Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Mark Alexander" at "11/08/2015 - 22:10":

Yes Mark, this guy is a great blogger. His strategy reflects 95% of the LLs I know.

Save for the deposit, repayment mortgages, treat tenants superbly and prepare for the worst.

This is a very precise tax change, deliberate, political and designed to stop individuals leveraging.

Sure there will be more to come. Last thing banks want is BTL'ers complaint they have been mis-sold interest only and they have debts into retirement. (Even though it was clear no advice was given). Expect a switch to repayment and lending restrictions based on earned income.

Limited companies do only get 20% - but they will be next. I am sure the government would do them now but that's a fundamental tax schedule change. Perhaps a complete removal of allowing interest as a business cost for purchases of residential property in 2021. Housing is riddled with politics - I am expecting these types of changes as a minimum.

Keep up the good work - I have sign the petition and shared with EAs. In the meantime my latest vacant property goes on the market.

Landlords Strategy (warning re swear words)
http://www.propertyinvestmentproject.co.uk/blog/my-property-investment-strategy/

Reply to the comment left by "Ros ." at "14/08/2015 - 08:07":

I have had a response from David Nuttall MP (Bury North) - not very sympathetic to our cause, and initially didn't even recognise landlords as business owners. I asked to share his comments with the RLA and NLA and he soon backtracked and agreed that we are operating businesses! Conflicted viewpoint or what!

Still waiting on a response from a few others.

Hi

Some facts and figures here for finance Bill committee

Private landlords who are facing losses following the Government's decision to cut tax relief on buy-to-let properties could protect their income by turning their rental activities into a business, experts have said.
The Chancellor slashed the tax relief that landlords in the top tax brackets receive on their mortgage interest payments, cutting it from the higher income tax bands, 40pc and 45pc, to 20pc by April 2020.
He claimed that this was to "level the playing field" and it was "unfair" that landlords enjoyed this tax perk but owner occupiers did not.
• Budget 2015 winners and losers
• House prices crash through the £200,000 ceiling for the first time
New analysis from accountants PwC has shown that if a private landlord transfers one or more properties into a company structure, known as incorporating a business, the total tax rate is greatly reduced.
"This is because a company is paying tax on the actual profit and therefore the rate does not fluctuate wildly. If the profit reduces, so does the tax," said Paul Emery, a tax partner at PwC.
"If the rental property is run privately, there is a scenario where because you no longer get full tax relief for your expenses, you can pay tax even if there is no profit," he added. "That means potentially enormous effective rates of tax."

By 2020, when interest rates are likely to be higher, the levy on a property worth £100,000 to a private landlord in a higher tax bracket - with an 85pc loan-to-value mortgage and a mortgage interest rate of 5pc - would be 106pc.
As a result they would expect to suffer an annual loss of £100.
If the same property were run as a business, the landlord would pay a tax rate of just 49.2pc and bank £888.
If mortgage rates go up further, the contrast becomes more stark.
If rates hit 6pc, a property owner operating under a business umbrella would again pay 49.2pc, but the private landlord would pay 186.7pc tax, and make an annual loss of £780, according to the PwC model.

"Other taxes such as stamp duty and capital gains tax could affect profits from a rental business, especially for a landlord with only a handful of properties," warned Mr Emery.
If the owner is a sole trader, he would pay stamp duty again on the "incorporation of the business" based on cost of the property.
But if the owner is in business with a partner, they could enjoy some stamp duty relief.
Alternatively, if a sole trader or business partners own more than six properties, it is classified as a commercial property business and they will only pay a flat 4pc stamp duty on the sale.
"The big tax difference is capital gains tax when the company finally comes to sell and dividend the profit to the owner at 49pc compared to 28pc for a private landlord - but at least you would know what your effective rate of tax is, and if you are reliant on the income rather than the appreciation of price, it may be a hit worth taking," said Mr Emery.
"Although incorporating your business helps you gurantee your monthly tax bill, it is not a magic solution. Tax is only one consideration when forming a company. For example, audited accounts might need to be filed," he added.

@Ros,
I have contacted. Sadiq Khan (Labour ) & Jane Ellison (Con) , Got a reply from Jane & sent her a follow up letter.

Not heard from Sadiq Khan yet, perhaps he is too busy in his quest to become a Mayor of London.

Thanks Neil and Shakeel. You got me over the 40. Now we have a record of 41 MPs you have been contacted by our members here. Let's keep this moving everyone - it is a key part of our campaign. You never know who might speak up for us, purely because one of us has contacted them and shown them what lunacy the whole thing is.

Lenders, adjusting to the current issue.

http://choicestoday.choices.co.uk/news_features/banks-to-impose-tough-new-buy-to-let-tests

Reply to the comment left by "shakeel ahmad" at "14/08/2015 - 10:44":

Hi Shakeel

That article has a link to an article by Victoria Bischoff in the Daily Mail dated 8 August in which she writes about our “tax breaks”.

Has anyone told her that deducting interest is not a tax break, it is what every other business in the UK does?

Brrooklands Commercial Finance have got onside. They have just emailed me (and thousands of others I hope) along the following lines

"STOP the Government making the biggest mistake in recent history
Dear all
You are all aware of the government's proposed changes on the current structure for tax relief for individual landlords, we have decided to be part of the petition currently run by other landlords and would like all of you to be involved in it, all you need to do is sign the petition below"

A link to our (or Ruhal's) petition is attached in their email.

Great stuff Brooklands...

Reply to the comment left by "Stewart Jackson" at "14/08/2015 - 12:22":

That's very good news Stewart, Brookland are a long established and highly respected NACFB Broker.

I will have a chat with Malcolm there, we go back a long way and I still refer a lot of business to them.

Ideally, if we both suggest the same things to him he's more likely to act. What we need him to do is to persuade his professional body (the NACFB) to ask all of their member brokers to follow Brooklands lead on this 😉
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Reply to the comment left by "Stewart Jackson" at "14/08/2015 - 12:22":

PS - Malcom Jones (the owner of Brooklands Commercial Finance) is also a Property118 member - see >>> http://www.property118.com/member/?id=3353
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