An infuriated landlord has put up a large billboard in a prominent street location to protest about Section 24.
This is the tax change phasing out landlords’ ability to set mortgage interest costs against tax, while landlords will be taxed on turnover and not profit.
David Heard, who has a portfolio of some 40 properties, has so far evicted six families and sold four of his properties plus a building plot where he had planned to develop a rental property – saying that this is purely down to Section 24. Other properties are awaiting sale.
He has also increased his rents, by 6% last year and a further 5% this year.
He said: “I have informed my tenants, with information packs that explain the policy, that these rent rises will be ongoing unless the policy is reversed. If I go bankrupt, we all lose.”
Heard told EYE that he had always intended holding on to his portfolio for life, and that he had previously been confident in assuring his tenants of a secure home.
However, he said that once Section 24 is fully implemented, he will be paying tax on around £80,000 of costs that he has paid out.
He said: “I have had to put measures in place in an endeavour to secure my financial future.”
Heard said that he has tried to get his MP, Penny Mordaunt, interested but said she had ignored his request for a meeting.
His solution has been to put up a billboard where she – and others – can see it.
It is in Stamshaw Road, Portsmouth – a main road location close to the ferry port and motorway.
It has so far cost him around £300, and he is paying a further £140 a month for a Facebook campaign. He plans to keep the billboard in place for up to a year.
Heard is certain that he is not the only landlord having to dispose of properties because of Section 24.
However, he warns that if there is a rush to sell buy-to-let properties, prices could drop: “If that happens some landlords will be stuck in a position without sufficient equity to sell, and making a loss on the rental income.”
Section 24 (so called because if it Section 24 of
George Osborne’s Finance Act 2015) started to be phased in last year and will be fully in place by 2020 when 100% of finance interest costs will be restricted to the basic 20% tax relief.
It has been called the biggest threat landlords have ever faced, with estimates that it could push about half into a higher rate of tax because of the way the calculation has been changed. Section 24 is often referred to by landlords as a ‘tenant tax’ because they argue it is tenants who ultimately pay the price.
Yesterday, there was talk of crowd-funding to help landlords put up similar billboards elsewhere.