Summer Budget 2015 – Landlords Reactions

TBH, I gave up on the NLA years ago. They never seem to have any gumption or teeth. I wrote to them at the start of this campaign asking what their intentions were to fight this crap and I got a letter back saying that summer was a bad time to lobby because Parliament was in recess. They were still considering their response but their plans would be confidential due to sensitivity.

Well I think we know what they are now. I's sure the Treasury committee are quaking in their boots.

That should be 'sales', not 'gains'.

Really am going mad...

Reply to the comment left by "John McKay" at "18/08/2015 - 20:16":

Absolutely John! These leeches are rubbing salt in our wounds.

Reply to the comment left by "Saeef Khan" at "18/08/2015 - 19:57":

Has anyone realised, when you push up rents then tax man is also going to have bite of that cherry

Yes, I've realised it. A lot. This is heavily political.

The big, largely overlooked consequence of this is, what happens to those that genuinely can't pay the higher rents? Those right at the bottom with 4 years of no increase in LHA. Higher rents are inevitably coming.

No tenant organisation has even raised a whimper about this.

The mantra is 'bad for landlords = good for tenants'.

Not this time it isn't.

Shelter, CAB and other taxpayer supported charities regularly come out with a fundraising survey predicting how hard things will be for tenants

Where are their surveys of the consequences of this budget resulting in 20% rent increases?

Reply to the comment left by "Monty Bodkin" at "18/08/2015 - 20:37":

That's great Monty. In fact raising rent may backfire especially on those landlords who are on border line of becoming higher rate tax payers.

In any event, Tax man is a winner in every given scenario. I would imagine Devil would have some similarities to Osborne.

Would it be 20% if the said 20% will also be taxed? Sorry - overthinking it.

Anyway, email to Aran Curry following his webinar of last night:

Dear Aran,

This is not the first time that I have listened to your webinar, and I really enjoyed it the first few times. It makes sense how you source the properties and the figures are really healthy, etc.

I was disappointed that you only mentioned the tax changes and the petition once as the title of the webinar was 'Understanding the impact of the new budget proposals for you and your investing'. I really don't think you explained the impact of the proposals at all. I understand that you were aiming to promote your business model and to recruit more people who want you to help them build a portfolio and coach them. I have admired you for a long time for the fact that you pass on your experience and prevent people from making mistakes in a business that could be very costly indeed.

However, as your model relies on finance and gearing over the term of the portfolio-building, the amount of finance for the complete portfolio would incur the levels of tax that is unimaginable and certainly much more than currently. You mentioned that you would be able to ensure that your clients remain in the basic tax band, but I am not sure that you can as the finance plus the income may well push them above that. Also, it is likely that your clients will have a job and income from that, which will add to the income plus the interest repayments. I am not sure that the income is enough to cover the tax bills following the Chancellor's proposals. This was the reason that I asked the final question that you attempted to answer.

I think you need to include a slide or two to show your audience the amount of tax incurred. After all, you will be supplementing the excess should the cash flow not be able to cover this. In one sense, I would therefore love to invest with you if you are indeed going to cover all my tax bills, I still have a property portfolio of over £1 million, finance of 75% and need not extend my contribution beyond the initial 70 - 75k investment! On the other hand, I think your business model is flawed now and may need some serious adjustments in light of the proposals.

Regards

Connie

Email sent to chairman of RLA:

Dear Mr Ward,

I have just received your email regarding the proposed tax changes. You have said that you have already met with George Osborne and he has said that there will be no u-turn on the proposal to tax landlords on turnover as apposed to profit. I and many other landlords are completely outraged at this discriminatory attack on people that provide a valuable service to society by providing accommodation to people who actually do not or can not buy their own home. It is fundamentally wrong and corrupt to tax someone on anything other than their actual profit.

You have mentioned about proposed alternatives to help alleviate this tax such as offsetting energy efficient measures against income as apposed to capital. This just simply is not good enough from the RLA. My personal tax bill is likely to go up by at least £12,000 per year, and that is before interest rates start to increase. My business will eventually become unviable as a result and 30+ tenants will have to be evicted.

This tax must be fought by you in the strongest possible terms, and if need be legal action should be taken against the treasury if it still wants to pursue this course. A number of landlord groups are already talking about this as an option. I suggest a joint legal challenge by both the RLA and NLA. I would suggest doing this democratically and polling your members as to whether a legal challenge should be fought, and then asking for a voluntary contribution from members to pay for court and barrister fees. This could easily be met via crowdfunding - there are already 14,000 signatures on the petition against this proposal, and I suspect many more.

I built my business based on the age old principle of turnover less expenses equals profit. It this is to change then the industry is ruined I'm afraid.

For what it's worth I have already contacted a number of MPs, only one has replied and he showed little interest. It is simply not politically prudent for MPs to support landlords if they want to progress in their 'careers'.

I am happy to meet or talk to you about matter.

Kind regards,

Neil Allen

Reply to the comment left by "Connie Cheuk" at "18/08/2015 - 20:48":

Would it be 20% if the said 20% will also be taxed?

I'm not claiming a 20% rent increase is in direct proportion to the 20% loss of tax 'relief'.

The figure is just coincidental.

There are so many variables making this nearly impossible to accurately estimate.

20% increase in rent is just my educated best guess.
- IMHO, a lot more accurate than HMRC's wild guess of this having 'no significant impact on rents'.

Deleted as double posted.

Reply to the comment left by "Saeef Khan" at "18/08/2015 - 20:45":

Well, you know what they say, Saeef, "death and taxes..."

Monty, the NLA suggested £70 per month for each tenant / tenancy on average. I am not sure where they derived that figure from either, but yes, each individual case will be different and dependent on how finance has been organised and how much the tax bites.