Summer Budget 2015 – Landlords Reactions

I met a letting agent in the street today. She works for one of the biggest and most proactive letting agents in Guildford and she had no Idea what i was talking about. NOT A CLUE.

I got the look from her I got from my wife when i first discussed it with her – “you can’t possibly be understanding the proposal because what you think is proposed can’t possibly be right – that is ludicrous, preposterous, wrong and you must be misunderstanding the whole thing”

Can we crowd fund some press adverts / Marketing ??

I sent this agent an e-mail a few days ago explaining it all and asking them to sign and the message isn't getting through! We need to start calling too clearly.

Reply to the comment left by "Mark Brown" at "05/08/2015 - 13:28":

Hi Mark,
As Landlords, we provide a large percentage of Letting Agents income, that's why I think Letting Agents have a vested interest in ensuring their customers are aware of these proposals.
I posted this on another thread yesterday.
Hi all,
I’ve also sent several emails to my letting agent. He also happens to be a LL in the Portsmouth area (not sure if he’s a member of the PDLA).
To date, I have not received any replies from him.
As I have received several, at least informative emails from other agents, I think he is about to become my ex letting agent!
How is everyone else who uses a LA finding their response to these proposals?
What is it with all allied trades/services that we Landlords use that makes them not want to get involved in our campaign?

Reply to the comment left by "Dom " at "05/08/2015 - 13:52":

I've sent emails to 2 letting agents I have used in the past...no response from either.

My daughter was house hunting yesterday (FTB) and saw 2 properties that were for sale by landlords, she asked the Estate Agent if they were selling up because of the 'Interest Tax' proposals. The Estate Agent replied that no landlords seemed bothered.

There is so much apathy out there...I persuaded another landlord I know to sign the petition, but she added that she had a good accountant so she would leave it all to him!

We've got a lot of work to do.

Crowd Funding a PR campaign/agency is a great idea, I'd happily chip in if the objectives were very clear, i.e. how will the money will be spent?

It would need SMART goals(Specific, Measurable, Realistic, Achievable and Timely), e.g. for every £X spent with a PR agency a press release will result in publication of articles with readership figures of Y people within Z days.

In terms of a potential crowd funding platform, one to be considered would be https://www.crowdfunder.co.uk/manageprojects/edit on the basis that they allow crowd funding for community based projects, which this would be.

Note that I do not have available time resource to set this up so I will leave it to others here to discuss the idea here and to elect one person (NOT ME) to set it all up. If/when it goes live please propose an article and Neil and I will promote it via Newsletters, social media etc. To create an article see >>> http://www.property118.com/readers-questions-2/43811/
.

Why should agents know or advise you. This is a tax matter and, if you have no mortgage, of no relevance.

I have written again to the Institute for Fiscal Studies and to the chief economist, Professor Philip Booth, to ask if they can point us in the direction of any perceived or projected impacts of the policy. I pointed out how the Chancellor had asked the RLA for this information. I don't think they'll answer, but I reckon it all helps to keep the profile up.

Letter from HM Treasury in response to my letter to George Osborne ....

Correspondence & Enquiry Unit
1 Horse Guards Road
London
SW1A 2HQ
Public.enquiries@hmtreasury.gsi.gov.uk
Mr Mark Alexander

August 2015
Our reference: TO2015/16915

Dear Mr Alexander

Thank you for your correspondence dated 27 July to the Chancellor about the restriction to mortgage interest relief for residential landlords. As it is not practical for Ministers to respond to all the letters they receive, I have been asked to reply on their behalf. It may be more helpful if I can give you an overview of the policy rather than answering each of your questions separately.

The Government wants a fair tax system. As you are aware, at Summer Budget 2015 the Chancellor announced a restriction to the tax relief available for financing costs. Under the current rules, landlords can get relief on finance costs at their marginal rate of income tax. For the wealthiest landlords, this saves them 40p or 45p in tax for every £1 of finance cost they incur. By restricting the finance cost relief available to the basic rate of income tax (20%) all finance costs incurred by individual landlords will be treated the same by the tax system.

The Government recognises the important role the private rented sector plays in the UK housing market and economy, but believes that the wealthiest landlords shouldn’t receive the most generous tax relief on their finance costs. This change will rebalance the tax system as it ensures all buy-to-let landlords will receive the same relief for their finance costs. Landlords will continue to get full income tax relief on the other costs incurred in letting out a property, such as letting agent fees and replacing furniture, which constitute day-to-day running costs. It is also worth noting that finance costs are not deductible for other forms of investment such as trading shares.

The Government does not expect this change to have a large impact on either house prices or rent levels due to the small overall proportion of the housing market affected. There are 1.6 million buy to let mortgages outstanding in the UK overall, out of a total private rented sector of 4.4 million households and total housing stock of 22.6m households in England. Only around 1 in 5 (18%) of individual landlords are expected to pay more tax as a result of this measure. The Office of Budget Responsibility also expect the impact on the housing market will be small and, taking account of the other budget measures, have not adjusted their forecast for house prices. Landlords will still be able to benefit from capital appreciation on their properties.

Furthermore, this change is being introduced gradually from April 2017 over 4 years. The restriction will be phased in the following way: in 2017/18 landlords will be able to claim the full relief as it currently stands on 75% of their financing costs, with the remaining 25% being subject to basic rate relief. In 2018/19 this will be a 50/50 split. In 2019/20 a 25/75 split. Finally, by 2020/21 all financing costs incurred by a landlord will receive relief at the basic rate of income tax only. The phased introduction ensures landlords will have time to adjust and plan for this change.

The Government has also taken steps to support home ownership and improve the supply of housing. For example, the Productivity Plan published alongside the Summer Budget includes a number of measures to make the planning system quicker, cheaper and more responsive to local needs. The Government has also provided funding for Housing Zones to transform brownfield sites into new housing, creating 95,000 new homes.

As with all aspects of the tax system, the Government will keep this area under constant review. Please accept my thanks to for taking the trouble to make us aware of your concerns.

Yours sincerely,

Sean Rath
Personal Taxation
HM Treasury

If anyone has a bit of time today I am putting forward some ideas regarding people/organisations to approach/websites to take a look at. Maybe some people on this thread can write to some of these where applicable and let us know when they have:
BTL providers. What are they going to do when BTL becomes unviable?
Arla: Ditto. Or at least, they will lose income from landlords currently using them.
Boris Johnson! Anyone based in London who wants to approach him? He is a maverick, so you never know - he may not toe the line.
'PricedOut' - a campaign group I presume for aspiring FTBs.
The Council of Mortgage Lenders?
Capital Economics?
Any construction interest groups.
NB. There was a big middle page spread in the Daily Mail today all about FTBs. Some important points were made, including:
Growth in the construction sector slowed down last month (this at a time when more houses urgently need to be built).
Quote:
'It is a lack of supply that is pushing up prices. Each year we build 100,000 fewer houses than we need, according to Shelter.'
Another point made:
Many mortgage companies now demand a 25% deposit from FTBs (where it used to be 10% or less). This is a major obstacle for FTBs. [and an obvious thing for the Government to try and change, rather than bashing landlords, which will not help many, if any FTBs]
A quote from another article, by James Coney in the 'Money Mail', regarding the 'housing crisis:'
'This is a supply issue. So it's tempting to blame immigration and buy-to-let landlords for draining the market of properties. There is likely to be some correlation - but frankly just to blame these factors is too lazy.'

Anyway, just thought I'd share those points.

Reply to the comment left by "G Cox" at "05/08/2015 - 14:32":

In a nutshell because it's in their own best interests.
If a large number of Landlords leave the PRS their own businesses will be decimated.
I can't imagine large corporates using High Street Letting Agencies can you?
High Street Letting Agents are facing tough competition from on-line alternatives already. I'm sure they really don't need a reduced customer base.

Reply to the comment left by "Mark Alexander" at "05/08/2015 - 14:37":

Mark. Can you pop over to South Wales and tear my hair out? I haven't got the energy.