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MIKE Hancock the Lib Dem MP for Portsmouth South has called on the new Coalition Government to start charging student landlords business rates on their homes.MMMM interesting one Mike. Have you thought this one through. Perhaps not.....
He states he is in agreement with the current situation where students are exempt from paying council tax. This lost revenue currently costs Portsmouth City Council £3.5m per year he suggests. His big idea is that 'fat cat' student landlords who make money out of students should pay business rates on their properties to make up this shortfall.
So Mike..... brilliant idea but there may be a few little flaws in your plan like:
When is a student not a student? Does a part time student qualify. What about houses where some tenants are students, some are not? Post grads doing work placements......students Mike?
Landlords with large property portfolios might legitimately be classed as a business but what about the legions of landlords with one property that they let out to three or four students, with very often one of them being their own child.
Most importantly Mike. If student landlords are to be treated like a business; then surely they should also be taxed as a business. This would allow the far more generous treated of expenses and allowances than is currently the case. Importantly, it would mean that rental losses could be off set against other taxable income as is the case with holiday homes. This would be particularly useful for many landlords who have frequently made losses on their rental business but have been unable to set against other taxable income made in the same tax year.
So Mike, interesting idea, but have you really thought it through, if so feel free to clarify your ideas. If not we will just have to assume that it's yet another politician's posturing from the comfort of their ivory tower with not so much of a toe grounded where the rest of us live.
"PLANET EARTH'
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What I was trying to do was to respond to a situation where local councils get either council tax or non-domestic rates is paid from every property except those occupied solely by students (and a few other very minor exceptions).
Even those that get full council tax benefit, the money for that benefit comes from central government and goes to the council so the council gets council tax for these properties. Now, I appreciate the history of this in that it follows on from the poll tax. And my understanding is that before the poll tax, under domestic rates, landlords were liable for rates so would have paid domestic rates on properties that were rented.
But we have the odd situation now where we have a tax that is to a very large degree a property tax and it essentially applies to every property except those occupied by students. These properties are totally exempt. This has a number of knock-on consequences. It favours one type of BTL property and landlord essentially over another. It has quite big consequences for local councils which have a large proportion of students because they are not effectively getting the council tax that other councils are getting.
You ask the question in your posting when is a student not a student and of course that is worked out at the moment to see whether a property is exempt from council tax.
My understanding is that it is that you can probably get more rent, even allowing for the fact it may not be occupied for 52 weeks from renting a property to students than to non-students and certainly in Portsmouth many properties are being converted. Indeed your website outlines the often considerable advantages and high rental income that renting to students gives. But that would be a commercial decision for BTL landlords to make. But it is an odd situation to have a property tax that doesn’t apply to one class of property.
I hope this helps.
Best wishes
Mike Hancock CBE MP
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