Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "07/08/2015 - 11:52":

The basis of an FoI request to the Treasury perhaps?

Or would that just be a question that would result in their standard template response do you think?
.

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "07/08/2015 - 11:52":

I haven't read the whole document, but interestingly it advocates lower LTV for homeowners as well as BTL.
What happened when FTB's couldn't raise the deposit because the LTV was lowered?....the government offered them incentives so that they could buy anyway!
Housing price increase fuelled by the government.

Reply to the comment left by "Ros ." at "07/08/2015 - 09:23":

Hi Ros

It was this part that stood out
“We could re-direct some of the £14 billion of tax reliefs received by private landlords to help struggling private tenants;

I took it meant the the loan interest relief they want to take from us! so already ear marking it to be used elsewhere

Reply to the comment left by "Mark Alexander" at "07/08/2015 - 10:53":

Please all read as you not see this alternative opinion from other participants in this forum.

Your comment is very true Mark.

But in all debates, I recommend avoiding reference the framework for companies as BTL investors always have the choice of using the corporate structure. Also, the argument that companies get away with something compared to PAYE BLT investors may not be effectively received as that structure has been whacked for higher rate tax payers by the new tax on dividend payment: ie they have had their share of pain.

Instead let’s focus on a comparison with PAYE framework businesses.
For example. If you buy some holiday lets or garages, all your interest expenses as a PAYE business are deductible at your highest rate in effect and such payments are deductible before the calculation of taxable income.

Hence, the discrimination against buy to residential let (BTRL) is abundantly clear.
The Chancellor admits that by making comparison with home mortgages (with some very erroneous statements incidentally). He says he is making even the playing field. We can decimate him on that of course.

But note that if you compare with second homes as an investment business (which in my home town of Whitstable I can tell you is big business and with holiday lets drives locals out of their home town), then the Chancellor would be on firmer ground. Second home investment cannot use interest costs against any income or CGT bills. Some BLT investors will be making a choice between BLT on the one hand and second or third home investment; especially when some BLT investments these days show a very small % profit on house value even before finance charges.

Obviously, this is where the BLT PAYE industry service as providers of rental homes comes in. The BLT portfolio is not used as second homes. It is made available for people to use as their homes; just as holiday lets and garages provide similar service and get full interest rate deduction.

As an economist with independence (my BTL will be standard rate even under the new rules) I cannot but help see matters from both sides and the logic above I think is undeniable.

But it is also clear that the ultimate objective of the measures have justification. BTL investors will have damaged some markets, forcing out at the margin ordinary people who then had to remain tenants. This would not have been possible on the same scale had they not been able to claim interest as a deduction at the higher rate. Without the latter, the overall BLT market will have lesser gearing and less buying power. More owner occupiers can emerge.

I just think the Chancellor has gone about this in entirely the wrong way.
The same objective can be achieved with better outcomes and far less or even no collateral damage by limiting the amount (% pts of debt or £K) of BTL interest that can be used to offset tax. If people want to claim more, then let them go into a company structure with ‘n’ years grace before the measures come in.

I hope you can push that to the Select Committee after you have told them the measures proposed will hit many standard rate BLT investors.*

I am sure that the mortgage lenders will follow in significant numbers for BLT lending to personal companies (with or perhaps even without personal guarantees); just as they have for student HMOs in recent years.

Graham Cox

* Probably none of them will realise this due to the complexity of the measures. Ditto many commentators on these page, being higher rate tax payers, realise the Achilles Heel that is this unintended, I suspect, but very real blow to many standard rate BLT investors courtesy of the bureaucrats in the Treasury.

Reply to the comment left by "Appalled Landlord" at "05/08/2015 - 23:54":

There is no way labour will win an election with cobyn at the helm.

Reply to the comment left by "G Cox" at "07/08/2015 - 12:57":

Some fair points. I disagree that we should ignore the comparison against limited companies - as the calculator produced by Mortgages for Business shows, ltd co.s will still be a reasonably efficient way to run a buy to let business. The figures for my own business shows I will be paying 3.2 times (88% vs 27.5%) as much tax as a private letting business than were my business identical in all respects except that it were limited. As interest rates go up that disparity will only increase. That's not really sharing the pain (although I think many wrongly believe that they are)!

Also, I would focus solely on BTLs without referencing BLTs (although it is lunch time so I may very well go and invest in one now).

Reply to the comment left by "Mark Alexander" at "06/08/2015 - 09:23":

I am not sure I agree entirely with the outcome you paint mark. I believe the PRS sector will grow....but more will be in the hands of the large corporates who due to their funding structures will have access the cheaper long term......10 year plus funding....This long term funding gives the security they need to build properties on a large scale.....I know....I rented in Switzerland for three years where most of the 50% plus Landords where said corporates. What is noticeable about this segment in the UK. ...is how small a proportion they represent as overall % of prs

Reply to the comment left by "James Tallis" at "07/08/2015 - 13:02":

Hi James

That is what I implied when I wrote "He needs to lead his party to election victory first, just like Foot, Kinnock and Milliband didn’t." Cobyn is more to the Left than the latter two, if not all three.

Reply to the comment left by "Dr Monty Drawbridge " at "07/08/2015 - 13:22":

Sorry, I am not 100% clear on the comparison you stated. Would you mind stating more simply.

Reply to the comment left by "shakeel ahmad" at "06/08/2015 - 09:45":

Most btl lenders will not give you a mortgage unless you already own your own property. I know.....I tried on my first attempt into btl a few years back.