday letting is because the former is so tax inefficient.
And NO Treasury T-pots, the answer is not to tax holiday lettings more - hard to achieve anyway- and YES it is to go back to the old system of letting long-term landlords offset the interest on their mortgage.
Not only will many holiday-let landlords revert to long-lets (much less hassle) but a raft of investors will be interested in getting back into the sector, increasing supply and preventing the huge recent escalation in rents for tenants.
Tories live under the delusion that home ownership makes Conservative voters of us all. Believe me this is outdated fantasy.
What we need is plenty of landlords renting properties at reasonable prices so people can get on with their lives in one location should they wish, or move easily when good work comes up in a different location.
Honestly, it isn’t hard to achieve.
Until next time,
PB
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