Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "02/08/2015 - 14:43":

Thanks BTL

I am subscribed to the YPN
I will certainly go and read what it says but agree with the above points and I am well engaged with organising a lot of them. I am also sending section 13 notices for rent increase which should be no.11. on the above list.

My point is that (HNW) landlords should be doing something tangible than relying on a petition which by the look of things and despite what you say doesn't seem to have the momentum to get us what we need - debate in parliament. Even then it is unlikely that the debate will result in any meaningful mitigation.

Reply to the comment left by "Anne Nixon" at "02/08/2015 - 10:39":

That's not correct....The first charge on a property lies with the bank.....any CGT debts left unrecoverd after a sale still remain with the individual.

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "02/08/2015 - 14:43":

Hello BTL,
How does making a pension contribution reduce your tax bill? my accountant has told me that you can not get any tax relief on pension contributions as we are not a business and do not pay NI contributions.

Reply to the comment left by "James Tallis" at "02/08/2015 - 14:41":

I meant the loss which is crystallised if the property is sold for a lower price than the loan which had been taken out on it originally. That is the likely scenario, especially by selling at auction in a slow market. Maybe the loss made would stay with the repossessed owner in the final working out? Not sure about the details but an enforced sale resulting in a loss in the property's value would be a disadvantage somewhere surely - if not to the bank then to further exacerbate the plight of the person being repossessed? I imagine that CGT would not be applicable in most areas of the UK with markets as they have been in recent years.

Reply to the comment left by "James Tallis" at "02/08/2015 - 14:41":

I meant the loss which is crystallised if the property is sold for a lower price than the loan which had been taken out on it originally. That is the likely scenario, especially by selling at auction in a slow market. Maybe the loss made would stay with the repossessed owner in the final working out? Not sure about the details but an enforced sale resulting in a loss in the property's value would be a disadvantage somewhere surely - if not to the bank then to further exacerbate the plight of the person being repossessed? I imagine that CGT would not be applicable in most areas of the UK with markets as they have been in recent years.

Reply to the comment left by "Jim S" at "02/08/2015 - 15:07":

Jim S – I am not an accountant, nor am I qualified to give financial advice so I will quote directly from the article:

‘Making pension contributions increases the basic rate tax band by 10/8 of the amount paid eg. a £4k cash pension contribution increases the basic rate tax band by £5k. This menas that £5k more of mortgage interest can be claimed at the higher tax rate – meaning pension contributions are even more tax efficient.’

Reply to the comment left by "Appalled Landlord" at "02/08/2015 - 12:18":

I have felt sad since the budget.Reeling with utter disbelief that anyone I voted for could even consider such an absurd move. Its a disaster for me I thought. Lots of moaning & emails and emotions and sleepless nights in our household, have changed nothing!

I read the recent tweets and suggested tweets and suggested Banners and slogans is with absolute adoration and full support but in truth so far only 6,000 people and bothered to do anything. At some point we need to realise in our message and plight is not being heard. People don’t care!

If we want people to engage, all of the slogans on Twitter things and face booking you can possibly think of are useless. Unless Mark A wants to go to Africa and shoot cuddly lion or duck tape himself to a channel tunnel train whilst holding 14 migrant babies, we are fairly assuredly, not going to get any publicity whatsoever and no public support at all.

I am nearly 50 years old and have only ever seen a fiscal revolt once, and that was when people were hit hard or likely to be hot hard in the pocket by the Poll Tax changes. People don’t care about others! People don’t march & protest for somebody else because they thought they were getting unfairly taxed. It does not happen!! crude by true example - A chap killed 38 people on the beach last month and I haven’t even asked “what was that all about then” - “what do ISIS want then” - maybe they are as pissed off as we are but I have’t bothered myself to find out what it is, let alone what I can do to make sure they don’t kill another 30 people next month…

People only care about themselves - They care about their wallets. We landlords are no different I can’t remember ever getting my knickers in a twist about somebody else's tax plight in truth. I even looked away when the Bank of Ireland customers got shafted with the rate hike and when George and Tony started that war - Not my problem mate.!…

The only solution to this impending nonsense is a unilateral, utter and complete significant increase in rents. We must all do it we must all do it by the same % and on the same date, we must publicise it and “start up the big fan” - some of it will surly hit the target! If necessary and if rent hikes means turfing out DSS tenants then as sad as that is, so be it. This is them or us it would seem. Please please please don’t think your tenants will do anything of any substance to help you. If you do then you’re dreaming. I have sent over 1,000 emails on this subject asking for help and I know that I haven’t had 1,000 people signed the petition I’m lucky if there is five I can say are because of what o did or asked for.

If reticent or confused as to whether or not you should or could raise your your rents in difficult times, I refer you simply to the decision in 118 versus West Bromwich where they raised the rate on a fixed mortgage and say “well we had to” the judge said you yes WB you can change the rate of a fixed price mortgage and in fact you are obliged to & you have too.

We should unite and show solidarity and if necessary set up a disaster fund for those of us hardest-hit. I would surely rather give a fellow landlord help in these hard times rather than be made bankrupt or forced to restructure and be forced to by my own properties again - or pay the tax. Further, we simply should not pay the additional tax.

To say you cannot or will not increase your rents is frankly pathetic and is to sign your own death warrant and to assure yourself of bankruptcy sooner rather than later. I am not being nasty or derogatory I am simply stating the truth. If you live in a place where you see no increase in house prices or rents, then You’ll be fine to find the couple of hundred quid to pay off the mortgages and or to restructure. If you live in the south-east of England, we are talking about a completely different scale of problem and numbers. With very few properties I’m near having to find £750K simply to restructure. IT IS ABSURD AND I WILL NOT DO IT!

If you put the rent up and people can’t pay it they will be homeless. If they can pay it they will be mad. Either way is our only chance of engaging there masses raising the profile and making this stupid policy disappear or at least get properly reviewed.

Final note. Lenders will be bricking it. Their shares have fallen they will be having meeting, upon meeting, upon meeting about the risk and how to shelter themselves from it. They will not be having meetings about how to capitalise on the problem. Were I CEO of a lender I would be looking to take the low hanging fruit now and over the course of the next four years, I would be taking very hard look at people I have lent to. It is clear and self confessed that most of us landlords will not be able to survive the stress test of the impending tax hike. And so, if was CEO I would call in the loans / foreclose on those that do not have a robust and sensible plane to survive. That plan must include rent increases.

Landlords need to fight the move for sure but must do so with vigour. We should try to engage everyone even if only to be able to say “i tried to tell you” but we must be honest with ourselves - We have no chance of success in emoting anyone else into signing the petition to help us - save a few good friends (about 6,000 it would seem). We should then walk boldly with dignity, don’t complain about the fairness as everyone has some unfairness in their lives - but make sure when we walk boldly we speak good business rhetoric and demonstrate that we have a very good hold on that big stick (rent increases) and we are not at all afraid to use it!

I'm not convinced by some of the analysis on this thread. I think the groups Osborne has very carefully targeted are quite a small part of the PRS. This is slightly old - 2011 - data, but I think the conclusions hold now. Critique welcome.

As I make it the market structure is roughly 20% properties are corporate owned, 20% portfolio landlord owned (6 or more properties), 40% by LLs with 2-5 properties, and 20% by LLs with one property.
Source:http://www.landlordlawblog.co.uk/2011/10/27/private-rented-sector-statistics/

Financially a little over half of BTL is not mortgaged - 1.7m mortgages, 3.5-4m mortgages. (Diverse sources).

I can't do exact proportions, however:

More than half of properties are not affected at all by the reduced mortgage interest relief.
90% plus of LLs will be minimally affected unless they have substantial non-LL incomes. (97% of LLs have 5 or fewer properties - first source above).
Someone on an average income with 2 or 3 properties will not be affected even if they are all mortgaged, assuming total rent of 20k. A portfolio of 5 with 2 mortgaged will not be affected.
Your modesti-sh pensioner with 1 or 2 properties mortgaged will often escape the net.

And a lot of people at the margins can move things around the family.

So the geese Osbo are plucking are:

Portfolio landlords with mortgages. (sorry Mark)
People with good incomes who have a couple of properties ticking over.
And - a group not mentioned but much affected - are landlords with mortgaged portfolios where returns are low. eg London. If you have returns of 10% it can be absorbed more easily.

He's plucked the well-off ones with money who can't vote elsewhere, and left the majority unaffected.

He's also tried to spike the guns of the anti-landlord zoomers who care mainly about spanking landlords and don't give a hoot for the real impact on tenants, because now the potential gains for the taxman are reduced.

I don't see much potential for hiking rents here, until after there has been a major shrinkage in the market. But if only 5-10% (perhaps 10-20%) of rented properties are seriously affected, that may not happen.

Very political. Very Osborne. Not many easy ways out.

Will it work? Or will the side effects undermine the cunning plan?

Reply to the comment left by "Matt Wardman" at "02/08/2015 - 15:53":

You are correct.

One more points:

1 - What will the impact be on all those get rich quick rent-to-rent and JV schemes? Is there enough jam left?
2 - I think I can perhaps see a gentle increase in rents, but not hikes. Perhaps similar to the increases in Scotland after the law was passed requiring admin charges etc to be hidden in the rent not passed on to the tenant as identified charges.