Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "KATHY MILLER" at "10/08/2015 - 22:18":

Trust me, it won't.

If she thinks I've got anything to do with saynotogeorge.co.uk (which I don't) she won't even look at it, no matter what I say.

Any suggestions to Tos can't come from me.

I have nothing against her but sadly that doesn't cut both ways.
.

We should not let them divide & rule us.

@Kathy. Osborne has this bug to pay the Overdraft by 2020. We all would like to pay our overdraft like yesterday. This does not mean that in order to achieve this we need to throw our loved one out naked on the street before starving them to death.

If we have taken an overdraft & it has turned into a hard core we find ways to reduce the O/D while try and maintain some financial sanity. There are various instruments to do this.

Mark Alexander,

This is the text I used:

Dear Sirs,

As you aware that, Chancellor has announced changes in taxation from April 2017 which will affect buy to let landlords and could potentially affect Estate agency business.

There is currently "Petition" set up on government website asking to reverse the decision. Once they have 10000 signature then government has to provide a response. (We nearly have 10000 signatures) and once it reaches 100k signatures then it is considered for debate in parliament.

I was wondering, if you and your team would sign this petition and if you could also direct your investors to the link below?, signature is accepted by providing, your name, postcode and email address. (It is completely free)

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

I thought I pass you this, as every little helps!

This is the response I received:

Many thanks for your email. Your email was forwarded to all our landlords and I am pleased to report that at least 80 of our buy to let landlords subscribed to the petition link your duly forwarded on to us.

We will also, pass this email to other branches and will keep you informed of progress.

Warm Regards

Andrew Wells
Client Manager
Reading Office
24 King Street, Reading, Berkshire. RG1 2HE

Reply to the comment left by "shakeel ahmad" at "11/08/2015 - 00:51":

Totally agree

Because if they get this in without any fight then they will find the next big target and keep going. When the debt is paid down nothing will get reversed they will just keep lining there pockets.

Looking at the UK over the last 15 years I think we have gone to a modern day victorian era. Our country as been stripped of so many assets to highest bidder that Joe public as to pay throu nose for most things.

For the very lowest paid they are one step from the work house.

Reply to the comment left by "Appalled Landlord" at "10/08/2015 - 20:47":

Thanks for your comment - I understand and accept what you say is correct.

The problem I have is most of the people I talk to are not accountants or business people and the main reaction to the proposed reduction in the tax relief has been that it is a cost I should be able to absorb.

Yes, the extra tax is 20% of the gross finance cost, but the effect is also an increase of 33% in net finance cost (in the example £10,000 gross, £6,000 after tax relief increasing to £8,000 after tax relief). I understand the need for the right terminology in correspondence but when talking to people who don't understand accounts there is an argument to further expand what is happening in terms that they can relate to.

Reply to the comment left by "Gary Dully" at "10/08/2015 - 01:12":

32p in the £ calculation is easy to figure out.
As soon as you are a higher rate tax payer you will be allowed 20p in the pound relief on every pound spent on interest.
That means that 80p in the pound is then taxable at the rate of 40%
That means that you will be taxed at 40% of 80p which is 32 pence in the pound.

So rent increases of 32% are now on there way.

1. Your calculations are wrong.
2. Your premise is wrong.

1. For every £1 you will be be assesed for 40p tax. You will then be given "relief"of 20p, so will pay 20p. That is 20%.

2a. Your calculation appears to assume that finance charges equal rent. If that is how you operate, then it is not a sustainable business model.

2b. You seem to want to keep the same after tax income as before. However, the treasury wants to take some of that money in the spirit of "we are all in this together".

If you want to keep the same after tax income, then the rent increase in £ terms can be calculated as follows (assuming no change of tax bracket and no loss of personal allowance), but the % increase depends on gearing:
- 20% taxpayer: no change.
- 40% tax payer: 1/3 of finance charges
- 45% tax payer: 5/12 of finance charges

Email reply just received from CML regarding information I requested on the number of BTL mortgages in the UK and the number of individual landlords involved

http://www.cml.org.uk/industry-data/

Dear Anne

Please see above link in regard to your enquiry

This is non member only information

Regards
Cherry Copping
CML

Reply to the comment left by "G Cox" at "10/08/2015 - 02:58":

THE SOLUTION.
1) calculate net profits to exclude all interest payments in the normal way,
2) calculate tax in the normal way and then
3) add extra tax to the tax bill of higher rate BTL tax payers equal to
a) 20% ( ie 40%-20%) of the total of interest costs deducted OR
b) 20% of the part of interest costs deducted equal to the person’s taxable income over the 40% threshold.

That [with 3)b)] is roughly what I initially thought the proposal was, but with the addition of limiting the actual additional tax to 20%/25% of lettings profit.

Whilst still not "fair", it at least does not take more in tax than the business' profits.

Great! Just bought my first BTL couple of months ago only to be hit like this by a Tory government no less!

It affects me in that 2/3 of profits will now go to government whereas before it was 1/3.

This makes me reconsider investment, do I really want to be working for government and bear all the risk?