Summer Budget 2015 – Landlords Reactions

Just had a letter from MX.

“One of my primary objectives is to develop an understanding of your current position and in due course would like to speak to you to discuss your portfolio along with your plans for the future”

Strange that no other lender takes such an interest in my life plan ….i wonder what their game plan is going to be… as i currently owe them 1.9m it will be interesting to see what they have to say …

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "25/07/2015 - 12:21":

I also love this letter. I sent questions to my MP to ask the Treasury, but I am also going to steal yours if you don't mind and get them off to him today, as yours are far more comprehensive than mine, and I am going to add the bit Appalled mentions regarding point 6.
Last night I chanced upon the 15 July select committee on the Budget - unfortunately I couldn't record it and got too tired to watch all of it. But all the witnesses in the first 2 hours supported our cause implicitly. Notably: Jonathan Portes of the National Institute of Economic and Social Research, Professor Philip Booth, Director of the Institute of Economic Affairs, Michael Saunders, Chief UK Economist of Citi, and Paul Johnson, Director, and Carl Emmerson, Deputy Director of the Institute for Fiscal Studies. I've already written to the IFS but am going to write again and to all of the others I mention, and I am going to add BTL Investor Scotland's excellent questions.
it's great to get another clever and articulate person on board!

Just for the record, these are the suggestions for questions I gave to my MP and I have also now sent him those from BTL Investor Scotland - he can then select or redraft them as he sees fit.

Dear Wayne

I have no idea how questions are usually framed for the Treasury so amend as necessary. I have had a brainstorm, so just use what you think you can out of the following:

1.Do you think the singling-out of landlords in the Summer Budget, asking them to pay tax regardless of their actual income, is fair?

2. Was it the intention of the Budget to bankrupt many private landlords as this will be logical consequence of the proposal?

3. How is it envisaged that the bankrupting of landlords (which will be exacerbated once interest rates rise) will benefit first time buyers? And is this fair?

4. Why did the Chancellor say landlords enjoyed a favourable tax regime compared to owner occupiers, when both the IFS and Policy Exchange have pointed out the fallacy of this?

(NB. The day after the Budget, the Institute for Fiscal Studies’ Paul Johnson correctly said that “rental property is taxed more heavily than owner occupied property.” Even the Tories’ favoured think tank Policy Exchange has concluded that the tax system “massively favours home ownership.” Unlike homeowners, landlords are taxed on rental income and capital gains. And the VAT system works against building new homes to rent by preferring home owner properties over rented housing.)

5. Given that the reasoning behind the policy is false, is the Treasury going to still go ahead with it?

6. Would it not be a better idea to build more affordable housing, which the IFS has stated is the only solution to the issue of affordable housing supply?

7. Have you done an economic analysis of the catastrophic effect this move is going to have on housing and the economy as a whole?

8. Have you thought about the consequences of this for millions of tenants who could lose their homes?

9. Once you have established the precedent that businesses can no longer include finance costs as legitimate expenses of running their businesses, which businesses will you target next?

10. Why was the measure introduced as something which would only affect landlords in the higher tax band and also only 1 in 5 landlords? This has also been proven to be a false statement.

Reply to the comment left by "Renovate To let" at "25/07/2015 - 13:06":

Renovate to let...nice to see another radio 4 listener.....I heard the same show but think in this instance you misunderstood their quote. They where not saying that only basic rate tax payers will be affected. ...They were refering to the fact that relief would be limited to the rate of tax that basic tax payers pay.

Reply to the comment left by "Ros ." at "25/07/2015 - 13:59":

Feel free to use my questions Ros.

BTL Investor Scotland has done a truly excellent piece of work with this letter. There can be no denying that.

However there is a point which has been overlooked in any post I've seen about this subject, which I guess is fair, because it's not really an economic one, or at least not an economic argument to put to MP's and so forth.

That is how ethical the Government has been in allowing so many people access to their pension funds knowing that the vast majority would take the money to put into property. By doing this they encouraged the market that they now claim to want to cool down.

On taking the cash from their pension pot people will have been allowed to take 25% of the total tax-free and then be taxed on the rest at whatever their rate is.

Having bought properties these people will now see their investments as unsustainable. Many of these people will have been Tory voters but I bet they'll think again in the future. And by the way, I'm one of those people.

Reply to the comment left by "Ros ." at "25/07/2015 - 14:18":

Hi, I have now also emailed my MP Zac Goldsmith.
Let's hope that our combined efforts force GO to rethink his proposals.

Reply to the comment left by "Dom " at "25/07/2015 - 15:20":

Great Dom. Well done. I've just drafted my email to Jonathan Portes and will probably send it tomorrow as I like to leave the important emails for a bit, review them and then send them. I'll then send similar ones to the other guys who were on the Select Committee.We're fighting for our livelihoods and for justice here, so it's great to see so much being done.
And you just never know which of these people might have the ear of Government, might be able to sway things a bit; it's why every email we send is important and could be the one!

Anecdotal i know but :

I have 120 rooms within my portfolio spread accross 2,3 4 5 6 & 8 bed properties, pretty much 100% of my tenants fall into one of the following categories: Students, asylum seekers, young professional sharers, couples "trying living" together out, a lot of single/couple migrant workers, contractors on 3-6 mnth contracts, visiting scholars, international students & Mon to Thurs workers who go home Fri - Sun and many people who have just come out of relationships who would otherwise be homeless.

NONE of the above are looking to buy propertyy to satisfy their circumstances.

I am also not aware of having to outbid any FTB EVER when buying 4,5,6 & 8 bed HMO props, why would they want one of them. Also when i but a property split into 2 or 3 flats they dont seem to want them either.

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "25/07/2015 - 12:21":

Thanks for the feedback on my questions, this has been helpful. I have again read the impact assessment and added 3 questions for my MP to ask the Chancellor. The questions are:

The impact assessment states that the measure could marginally reduce demand for housing. Can the Government explain how the measure will reduce demand? Surely demand for housing is influenced by demographic factors and rates of household formation. Is it not the case that the measure is more likely to affect supply rather than demand?

The impact assessment states that the measure is not expected to have a significant impact on either house prices or rent levels due to the small overall proportion of the housing market affected. How has the Government arrived at these conclusions? Does the Government know what proportion of the housing market will be affected? Does the Government know what proportion of the private rented market will be affected?

The impact assessment states that the measure is not expected to impact on family formation, stability or breakdown. In coming to this conclusion, has the Government taken into account the impacts that arise from landlords being declared bankrupt and from tenants being made homeless?