Summer Budget 2015 – Landlords Reactions

Yes, we don't give up that easily. Of course the Chancellor will say 'no'. He'll say 'no, no, no...' We have to keep up the pressure to turn that 'no' into a 'maybe' and then a 'yes.' We have to somehow get other influential people to get the message to him that this is going to be a big mistake for many reasons.
During this whole campaign I have had little moments of disappointment and felt a bit demoralised. That's normal. But we know this thing is unfair, illogical and discriminatory and how can you just give up like the RLA? Even as they continue to say how bad and how wrong it is?
Onwards and upwards (no-one said it would be easy).
I expect when we get the 'Government response' on achieving the 10,000 signatures, it'll be: 'The Chancellor. He say 'no.''

Reply to the comment left by "Simon Lever" at "04/08/2015 - 19:28":

Yes that's where I got the quote from but where did Corbyn get the statistic from?
.

Reply to the comment left by "Kathy Evans" at "04/08/2015 - 12:11":

Not so much an attack on sole traders.....but one that affects any type of individual or entity with no other employees. As a result of the last budget only company with more than one employer will be able to claim the 3000 NI relief.

So, for anyone thinking of incorporating and hoping to get that relief.....make sure you make a partner/spouse an employee of your company too.

Reply to the comment left by "Mark Alexander" at "04/08/2015 - 19:35":

Mark

Further Googling shows it is in a briefing paper from Unite Union and also a briefing from Shelter who refer to UK Input-Output Tables, Office for National Statistics, 2002 Edition.

Unite paper: https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CCEQFjAAahUKEwitpqSLi5DHAhWFPz4KHVUbCCM&url=http%3A%2F%2Fwww.unitetheunion.org%2Fuploaded%2Fdocuments%2F00014-Housing%2520is%2520a%2520human%2520right_What%2520the%2520Govt%2520must%2520do_690111-23024.pdf&ei=VQjBVe2nGIX_-AHVtqCYAg&usg=AFQjCNF0fYJDeq6lqaG3NRzUI8JJEPICcw&sig2=gpzJOPqFryes8pA7gidbJg&bvm=bv.99261572,d.dmo&cad=rja

Shelter paper: https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&ved=0CDgQFjAEahUKEwitpqSLi5DHAhWFPz4KHVUbCCM&url=https%3A%2F%2Fengland.shelter.org.uk%2F__data%2Fassets%2Fpdf_file%2F0008%2F276668%2FBriefing_Housing_Investment_Part_1.pdf&ei=VQjBVe2nGIX_-AHVtqCYAg&usg=AFQjCNG93EwMWb4oU1lmSih6bNcahArwFw&sig2=wlJPjG8yaXS-Zrzn_RlcVA&bvm=bv.99261572,d.dmo&cad=rja

Reply to the comment left by "Ros ." at "04/08/2015 - 19:32":

SAY NO TO GEORGE !!!

Bodies like NLA or RLA are there to provide jobs for the boy.

What, Mark & others are doing should have be done by them If I remember correctly Mr Ward is suppose to be retiring. If he is retiring than I don't think he will be in a frame of mind or motivated to fight anybody's corner..

Reply to the comment left by "Mark Alexander" at "04/08/2015 - 19:21":

As they are working on further research on the impact of the changes, to present to the Cancellor, we must be able to submit to them some of our own findings and the likely impact.

It is rather dispiriting, that their Policy Director met with the Chancellor but was not able to influence him so I do wonder what they presented initially.

I do think we need to email them the significant literature members have created on here in order to ensure that the information is heard. What do you think?

Reply to the comment left by "Connie Cheuk" at "04/08/2015 - 20:19":

I think you're spot on Connie. You've turned it into a positive. We are now in dialogue with the RLA thanks to you (they ignored my emails - you have the magic touch). So, as you say, we must relay to them the key arguments about the impact. This must be a new priority - a comprehensive, well-researched argument about the impact.

Reply to the comment left by "Ros ." at "04/08/2015 - 20:35":

We'll need to take a broad sweep and then simplify.
We can get a few ideas from the results of the SAL survey - specifically about intention to sell properties because of the tax change, intention to raise rents and intention (most likely not) to expand. [NB it was in the Tories' Manifesto to encourage the expansion of businesses.]
I don't know if we should do our own survey? I don't know how many people would fill it in... And although it might be seen as biased, coming from us, it would be just as biased coming from other landlords organisations, maybe...
We also have the results of a survey done on tenants' intentions if their rents are increased. From what I read, I felt that tenants would mostly have no option other than to accept the rises - especially if they are going on all around them.
Off the top of my head: we need to get some good idea of what we think will happen to house prices; how the policy will not provide the housing the country needs - in fact, the opposite if BTL is dead in the water; how tenants will suffer and not thank the Government... What will happen to the bankrupt landlords and their houses and tenants...
I think most of it has been said on this thread - we just have to go through and collate our arguments about impact. But then we need to try and back them up as lucidly as possible - including alternative scenarios. so that we come to a balanced view. The IFS, remember, is IMPARTIAL and they agree it is 'plain wrong,' and will not tackle the housing crisis.
It would also be good if we could prove it would hardly help FTBs if at all. I know most of my properties would only interest other (ltd) investors.

I thought I'd respond to some of the comments on my post:

Jim S - I never said it was easy; I'd surmise it certainly can be lucrative. In that respect that's no different than my business though - it's not easy, but it will hopefully be lucrative. I'm not doing this for charity - I'm hoping to make a considerable amount of money, and I don't think there's anything wrong with that for me or for you.

As for getting on board the gravy train - I'm not really looking for a gravy train, but if you wish to characterise it as such so be it.

Mark Alexander - How is my comment disparaging to people? I'm not saying all tenants do not contribute to society. I'm a tenant myself - because it came down to a choice between keeping a high-paying job and buying a property, or taking a chance on starting a business and foregoing the property purchase. However, numerous papers and studies show homeownership has positive effects to homeowners, their children and their community.

As to whether BTL landlords are entrepreneurial - I'm sure some are, to the extent that it is possible within the fundamental business model, and sure - some may have built savings through self-employment that is now invested in BTL. But by and large, by it's nature (i.e. renting property that already exists) BTL doesn't add much to the country's economic position through innovation, employment and exports.

Lisa Stux - it sounds like you suffered through some unfortunate circumstances and have worked hard to come through it. I don't know whether you are highly leveraged and are aggressively accumulating more property - it doesn't really sound like it. So I don't know that you're really the target of this tax change.

As for the "passive income" though - I'd argue that BTL is largely passive income. Of course it's not entirely passive, as the world isn't that black and white, but compared to most other businesses it is. Especially factoring the gains from use of leverage and capital appreciation as distinct from the maintenance of the property and managing/finding tenants.

James Tallis - absolutely, a healthy market place needs rental property. It should be high quality rental property that is managed well and continually re-invested in - and I don't believe that is always true in the UK. In addition there's probably an optimum level for how much rental property is needed, and beyond that it starts to distort the market - I think we are probably past that point.

On your second point - that's a decent suggestion and I suppose seeing how that plays out may reveal more about whether Osborne is making a grab for CGT or not. I can't really say it matters that much either way given the 5 years it's being phased in over. Wish that have been the case with the overnight change in tapered rates for CGT to flat 28% of a few years back - that was certainly unwelcome.

I'd point out CGT can be deferred though EIS/SEIS investment - if you do in fact sell and owe CGT you can instead invest in a small growing company. I don't think there's anything that can be done about stamp duty but with the revised stamp duty thresholds that is likely to effect very few people.

As for use of limited company structures - it strikes me if many BTL landlords had been running as limited companies all along they would be forced to view their company's finances differently anyway. The balance sheet would have to show a deferred tax liability based on increasing value of the properties, which would have made equity look a lot smaller - accurately I might add. However as personal investments that has probably been overlooked in many cases. Perhaps that's another motive for Osborne and Carney?

Ros - thanks for your thoughts, but no, I don't consider myself a bitter and jealous person. I steered well clear of any personal attacks so not sure why you felt the need to use that language.

I'm also not sure how all the arguments I presented, most of which are grounded in what I believe are fairly fundamental macroeconomic principles, have all been refuted previously? I don't actually recall much in the way of comments on productive investment and relative merits of investing in BTL vs. other more entrepreneurial small businesses.

Monty - as mentioned earlier, numerous studies have been done on homeownership vs. renting and its effects on stability and community ties. So if it's good enough for Harvard, the US's largest association of estate agents, the Economist and more, I would have thought it was quite a good topic for serious reply?

http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/hbtl-04.pdf
http://www.realtor.org/sites/default/files/social-benefits-of-stable-housing-2012-04.pdf
http://www.economist.com/node/13491933

John McKay - yes I'm quite sure it was hard work in the early days, and may or may not still be. Again, I'm not questioning that. I'm questioning whether the country as a whole could accumulate more fruits from your labour if that labour was directed to a different line of business. I've done the maths, and also done the "crap, do I really want the hassle?" thinking, and am plenty aware that there is a fair amount of work involved in being a good landlord. However I still think the gains are outsized and the taxes paid and broader economic benefit is undersized per unit of effort.

As to the username I chose, you're absolutely right that was an obnoxious choice. I picked it for impact and controversy to pick up a few extra readers, but yes it was perhaps childish and over the top. So I've changed that.

And as to my business - it's a technology startup.

Barry Fitzpatrick - I wouldn't exactly say I'd be "happy", but if the chancellor changed the rules such that in 2 years I'd begin a 5 year process of moving to a new policy where only half my tax break existed, I'd probably get over it and look at my options. Although as a small, new-ish business, I'd probably be in the company equivalent of a 20% taxpayer so it wouldn't have any impact.

Anyway, I'd still say the situation seems to me to be:

- the policy is being changed to discourage BTL and encourage investment that is more likely to contribute to the net wealth of the UK
- it's being phased in over a fairly long time
- it's a perfectly reasonable policy act given the importance of the UK's competitiveness in the global economy

...and so it is what it is.