Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Mark Brown" at "05/08/2015 - 09:28":

Hi Mark

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I have had a long conversation with John Stewart at the RLA about collaborating, sharing research, sharing resources etc.

He seemed to be very open minded about the idea and will be speaking to the RLA Directors about it later today.

I will report further when I hear more from them.
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Reply to the comment left by "Ros ." at "05/08/2015 - 07:31":

Hi Ros,

So am I the obvious troll you refer to? If so, why not just name me?

As to "trolling" - I'm not. I'm engaging in debate on the internet on a topic that interests me. I have a different viewpoint to most here - that doesn't make me a troll.

Generally trolls pretend to be something they're not. I suppose you might assume that if I'm posting on a landlord forum I'm a landlord, but I guess I can clear that up - I'm not. I've considered it, don't have any particular moral or ethical objections to it, may do it in the future, but think it's reached an unhealthy level for the greater good.

So hope that clears up any perceptions that I'm some sneaky troll. I guess we'll see now if there's any debate or opposing views allowed.

Hi Appalled Landlord,

Would like to respond to a few bits:

>> You have a very interesting viewpoint: We should do what George Osborne wants us to do. We should do what HMRC wants us to do.

>> This is state direction of the economy. Did you take this from the communist party manifesto?

Changing tax policy is hardly state direction of the economy. It's a long-used approach to encourage or discourage certain behaviour in line with government objectives. As for the communist party manifesto - no, never read it as I'm not a communist. I am 100% for private enterprise, property rights, personal freedom and the other benefits of capitalism.

>> Of course landlords buy furniture, fridges, ovens, lawnmowers etc.

Yes, but I believe in aggregate lower-spec and/or less frequent. I have no stats to back that up mind you, but it would seem logical - I doubt most landlords buy a premium product when they can get away with a basic one - whereas some homeowners do.

>> “We provide a valuable service” is not a smokescreen – it is an understatement. We provide an essential service. Where else would our tenants live – hotels, B&B’s, hostels, the workhouse?

Fair enough yes, it's a valuable service for those who really need or prefer to rent. However, some of the people currently having to rent would much prefer to live in homes they would buy themselves if not competing with landlords.

>> You think it is the duty of a citizen to make the country richer. This is very strange, coming from an actual entrepreneur. The entrepreneurs that I know of made themselves vastly richer – and then became tax exiles.

I wouldn't go so far as to say it's the duty of any citizen to make the country richer. However, I would hope that many of the country's most capable and resourceful individuals would at least consider how they can help build a better country and a better future and factor it into their thinking and behaviour in some way. But no obligation.

>> I suspect that you did not start a business so that you could employ 7 people or make the country richer. You started a business to become richer yourself, and you need these 7 people to make you so.

Already stated that - absolutely yes. Enriching myself and supporting a stronger national economy and society don't have to be mutually exclusive.

>> You are suggesting that we should sell our properties and start exporting something. Sheer bloody nonsense.

At the end of the day, net exports are what drive national wealth and in turn the strongest future for residents of the UK and our children. I really can't see much to argue with there.

>> You are posing a false comparison. Both activities are needed, and one does not exclude the other.

Agreed, but it's a question of proportion. And relative incentives or disincentives for each.

I skipped a few other things particularly the ones that got a bit more personal. I already apologised for the poor choice of username, and have changed that, so hope we can leave that there.

Editors Note: Due to the overwhelming support and popularity of this article we must apologise that Property118 is physically unable to respond to all direct emails and telephone calls. We would be most grateful if you can comment via this thread and the team of readers working with us will help pick up on all points 🙂

Thank you once again for your support.

The fundamental absurdity to focus on in my view is ......................

The net rental income before interest cost is fully counted as taxable income and so can push you into a higher tax band. By contrast, if you had invested your equity in a listed company running BTL or a private company doing the same (incl your own company) , the interest cost is deducted and the dividend declared pushes up your taxable income total by less and hence might not push you into a higher tax bracket.

This is maybe only relevant for smaller BTL investors, but it is completely against tax logic and is hence a potential Achilles heel.

Hi All

I just wanted to point out what makes this proposed policy ridiculous.

Tenant left property 6 weeks rent not paid. I have paid the mortgage for the two months.

Now the government want me to pay tax when I am already down the rent.

If I was to pursue the outstanding rent all I would be doing is wasting my time putting me under enormous strain. Increasing my losses by having to pay the courts to get a CCJ then as there is no bailiffs in NI (which would cost).

Name anyone who losses money and then is expected to pay tax on money that was not paid.

If it was a shop it would be theft. or Fraud

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "05/08/2015 - 10:22":

Hi BTL. Unfortunately, none of these have received letters as far as I have been informed. So, if anyone is a constituent of one of these, it is imperative that you write. I'm not sure if they will also read correspondence from non-constituents. If they head up a Department and it is a departmental matter then they allegedly do - although I have written several of these and not received a reply. It may not be the main thing though, that we get a reply. At least there is a possibility that they will be aware of our point of view if an email has been sent.

Reply to the comment left by "Technology Entrepreneur" at "05/08/2015 - 11:11":

This Forum is not just for Landlords, but for a whole range of people including Tenants. I have read some very good questions on here from tenants who face eviction or not receiving support from their Landlord; they simply wanted reassurance and others' take on the situations and problems they faced.

I think it's good that you have taken an interest and have shown us what opposing views you hold that I am sure others in society share - one of my lodgers included, even though he is staying under my roof which allows him to make a living as the downturn is still a downturn in Northern Ireland. We have spent many hours in the kitchen debating this issue; he holds many of the views you do, which is fine, he's entitled, but he also gloats and does not see that those who set up their business structures under the current system did not do so thinking that there would be a mad tax that would apply to no other business.

It could have happened to another business, and certainly could be rolled out to several or all.

It's natural to want to protect our assets now; who wants to lose 50k, let alone hundreds of thousands? I would not wish it on anyone, and I know many entrepreneurs who have set up businesses, be they small (Bill from the second hand furniture shop) or the estate agents who are capitalising on the upturn and setting up shop. All should be commended during economic times that are testing, to sod it and give it a go, hoping for success. This is the foundation of enterprise. I don't think I'm idealistic, and I don't think blaming a sector of society that decided to legally make money this way, rather than another, should be reviled. The majority of Landlords adhere to the law, implement legislations, and there are many, and just want to enhance their lives. They are from all different backgrounds and ways of life, not necessarily privileged.

There are businesses out there making money through the vulnerability of others; the copy-cat online companies that trick people out of their money by masquerading as the government website, for passport renewals, for example. I would rather see an end to them than the Private Rental Sector that has been recognised by many, including Housing Reports commissioned by Councils. The Private Rental Sector has been valuable over the years in providing housing stock; it helped me when I was made homeless at 16 and didn't qualify for social housing until my situation became dire, it helped me when I was student and could afford no more than a tiny room, and it is helping others now by providing a range of housing.

We have read your views and have taken note; please could I ask you to stop now deliberately trying to antagonise individual members on this Forum.

Reply to the comment left by "Technology Entrepreneur" at "05/08/2015 - 11:33":

Hi Entrepreneur

This forum is for landlords who will be affected by the proposed change and who want to prevent it. It is not intended to be platform for a philosophical debate about whether providing flexible accommodation to those who need it is a good or a bad thing.

We occasionally see posts from people like you, written from a solid basis of ignorance. Although they are a distraction, they do provide an insight into the muddled thinking of the anti-landlord brigade.

By the way, you made great play of the fact that you are an actual entrepreneur, implying that we claimed to be but were not. I have read every comment on this thread, and I don’t recall any landlord claiming to be an entrepreneur. In any case, it just means somebody who runs a business, it is nothing special.

You wrote “Changing tax policy is a long-used approach to encourage or discourage certain behaviour in line with government objectives.” What are the government objectives of this proposed change? Does it have any apart from increasing tax, which will be passed on to tenants?

I fail to see your point about not over-paying to put premium appliances in rented properties. I wouldn’t put them in my home either.

As regards selling our properties and exporting something, what do you think we can export that the Chinese are not already doing?

In your first post you wrote: “BTL adds very little to the country’s economy. You may gain, but the country doesn’t. In your latest post you wrote: “However, some of the people currently having to rent would much prefer to live in homes they would buy themselves if not competing with landlords”

City A M http://www.cityam.com/220861/bashing-buy-let-landlords-will-push-rents-
and-hit-uk-economy-hard
quotes the chairman of the RLA saying:

“Between 1986 and 2012, 57 per cent of all new dwellings created were private homes to rent, the majority of which were by individual landlords providing vital houses for those requiring accommodation, especially those needing to move for work or study. These homes were not “taken” from those who wished to buy.”

We did not just buy them, we enabled them to be constructed by buying off-plan. And for each site we enabled, the developer had to build affordable homes as well. And, on each site, home-owners were able to buy for themselves also. This in turn freed up properties in chains which ultimately allowed first-time buyers to buy.

For every £1 spent on housing construction an extra £2.09 is generated in the economy. So we not only increased the quantity of housing, we boosted the economy.

At the other end of the spectrum were old properties which owner-occupiers did not want to buy.

Sometimes this was because of the bad condition they had been allowed to fall into by their owner-occupiers. Landlords bought them and restored them, thus improving the stock of habitable housing.

Other old properties were unattractive to home owners because of their great size. Some landlords bought them and turned them into HMO’s which provide accommodation for several people, thus increasing housing capacity.

To sum up, landlords increased the quantity of habitable dwellings. That is a permanent effect, never mind the beneficial effect on the economy while we were doing it.

We contribute in other ways. Some landlords provide accommodation for the poorest members of society, those who are on housing benefit. Where should they go instead, to the Poor House, or to the streets?

Other landlords provide very long-term accommodation to people who are not on benefits, but who either cannot afford to buy a property, or simply do not wish to, like yourself.

Others provide accommodation which enables mobility. These tenants include students, people who relocate to learn their profession, people who move to another part of the country to start a new job, and people who come from abroad to work in the NHS, for example, or who come to work in the UK branches of multi-nationals.

Yet to the anti-landlord brigade, would-be buyers have more right to this accommodation than the current occupiers.

It is a fallacy that for every rented dwelling there is a buyer who is ready, willing and able to purchase it.