Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Appalled Landlord" at "20/08/2015 - 12:15":

I think we need to focus abit more on the vast majority of LL , who are std rate taxpayers, reliant on tax credits & CB to top up salries and meagre BTL profiits (the ones who are to be recognised and apparently wont be affected) , who are going to be hardest and most unfairly hit, this is the normal guy in the street with 1 or 2 props who is artificially pushed into HR tax, these will be the people the documentaries will be done on and there are lots of them.

It is a sad fact that most wont know what is going to hit them until it is too late due to current misinformation and claptrap from media, accountants, MPs and the Budget speech itself.

It was a black day for the Conservative Party when the Chancellor proposed to adopt a “plan” put forward by the Green Party, led by the left-wing Natalie Bennett, who ousted its only MP as leader in 2012, and whose partner is Jim Jepps, a left-wing activist who was a member of the Trotskyite Socialist Workers Party for 10 years, according to Wikipedia: https://en.wikipedia.org/wiki/Natalie_Bennett

She has degrees in Agriculture, Asian Studies, and believe it or not, Mass Communication. However, there is no indication that she has the slightest idea about Economics, Taxation, Business, or even the Real World.

It will be a blacker day for the UK if this economic madness is implemented. And an even blacker day for George Osborne’s ambition to become Prime Minister.

Reply to the comment left by "Appalled Landlord" at "20/08/2015 - 11:47":

Hi

I split a house into two so remortgaged to create two mortgages jul 2007

Reply to the comment left by "KATHY MILLER" at "20/08/2015 - 14:35":

Thanks Kathy

So, like me, you did not buy a property in the first half of 2007. Did any landlords on this forum buy properties in the first half of 2007?

Reply to the comment left by "Appalled Landlord" at "20/08/2015 - 14:49":

Nope i didnt buy any first or second half of 07 ..havent added to rental portfolio since early 06. Just done flips since.

Reply to the comment left by "Appalled Landlord" at "20/08/2015 - 14:49":

Hi Appalled.
I bought two in the valleys in May 07; one in Cardiff in May 07; one in Cardiff in June 07 (and two in Cardiff in July 07). Let me know what other details you want.

Reply to the comment left by "Ros ." at "20/08/2015 - 16:14":

Thanks Ros

The three you bought up to June, who did you buy them from - occupiers/executors/ banks, or other landlords, and were owner-occupiers competing for them?

I have just received an email from Homelet insurance with their Landlord Lowdown August edition

The summer Budget was the fourth and last item, after Japanese knotweed, pensioners considering becoming landlords and marketing property in the summer.

The heading was “Summer Budget: How will landlords be affected?”

Their answer seems to be: not much. The report read:

What was announced?

Tax relief cut for buy-to-let home buyers
Probably the biggest news for Britain's landlords was Osborne's announcement that mortgage interest tax relief for purchasers of buy-to-let homes is to be restricted to the basic rate of income tax, which currently sits at 20 per cent. The changes to the current system will be phased in over the next [sic] four years in a bid by the government to make home-ownership more accessible for first-time buyers and to even up the playing field between landlords and owner-occupiers. The majority of industry experts have criticised the move, saying that rental yields will have to keep pace for landlords to see returns comparable to those they have been receiving in the past couple of years.

How has the property industry reacted?

Measures to reduce tax relief for landlords have been met with widespread disapproval.

Here is a snapshot of some of the property industry's biggest players' comments:

David Cox, Managing Director of the Association of Residential Letting Agents (ARLA):
“At a time when the supply of rental property is already struggling to meet demand, it is dangerous to try and reduce growth in the rental market.”

Shane Ballard, Lettings Director at Greene & Co.:
“Areas which return high rental yields could become increasingly competitive while other areas where the rental yield is much lower may see a fall in demand from landlords as they no longer see it as a worthwhile investment.”

Richard Donnell, Research Director, Hometrack:
“The changes to buy-to-let mortgages and mortgage tax relief for high rate tax payers will moderate housing demand, but this is unlikely to impact the growth in house prices as just one-in-ten housing sales is to a buy-to-let investor buying with a mortgage – 63% of rented homes are not encumbered by a buy-to-let mortgage.”

But there was no mention of businesses becoming unviable and landlords going bankrupt.

I replied as follows

Hi

This report suggests that landlords have nothing to worry about from the so-called "restriction on tax relief". It would help your customers if you explained what this gobbledegook means. It means that landlords will pay a levy of up to 25% on their finance costs, including interest.

Some landlords who are basic rate taxpayers do not yet know that the proposed change will push them into the higher rate band.

Those who can get the levy back by increasing rents will do so. Those who can't, because their tenants are on Housing Benefit for example, will evict them. Some landlords, whose tax will exceed their real rental profit, will go bankrupt.

That is how the landlords of 37% of rented properties, and their tenants and lenders, will be affected.

Bluntly, if the sum of their total income plus their BTL finance costs (including interest) is more than £43,000, they will pay more tax in 2020/21.

If you want to do your readers a service you should explain the effect this proposed change will have, and how they can help prevent it.

The website: http://saynotogeorge.co.uk/why-say-no/ shows how various groups of people will be affected, and how they can contact their MP.

This page: http://www.property118.com/contact-mp/77191/ describes what to write to him or her.

Many people wrongly think that they will be unaffected if they are currently basic rate tax payers. This page: http://www.property118.com/only-1-btl-and-hmrc-tax-me-out-of-business/77297/ shows how they may be pushed into the 40% band.

Finally, from the top of this page: http://www.property118.com/budget-2015-landlords-reactions/76164/comment-page-268/#comment-62071 they can download a spreadsheet which they can use to calculate their tax today, and what it would be in 2020/21.

It would be enormously helpful if you could send these links to everyone on your mailing list. I am sure they would be grateful to you for them. In fact, they need your help!
Kind regards

Reply to the comment left by "Appalled Landlord" at "20/08/2015 - 16:44":

Hi Appalled. Well done - that's what we all need to do all the time - challenge the distortion GO dished out in the Budget - one which people are inanely repeating.
Regarding my house purchases:
1. Valleys house bought May 07. I believe it was from a landlord. No competition from anyone.
2. Cardiff house bought May 07: Bought from a landlord - in one of the 2 main areas for student lets in Cardiff. No competition from anyone - house prices were quite high.
3. Other valleys house bought May 07. From an owner-occupier but it was in a complete state and needed a solid two months' building work - replastering, new kitchen, new bathroom, new floors etc. No competition as was a dump requiring a deposit and cash to fix all the problems.
4. Cardiff house bought June 07: Bought from a landlord, as in the same student area. Also needed considerable work with severe damp problem. Also no competition. Got the feeling these houses had been on the market for a while and were not bargains. (in fact hardly gone up in value since - except for the value I've put into them by doing the works.
What are you doing with this information if you don't mind me asking?
Thanks.

I appear to have missed something. What is the relevance of 2007?

I purchased a flat in 2007 - probably late. Had a look for the exact date but it does not show up on price websites (probably because I was freeholder and the leasehold therefore expired).

I had offered to buy it in 2006 from the owner occupier but she turned me down on some sort of anti developer principle (I owned upstairs and was converting the building along with the house next door). Instead, she accepted less from "a really nice first time buyer". It turned out that the really nice first time buyer was actually an investor who made about 25% selling it on to me within a year without spending a penny. At a guess it was late 2007.