Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Ros ." at "22/07/2015 - 21:57":

Hi Ros

You would need to increase your rent by 10%. Ian was only calculating the increase on your share.

Reply to the comment left by "Simon Roads" at "23/07/2015 - 10:00":

Hi Simon

Using the rounded off bands like Megan Shaw, I make the tax on a profit of £5,000 to be £8,200, or 164%.

Reply to the comment left by "Appalled Landlord" at "23/07/2015 - 15:20":

I mean the £5k profit in Ros's example of course, not on any profit of £5k.

Reply to the comment left by "user_ 7938" at "23/07/2015 - 12:58":

"I am personally a 40% tax payer, but my property has been 99% declared to my Husband as he is in the 20% threshold."

Hi Andrew

Please be very careful about this.
Property income where a property is jointly owned by 2 people who are married or in a civil partnership is assessed on both parties 50:50 by HMRC by default.

The only way to change this is to submit a form17 to HMRC advising them that you wish to change the split of income to the percentage of the underlying ownership of the property. For the split to be as you have indicated above the underlying ownership would have to be 1% for you and 99% for your husband. If this is not the case then your tax returns are wrong.

You cannot decide to split the income in an arbitary manner and you must inform HMRC if you are not splitting it 50:50.

Just had a reply off my Labour MP!:

Thank you for your email of 19 July regarding the Budget.

As you set out your case extremely well, the best thing to do would be for you to allow me to send the letter you sent me to the Chancellor. Can I have your authorisation to do this or do you want to amend the letter slightly

Also, I would be happy to submit some written questions to the Treasury. Please feel free to suggest a form of words and I will change as necessary.

Yours sincerely
Wayne David, MP

Can anyone help with this? I'm feeling frazzled today (and just had a letter off a certain dreaded mortgage company which didn't help!)
I think this is positive - a Labour MP advocating for us with the Treasury. Some of these letters we are all sending are bound to pay off.

Reply to the comment left by "Ian Simpson" at "22/07/2015 - 21:42":

RENT INCREASES

Afternoon all - new here to the forum - prompted to sign up after 2015 budget bombshell. I've been reading the forums with interest - especially this one. I have 2 properties in South West London, each rented to professional couples at just below market rate. Just.

After a discussion with my accountant and my partner I thought I'd approach my tenants about this and let them know that after 3 years and 2 years respectively it was likely I would have to look into raising rents. One couple has now given me notice to quit and the other have said that they would not be happy paying any more due to affordability issues! I am shocked. They are/were both great tenants and even without anything formal going ahead the reaction has been worse than I imagined.

I am worried that in London in particular rent increases will not be an option in mitigating this extra tax. HMO landlords around this neck of the woods seem to have no trouble finding tenants but its getting harder in the single home market in supposedly the most in demand city in the world. Have renters simply had enough? Reached they peak of what they are willing to pay? It certainly seems this way. Property price rises mean that in the 10 years I've had these properties I'm in a great position to sell and it does look like this landlord at least will be exiting the market thanks to Georges plans.

Also had a reply off the IFS, saying they can't help. However, I have asked if I can continue to write to them with my arguments as an affected person and whether they could at least read these letters in case they find something in them that hadn't occurred to them:

Letter off IFS:
Dear Ros,

I'm the press & communications manager at the IFS and your emails have been passed on to me.

I'm very glad that you've noted some of the things we said in this area following the Budget. However, I'm afraid we do strenuously protect our independence and impartiality. It's crucial to our organisation, our work and how we are perceived. As part of that, we don't join in lobbying or advocacy efforts of this kind.

Kind regards, Jonathan

Reply to the comment left by "Ros ." at "23/07/2015 - 17:24":

A few draft ideas for questions for my MP to put to the Treasury. Feel free to contribute, as these are just off the top of my head and it's been a long day:
1. Why is one very specific group - private landlords; not landlords with limited companies, not letting and managing agents, not Housing Associations, who broadly do the same job as private landlords and not any other business category - being targeted to have their finance costs disallowed as a legitimate expense of their business? [this one could do with being shorter]
2. If this proposal is enacted, which groups and/or self-employed business people will subsequently come under this new tax regime?
3. How can you suggest taxing businesses, whether self-employed or within a corporate legal entity, on costs? Is income tax not supposed to be applied to income? In other words, how can money going out of a business' account be called 'income'?
4. The Chancellor suggested that the move was aimed at 'leveling the playing field' with first time buyers [or was it owner-occupiers?]. How does it do this, given that the IFS, among others, has said that private landlords are already more heavily taxed than owner-occupiers?
5. Why was the measure presented as a reduction in 40% 'tax relief' to 20% 'tax relief', with the statement it would only affect 1 in 5 landlords when in reality it consists of removing the ability of private landlords to offset 100% of their finance costs (and will affect practically all private landlords who pay mortgage interest)? Why wasn't '100%' mentioned, as it is the most significant percentage to mention? Was it to confuse everyone so that they wouldn't understand the terrible injustice and dangerous precedent it would set of taxing people on costs regardless of income and even introducing a system whereby people will have to pay high rate tax on a non-existent income (e.g. they might have to pay tens of thousands in tax, when they may have made zero or less than zero profit on their business? [this one is too long too, so any rephrasing would be much appreciated]
Thanks in advance.

Reply to the comment left by "Ros ." at "23/07/2015 - 18:50":

RoS

I am going to play devils advocate with you here and answer from the perspective of Government, the BoE and HMRC.

The answer ......

Private landlords are not a business and never have been, this is enshrined in tax law and statute.

The effects of the budget are that you will only receive tax relief on 20% of the interest you pay. We may look further at this to bring private landlords in line with the taxation of other forms of investment income such as dividends.

The new measures have been introduced by Goverment on the recommendation of the BoE in order to stop the growth of the PRS.

If the PRS continues to grow at an unhealthily rate in private Ltd companies we may have to consider extending these measures to companies too.

Now back to being myself .......

The above notions are now so deeply entrenched I think it is pointless trying to change their minds. You would have at least two battles to fight, the first being that BTL is a business not an investment.

What I believe we must fight, for our own benefit and the economy as a whole, is that the new rules should not have a negative effect on BTL landlords whose portfolios were established under the old rules.

In other words, new rules for new debt only.

To clear up any confusion on what I mean by new debt, I mean any increase in a landlords borrowing after April 2017 will be treated as falling under the new rules and every £1 of debt borrowed before April 2017 will be treated as falling under the current rules.