Summer Budget 2015 – Landlords Reactions

I think the" one off"c Landlord with a 95% LTV will be exiting the market pretty quickly as his toe in the water at BTL will actually be costing him money.

Cash is king!.....again.

Reply to the comment left by "Simon Dewsberry" at "10/07/2015 - 11:36":

So what happens if your rental takes you into the 40% bracket? My employment salary is £30k, and my rental income is £15K pa. My interest on BTL mortgage is £8400 - will I have to pay 20% of all my mortgage interest even though I am only just into the 40% bracket?

Reply to the comment left by "Simon Dewsberry" at "10/07/2015 - 11:36":

Hello Simon,
I like the way that you have laid the figures out, very easy to understand the amount that is being stolen from us.
20% of whatever interest we pay goes to the tax man (For a 40% Tax payer)
25% of whatever interest we pay goes to the tax man (For a 45% Tax payer)

Jim

Reply to the comment left by "MuckyBoots " at "10/07/2015 - 12:07":

I'm sure an accountant will come and pick the bones out of that for you !

George Osborne was on the news this morning in connection with making planning approval automatic for building on brownfield sites. He wants to make it easier for developers to build the houses and flats the country desperately needs.

This comes two days after he attacked the sector which has done most to encourage new-builds this century with his iniquitous tax on something that is a cost rather than an income.

It was the commitment of BTL investors who bought off-plan who enabled developers to build many of the hundreds of thousands of new flats and houses on brownfield sites since the millennium.

We did not take existing properties away from first-time buyers (FTB’s). On the contrary, we facilitated the construction of new homes, some of which were bought by owner occupiers who thereby freed up properties for FTB’s. In addition, the developers had to build affordable housing on the same site, for housing associations.

If BTL landlords had not made this commitment, developers would not have sold so many properties, or so quickly. Therefore they would not have been able to start their next projects so soon. There would have been fewer homes today, and rents would be higher.

George Osborne wants to encourage new-builds. I suggest he does so without our help.

We should go on strike by not buying them, either off-plan or finished. Those who have paid a 15% deposit are stuck with their purchase, but those who have only paid a few hundred pounds might consider sending a clear message to the big house-builders by cancelling their purchase and saying why.

In January 2007, well before the sub-prime scandal stopped the property market in its tracks in the August, an RICS surveyor told me that developers were cancelling projects, mothballing construction sites and laying off workers. The recession had already begun then. This was because investors had stopped buying property because the Bank Rate was so high they could get the same return by leaving their money in the bank, but with no effort.

This shows how important BTL investors are to the construction industry and thus to the wider economy, not just to the stock of property. Now we are under attack, it is time to strike back!

Jim, So in simpler terms, we only can claim for HALF the interest?

Simon, so how do I work out my next Tax going forward, so simply can see the formula every year?

A 20% tax payer will not se a difference in theor tax bill

The overview and final result will be that a 40% tax payer will see an increase on their usual tax bill equal to the 20% of annual mortgage & other finance costs paid out.

The overview and final result will be that a 45% tax payer will see an increase on their usual tax bill equal to the 25% of annual mortgage & other finance costs paid out.

These are not immediate it will be phased in over 4 yrs on a sliding scale
But will be the end result after 4 years.
All will see an increase in tax bill due to te removal of the 10% wear & tear allowance (unless you spend more than 10% of rent received on repairs)

Reply to the comment left by "Simon Dewsberry" at "10/07/2015 - 15:32":

Simon, I'm pretty sure that I understand the new rules.
However, I'm currently able to set ALL my interest costs against tax liabilities.
For example, If I own a property which produces £10k PA rent and my interest payments are £5k PA, I only pay tax on the remaining £5k. Assuming I'm a basic rate tax payer (20%), I would be liable to pay £1k to HMRC.
Under the new system, I can only claim 20% of the £5k interest = £1k. I'm then taxed on the remaining £9k @20% = £1.8k - Almost double my previous liability.
How can GO or anyone else say this is only going to affect higher rate taxpayers?
Please tell me that both my accountant and I'm wrong!

Reply to the comment left by "Dom Glynn" at "10/07/2015 - 15:50":

NO. you will continue to pay tax on the 5k profit ie £1k only as basic rate payer,

a 40% rate payer will pay a further £1k (20% of mort int) Total £2k

a 45% rate payer will pay 1k plus £1250 (25% of mort int) Total £2250

unless i have misunderstood the vicious new rules !

Reply to the comment left by "Simon Dewsberry" at "10/07/2015 - 16:04":

NO. you will continue to pay tax on the 5k profit ie £1k only as basic rate payer,

a 40% rate payer will pay a further £1k (20% of mort int) Total £3k (1k + 2k(40%x£5kprofit))

a 45% rate payer will pay a further £1250 (25% of mort int) Total £3500 (1250+2250k(45%x£5kprofit))

unless i have misunderstood the viscious new rules !