Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Ros ." at "06/08/2015 - 15:03":

I got that too.

I replied stating how disappointed I am that they did not mention the petition.
One would think theye would do that for their customers, even if (as with RLA) they don't think it will have any effect.

1. Just received an answer from the Bank of England (I wrote a couple of weeks ago):

'Thank you for your email of 24 July concerning the proposals to reduce mortgage relief that landlords are able to claim which was announced in the summer budget by the Chancellor.

I am sorry to hear about the adverse impact this will have on your personal financial situation and I can see from your email that you would like the Governor to take your concerns forward about the impact that the new measures will have on you, with the Chancellor. While it would not be appropriate for the Bank to advise or intervene on specific areas of government fiscal policy, we have alerted Governor’s office of your concerns, and they will ensure that they are considered as part of the Governor’s regular briefings. May I also suggest you direct your concerns to the government. I enclose the contact details below for ease of reference:

HM Treasury
The Correspondence and Enquiry Unit
2/W1
HM Treasury
1 Horse Guards Road
London
W1A 2HQ

Tel: 020 7270 4558

E-mail: public.enquiries@hm-treasury.gov.uk

I am sorry we could not be of direct assistance on this occasion. Thank you once again for writing to the Bank of England.

Kind regards

Jasbinder Kaur

Public Enquiries Group

Bank of England|Threadneedle St|London EC2R 8AH|+44 (0)20 7601 4878

enquiries@bankofengland.co.uk'

2. I have just sent the two examples - the Aunt Sally one and the Dave and Margaret one to Professor Philip Booth at the Institute for Economic Affairs (although he is on holiday). I'm not sure where that will get me, but you never know how our voices may be heard and the message get through to the top.

http://www.mortgagestrategy.co.uk/news-and-features/sectors/buy-to-let/buy-to-let-news/budget-populist-cut-to-landlord-tax-relief-not-a-great-leveller/2022426.article

Quite a few inaccuracies.

I sent them the press release.

8,827 signatures.

https://petition.parliament.uk/petitions/104880

Open Question; I don't know if I have missed the answer to this one on an earlier thread, but just exactly what is the reason that LTD companies are classed differently to a sole trader landlord for the purpose of this "restricting interest finance relief" that the chancellor is introducing. I don't know anything about LTD companies and how they operate and so would like to know why it does not affect them. There must be a reason. I have always thought that the only reason you would have a LTD company was for the legal protection of limited liability and something about being able to pass shares on and avoid capital gains tax. My accountant has always told me that the effective rate of tax once you have took the money out of a LTD company was just the same as for a sole trader. What is it I am missing about the chancellors logic? Their must be a reason.

Here is the response I got from the Bank of England today:

Thank you for your email of 25 July addressed to the Governor concerning the proposals to reduce mortgage relief that landlords are able to claim which was announced in the summer budget by the Chancellor. Your email has been passed to me to reply on the Governor’s behalf.

We appreciate the time you have taken to write to us. I can see from your email that you have written to the Chancellor asking for the proposals to be put on hold and for the government to consider alternative measures instead and that you would like the Bank of England to have an input in this. While it would not be appropriate for the Bank to advise or intervene on specific areas of government fiscal policy, we have alerted Governor’s office of your concerns, and they will ensure that they are considered as part of the Governor’s regular briefings.

In terms of the housing market, the Bank of England monitors housing from both a monetary and financial stability perspective. The Financial Policy Committee (FPC) is responsible for the financial stability of the UK and as such is responsible for mitigating the potential risks that could emanate from the housing market such as risks that could arise from household indebtedness for instance and the wider impact this could have for the economy.

Following its policy meeting in September 2014 the FPC recommended that HM Treasury exercise its statutory power to enable the FPC to direct, if necessary to protect and enhance financial stability, the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) to require regulated lenders to place limits on residential mortgage lending, both owner-occupied and buy-to-let, by reference to:
a) Loan-to-Value Ratios;
b) Debt-to-Income Ratios, including Interest Coverage Ratios in respect of buy-to-let lending.

You can find further information on the risks that the committee have identified that could arise from developments in the UK housing market which is why these additional powers have been requested in the statement that was issued on 2 October. Please see the following link:
http://www.bankofengland.co.uk/financialstability/Documents/fpc/statement021014.pdf

I hope the above provides clarification on the Bank’s position on the housing market. Thank you once again for writing to the Governor.

Yours sincerely
Jasbinder Kaur
Public Enquiries Group
Bank of England|Threadneedle St|London EC2R 8AH|+44 (0)20 7601 4878 +44 (0)20 7601 4878
enquiries@bankofengland.co.uk

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "06/08/2015 - 22:04":

Would you say this is a way of saying that the Bank of England pointed to completely different solutions to that proposed in the Budget? That's how I understand it. As I mentioned, earlier, I sent Jasbinder the two examples earlier today - and asked him/her (I don't know the name) to pass them on. At least we're getting a bit of a dialogue going. Mmm. Interesting.

Reply to the comment left by "Ros ." at "06/08/2015 - 22:11":

I keep hearing about this concern over debt. Surely landlords will experience more debt with whacking great tax bills!

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "06/08/2015 - 22:04":

The BoE way of dealing with their perceptions makes a lot more sense than the Chancellor's proposals in my humble opinion.

Restricting LTV and increasing interest cover requirements will subdue borrowing and have the calming effect the BoE believe to be necessary without creating the chaoes we all know that will ensue if the Chancellor's proposals are implemented without substantial amendment.
.

Reply to the comment left by "Connie Cheuk" at "06/08/2015 - 22:25":

Yes, they're talking about 'household indebtedness,' but ours are legitimate business 'debts.' And they're secured debts. They're not borrowing to go on a cruise.
If businesses weren't allowed to take out loans to start up and expand businesses where would we be?