Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "adam prospect" at "06/08/2015 - 07:40":

Hi Adam,

I don't disagree with your concerns about some of the communication. I'm not convinced that there is much scope for raising rents and some of what people are saying does sound like bare faced threats which do our reputation no good at all. I also cringe when I hear the same landlords talking about their business almost as if it were a charitable foundation caring for the community. I don't think some people understand just how unpopular landlords are at the moment and that claims like this make the situation worse.

That said, I also don't think that you "get it" when it comes to the new rules. Making buy to let less attractive going forward is one thing (if indeed it will be any less attractive). Crucifying those who have responsibly and prudently focussed on it for the past 20 or 30 years is another.

The implications of the new tax rules are devastating for a large number of people - and it is quite random who is to be devastated. It does not just hit the highly leveraged or short termist. And going forward, it does not even discourage high leveraging or short termism - so long as you are in a company.

As I posted before - I have over 60% equity in my portfolio - hardly irresponsible. I developed the properties myself and ownership of parts goes back to the 90s. By 2020 my tax as a % of actual profit will be 88% (more if interest rates rise by more than 1%). If I were incorporated it would be 27.5%. So in theory, someone could come along and buy out my business which has been made unviable by the new tax rules, and then operate it very profitably with no changes other than a tweaked ownership structure.

So yes - right now I am failing to see how there is anything fair about this new arrangement. Or how it is going to fix the problems it claims to have been introduced for.

Reply to the comment left by "Dr Monty Drawbridge " at "06/08/2015 - 08:35":

Dr Monty Drawbridge,

Would you have to pay CGT, and if not too personal, how much, if you were to sell your portfolio as you described?

Reply to the comment left by "Dr Monty Drawbridge " at "06/08/2015 - 08:35":

Excellent reply!

Reply to the comment left by "David Gill" at "06/08/2015 - 07:30":

"UKIL" UK Individual Landlords - I like it.
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Reply to the comment left by "adam prospect" at "06/08/2015 - 07:40":

Let's suppose you are right and all UK landlords do buy an average of 10 more properties. However, unlikely that might be, I agree with you that it could cause a problem.

The question is perhaps, how big is a healthy PRS. I would suggest about 30 - 50% of homes which would put the UK on par with Germany, the Euro power house. We are currently at around 18%.

If free market economics are allowed to prevail I suspect the 30 - 50% PRS figure might be achieved within two or three decades. Yields would gradually fall as more property is constructed and rents reach a natural economic cap.

The proposed measures are not only likely to stop growth, they will put it into reverse. This will cause huge problems, both economically and socially. Now is not the time to put the brakes on, the UK needs both econimic and housing growth.

If at some point there is a more pressing need to control growth there are softer measures to control it. A sledgehammer is not a requirement for cracking a nut. Limiting new BTL debt to lower gearing and higher interest cover gradually would do the trick, without putting the economy into reverse.

I look forward to reading your response.
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Reply to the comment left by "BTL INVESTOR SCOTLAND" at "06/08/2015 - 08:15":

The slogan for today has been Tweeted and added to the campaign Tweets page ready for members to re-tweet - see >>> http://www.property118.com/tax-levy-campaign-tweets/
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More coverage of buy to let today - apparently its game over - we will see about that.

http://www.fool.co.uk/investing/2015/08/05/3-reasons-why-its-game-over-for-buy-to-let/

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "06/08/2015 - 08:15":

It isn't necessarily ridiculous, but it is unfair. Aren't Ltd Cos individuals as much as people in th eyes of the law?
Mr Cameron has put so many areas off limits for taxation increases anyone left out in the open is bound to be fair game now.

Reply to the comment left by "Connie Cheuk" at "06/08/2015 - 08:19":

Hi Connie

I have used a leveraging strategy, as well as investing savings and blood, sweat and tears. It is not uncommon for entrepreneurs, e in all types of business, to use leveraging.

It is discriminate even if it is a tax on leveraging, because it is only being applied to landlords who leverage and not all other businesses.
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I had a reply from Professor Philip Booth, the Director of the Institute of Economic Affairs. He was one of the main witnesses, along with IFS Director, Paul Johnson, at the Budget Select Committee Meeting of the Treasury. An extract from his email to me (I asked him yesterday if he knew of any research we could use in our campaign and he kindly answered, despite being on holiday):

'The two obvious places to try would be the real estate group at Reading University or a consultancy we know well called Europe Economics. However, I doubt they have anything off the peg and they would charge.

I did a blog on the subject during the election campaign. It is the one about Natalie Bennett - but i don't think that will tell you more than you already know.
Best wishes:'

It probably doesn't tell us any more than we know, but it's reassuring to know that a chief economist has taken enough interest in the subject to write about it and to at least have started thinking about what it means (we actually will know a lot more in many ways as we have spent so long thinking about it).

Here is the article for anyone interested:

http://www.iea.org.uk/blog/the-green-interview-%E2%80%93-failed-on-style-what-about-the-substance

I think it is good that he knows about our campaign as well, as he is deemed to be an expert and may be consulted again by the Treasury.