Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Gentle Landlord" at "22/07/2015 - 13:14":

Hello Gentle Landlord

Thank you for your endorsement. I appreciate it.

Simon

Wow! 1051 contributors to this thread. Please, all 1052 of you, write to your MP and ask them to reconsider these budget proposals borrowed from the Labour and Green Parties with next to no real consideration on the implications of adopting such policies. My letter went to my MP yesterday. Yours?

Reply to the comment left by "Gentle Landlord" at "22/07/2015 - 13:14":

Great letter, Gentle Giant and thanks for those kind words.
There is just one thing I would point out again - which is that if the changes only apply to new debt - as this will include re-mortgages, I would think, many of us would get tied into old ones or for those of us whose MX ones are going to be due out soon, we would have to pay the levy/turnover tax as soon as we re-mortgage. That is why I would like us to say 'on any new property purchases'. That is also logical as we are allegedly in competition with FTBs at the point of purchase, not at the point of re-mortgage. (if that makes sense)
Now, onto another subject:
Not only have we been blamed for FTBs not being able to purchase (a very sweeping and unsubstantiated claim - e.g. are we responsible for the fact that some people are not able to/choose not to save deposits and/or for the fact that their income is too low?); we have also been blamed for rising rents and this has also been seen in some quarters as something which stamping on landlords will reverse.
Well, I thought it was a bit of a bluff when some landlords here said they would increase their rents in order to provide a cushion against this abominable move. But I sat down and worked on my personal financial strategy this morning and realised that raising rents could be the way forward for me. I don't want to do it; it seems a bit mean, but I need to protect myself against bankruptcy and losing my own home.
I am not too worried about the initial cost of the proposed turnover tax for me (apart from the awful injustice of it), which has been calculated on this site by Simon and Appalled Landlord (most helpfully) as a loss of £8,000 a year for me (going down from £40,000 net income to £32,000), and I rely totally on my rental business for my income. I'm a parsimonious type though and can bring up my teenage children on that. The real worry is when rates rise and my net income could go down to anything, but to pluck a figure out of the air, if interest rates rose by 3%, that would mean roughly (I'm not doing exact figures) £45,000 extra interest a year to pay. So, according to the mad Government proposal (where black is white) by 2021 my alleged income would be £85,000, instead of my actual income of minus £5,000 - NB. I have savings and could cover a loss like this for a while, sell a few of my heavily-geared houses maybe, although I wouldn't gain much from that because they were nearly all remortaged in 2007 and so most of any proceeds will go on paying CGT and/or sell my family home and downsize - maybe I'll end up in a caravan - also fancied that. Of course, according to the new rules I would no longer be entitled to tax credits to help me as I would have such a high imaginary income. So I would be expected to pay tens of thousands a year in income tax now on my non-income.
This adding on of our costs to redefine our 'income', is what is the most heinous part of this crime and what, if it goes ahead would lead to many bankruptcies.
But, remember everyone, the only way to defeat this is to think positive and ignore statements from Osborne as though it were definitely going ahead - he's bound to imply that. There are some voices of dissension in the Bank of England, as well as the IFS, by the looks of it, which I'd say is very encouraging news.
In the meantime, in terms of my own business, I have realised that maybe I will have to increase rents to help to build my war chest. And as, according to the Daily Mail today, an estimated half a million landlords will be affected (not the 1 in 5 suggested by the Chancellor), we will all be raising our rents - it will be almost like a cartel. The poor tenants will have nowhere to turn, because the rents will go up all around them - whilst the Government cashes in on increased revenues from the turnover tax - forcing the very people they reckon they want to protect, into an even worse financial situation (the tenants).
So it is not a bluff as far as I am concerned and as many of my rents are below the maximum rent I could achieve - some of us landlords are good like that - I have several tenants whose rent hasn't gone up in 7 years - it would be nothing to raise them by 5-10% and I think that will cover the additional cost to me of the turnover tax as it stands.
(I wonder if one of the clever mathematicians on the site could do some calculations on this? Only if they want to - for fun!)
It might also be necessary for us to increase rents sooner rather than wait until rent controls come in. I am making a prediction here, for the record, that if the Government gets away with introducing this pernicious and unjust tax, that will be next, especially with the latest stuff in the news today about George Osborne getting personally involved in our business (honestly, mate, eff off! if I'm allowed to swear).
Also, last but not least, don't forget we can take them on in the courts! We have to throw everything we can at this.

Reply to the comment left by "Simon Lever" at "22/07/2015 - 15:23":

You welcome Simon. Thanks for your non-obligatory time over the phone. Much appreciated.

Reply to the comment left by "Gentle Landlord" at "22/07/2015 - 13:14":

Good letter gentleman. ...I too also wanted to point out that I am not too happy about comparisons to limited company Landords. ....as this may well encourage osbourne to also remove relief for those planing to move properties into a company. This will leave many with not fall back option.

Question for you gentle Landord.....what is your definition of new debt?

I've just written to 'spareroom' as I have noticed in the past that they donate money to Shelter. I have asked them to support us against this measure, pointing out how apart from it hurting their client base (landlords), it will also affect tenants and housing in general.
I wonder has anyone been following Shelter's response to it? I reckon they've shot themselves in the foot.

Reply to the comment left by "Ros ." at "22/07/2015 - 19:40":

Their business model is reliant on resident landlords, they supported Shelter and resident landlords got their tax free rent allowance increased. Funny that hey?

I wouldn't expect too much support from them if I were you.
.

Reply to the comment left by "Ros ." at "22/07/2015 - 19:40":

Also bear in mind that resident landlords are not subject to deposit protection legislation, they are not required to have annual gas checks and there are no hard and fast rules in terms of evicting lodgers either.
.

Reply to the comment left by "Ros ." at "22/07/2015 - 16:59":

Hi Ros

You prompted me to go online to read the article at:

http://www.dailymail.co.uk/news/article-3170154/Bank-crack-risky-buy-let-mortgages-warns-Osborne-Ministers-hand-powers-limit-lending-landlords.html

“Mr Osborne told the [Treasury select] committee the Bank was supposed to ‘identify bubbles and risks in the financial system’, and had recently named the buy-to-let sector as one of them. But he said he did not want to stop small-time landlords from investing in property, saying: ‘There are many people who have saved hard throughout their lives to buy a little property and rent it out. Those are people we absolutely want to support and help. But I think there are concerns we have to address.’

In the Budget, the Chancellor revealed that generous buy-to-let tax breaks would be reduced over the next four years. And in an attempt to temper Britain’s buy-to-let industry, wealthier landlords will no longer receive higher rate tax relief and will instead receive only basic rate tax breaks. The move is expected to hit almost half a million landlords.”

Did he mean that they will support us if we own just one little property?

He does not want to stop small-time landlords from investing in property, because he wants them to facilitate new-builds. But the new proposal will “absolutely help” to cripple these small-time landlords, by taking all the profit away from them, and possibly a bit more. Can he really be unaware of that?

You would not realise it from the article but some of the “wealthier landlords” will be bankrupted by HMRC, a branch of the government, because of this levy which he has disguised as a “reduction in tax relief”. They will lose their homes, become tenants and go on benefits.

Two brilliant examples of joined-up government!

Reply to the comment left by "Appalled Landlord" at "22/07/2015 - 20:06":

Hi Appalled.
Size really does matter. But this time, the smaller size is preferred.
I've noticed this in my own life in the past (talking here about business, of course). An old neighbour land friend of mine didn't seem to approve as my portfolio got bigger. She was okay about me owning one or two, but no more than that and I started to get the frosty stares. So if you own a bicycle shop that's nice, that's good. Even two is okay; you're an ambitious and successful businessperson, but wait, hold on. not more than 5 or 10! You're getting too big! You're a greedy capitalist now.
So George approves of one little house. Hypocrite. His one house (he may have more than one) will almost definitely be worth more than all my little houses put together. But it's okay if the money comes from Mummy and Daddy - I don't know about him personally - don't read the showbiz gossip - but obviously loads of people who support this attack on us will be a lot wealthier than many of us are - even those with quite a large portfolio like I have - because, excuse me Chancellor, the building society owns most of it, that's why we have to pay the flipping interest.
I reckon we're looking at a class issue here from two directions. The people who own less than us see us as the greedy capitalists and the ones above detest us as the nouveau riche. These policies are not 'objective' - they're based on highly subjective ideas and powerful jealousies from 'below' and distaste from 'above.' But it's very selective - they don't want us to be compared to other business people as that isn't what they want to hear. I think mostly this has come about because of the policies of envy (fanned by the likes of Shelter) and then Osborne seeing us as an easy target.
But we have to stop being an easy target. We have to write to everyone we can think of who might support us and get our message up to the upper echelons.
I've had an email back from the DPS - they indicated they may mention this in their monthly newsletter, so I've asked them to clarify if they would put a link in it to the e-petition - not yet started - I emailed the Government department responsible for it a few days ago and have heard nothing!
I think the more we can think of different people and different organisations to contact (I also emailed 'Landlordzone, for example, but not heard anything back), the better.
Also, if people here receive an email from a local letting agent or local landlord group, it would be an idea to email back with a link to this thread and with some of the basic information. It is still the case that many directly-affected people have swallowed the Chancellor's spin on this.
They're not getting the message that we can currently claim 100% of something and now everyone, regardless of whether they are a 20 or 40% taxpayer will only be able to claim 20% of it. It's missing out the '100%' bit and missing out the fact that they are disallowing something that has led to the widespread misunderstanding.