The New Worker
The Weekly paper of the New Communist Party of Britain
Week commencing 5th June 2015
PRIVATE landlords have enjoyed a £14 billion tax break against mortgage interest on buy-tolet properties according to a report released by Shelter last week.
The scale of the tax breaks was revealed by HM Revenue & Customs after a freedom of information request.
Landlords buying properties were allowed to claim mortgage interest as a business expense, according to figures recently released showing the rapid expansion in the buy-to-let sector following the 2008 financial collapse.
Property owners, who can claim tax deductions for a wide range of expenses when they rent out homes, claimed £6.3 billion in tax relief against the cost of mortgage interest alone in the 2012-13 financial year.
These allowable expenses include the cost of insurance, maintenance and repairs, utility bills, cleaning and gardening, and legal fees. Ordinary homeowners are not entitled to similar privileges.
And even the rents they collect are often paid by the state in the form of housing benefit.
The figures obtained by Shelter reveal that the number of landlords has increased by more than one-third over the past six years: 2.1 million taxpayers declared income from property in the 2012-13 financial year, up from 1.5 million in 2007-08.
Seb Klier, policy manager of Generation Rent, which campaigns for the rights of those privately renting, said: “When you get a taxpayer subsidy to borrow money, it’s no surprise that more people are choosing to invest in property instead of, say, buying shares in companies, which actually create jobs.
“The tax system also puts landlords at an advantage over potential owner occupiers when competing for the limited supply of houses and it’s those thwarted first-time buyers who end up paying off the mortgage anyway in rents.
“We need to stop subsidising property investment and use that money to build more homes instead.”
Former council homes in London are now regarded as a “gold mine” for landlords. Housing association homes will soon be available to the private sector as the Government has extended the right-to-buy to a million housing association tenants. Last year more than 86,000 households were officially registered as homeless in England, Wales and Scotland and a further three million people were on waiting lists for social housing. Meanwhile, housebuilding has fallen to its lowest level since the Second World War.
Thatcher’s right-to-buy, passed in the 1980s, has resulted in 1.9 million homes being lost to the country. Local authorities have built just 345,000 replacement homes. Now a third of ex-council homes are in the hands of private landlords.
Refurbished two-bedroom ex-council flats in London’s West End are commanding rents of up to £28,800 a year, making them a “gold-mine” for anyone buying them.
Affordable housing for working class people who live in London is disappearing fast.
Some London councils are now being forced to buy back properties they were forced to sell under the rightto- buy from private landlords at many times the price they were originally sold at.
And the new tenants who are moved into them will also have the right to buy, so these could end up back in the private sector with the council forced to sell them at a big discount.
Westminster City Council was notorious for a huge right to buy scandal in the 1980s, when Tory leader Dame Shirley Porter was found to have sold off council homes to likely Tory voters. The cost to the taxpayer at the time was roughly £27 million.
Now, to tackle its crisis in affordable housing, the council has set up a charitable company called Westminster Community Homes. The company has spent £90.74 million buying back 295 excouncil homes, at an average cost of £307,593. A Mirror investigation has found that the prices being paid to buy back the homes are up to 22 times more than they were sold for.
Land Registry documents show that in 1987 one flat in Fulmer House, Westminster was sold to a tenant for £11,700, a discount at the time of £27,300. The same property was bought back by Westminster Community Homes in 2011 for £260,500 — a loss on paper of £248,800.
Landlords claim that renting homes is a business like any other but it is not. Most businesses produce something that they sell. Landlords produce nothing; they acquire a property and sell access to it for a large sum in rent every week without doing a stroke of work themselves. They are entirely parasitic