Summer Budget 2015 – Landlords Reactions

Great article Connie and first headline in the yahoo line up today! You were very brave to put yourself out there publicly and I truly hope that the parents are supportive of your hard work over the years when you break the news to them of your LL job. I find myself also keeping quiet about the LL job as they simply wouldn't understand why you'd take on debt unnecessarily rather than working traditional hours in a frozen civil service pay structure - my circumstances differ though in that I have to deduct £1K childcare costs each month from the f/t wage, so like you I will be forced out of the day job with this proposed change and instead use my personal allowance for the fictional rental income!

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "22/08/2015 - 09:21":

Brilliant coverage in the Telegraph - well done Connie and Richard.

Does anyone know if this appears in today's physical newspaper? I bought a copy to show family but can't find it! Or will it appear another day in the paper?

Angela

Reply to the comment left by "Angela Bryant" at "22/08/2015 - 11:11":

Yes Angela it is there. The paper has loads of sub-papers so just keep pulling everything apart until you find the property section. The front page has a stunning picture of a lovely Oriental lady looking rather glum ( 🙂 ).

The following Tweets have just been added to our Twitter Campaign page, see >>> http://www.property118.com/tax-levy-campaign-tweets/

PLEASE RE-TWEET

Death of buy-to-let: landlords wake up to Osborne's 150pc tax | via @Telegraph http://t.co/1GJt1CeOwe

— Mark Alexander (@iAmALandlord) August 22, 2015

Alice in Wonderland buy-to-let tax sets a new benchmark in absurdity | via @Telegraph http://t.co/kuZDCpVDkf

— Mark Alexander (@iAmALandlord) August 22, 2015

.

I believe the best chance we have in getting this overturned is 100,000 signatures and debate in parliament.

The RLA and NLA have 78,000 members between them. Why the hell haven't everyone of them and their family members signed it!

Telegraph this morning:

http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11816720/Death-of-buy-to-let-landlords-wake-up-to-Osbornes-150pc-tax.html

Death of buy-to-let: landlords wake up to Osborne's 150pc tax

The Chancellor's complex new tax – which will see some buy-to-let investors paying more than 100pc of their profits in tax – is already prompting some landlords to sell

Hundreds of thousands of landlords and their accountants are digesting the impact of George Osborne’s shock tax change unveiled in the summer Budget on July 8.

The tax increase, on which there was no consultation, will be phased in from 2017 and fully implemented by 2020.

The change was unexpected, and the new regime is highly complex, so investors and their tax advisers are only now fully grasping its effects. Many investors remain unaware of the change, or underestimate its severity.

All higher-rate taxpayers who own buy‑to‑let properties on which there is a large mortgage will pay substantially more tax. Some current basic-rate taxpayers will also be hit, because the change will push them into the higher-rate tax bracket.

Those who are worst affected will see:

● the actual tax they pay on their investment rising twofold or more;

● the tax rate payable rising above 100pc, meaning that more than all of their profit is paid in tax;

● a degree of tax that pushes them into loss, making their investment financially unviable and forcing them to increase rents sharply – or sell.

Scroll down for a worked explanation of the changes.

What is also becoming clear is that worst hit will be those modest, middle-class savers who have prudently chosen to invest in buy‑to‑let, often alongside pensions and Isas, as a means to supplement their income.

The mechanism of Mr Osborne’s tax attack is the removal of landlords’ ability to deduct the cost of their mortgage interest from their rental income when they calculate a profit on which to pay tax.

So very wealthy landlords who do not need mortgages are untouched.

• Comment: This Alice in Wonderland tax sets a new benchmark in financial absurdity

In effect, the Chancellor wants to tax landlords on their turnover rather than their profit, meaning that tax will be payable on nonexistent income. This explains why tax rates will, for some, exceed 100pc: landlords will have to pay all of their profit in tax, and then pay more tax still.

As landlords absorb news of this shock tax attack, many have turned to online forums to vent their dismay. Some are writing to their MPs and directly to Mr Osborne.

More than 14,000 have signed an online petition calling for the tax to be withdrawn.

Other buy-to-let investors, though, remain unaware of the tax bombshell poised to wreak havoc on their finances. Accountants, mortgage lenders, brokers and other professionals are themselves still working through the ramifications.

Tina Riches, tax partner at accountancy and investment firm Smith & Williamson, said: “We are contacting all of our clients who have mortgaged property which they let, and we want to speak one-to-one with those worst affected. It is going to have a significant impact.”

Smith & Williamson has calculated that any higher-rate taxpayer landlord whose mortgage interest is 75pc or more of their rental income, net of other expenses, will see all of their returns wiped out by 2020.

So mortgage costs above 75pc of rental income will mean the buy‑to‑let investments become loss-making.

For additional-rate (45pc) taxpayers, the threshold at which their investment returns are wiped out by the tax is when mortgage costs reach 68pc of rental income.

The investors worst affected are therefore likely to be those who have bought recently with large mortgages. Low-yielding properties, such as those in London and other parts of the South East, where rents are comparatively low relative to property prices, will also be exposed. That is because rental income is likely to be lower relative to investors’ mortgage costs.

“It will be very difficult for middle-income borrowers to get into buy‑to‑let in future,” Ms Riches said. “It won’t end overnight, but existing investors will sell and far fewer will buy. Buy‑to‑let may well waste away.

“The wider worry is that the Government can make such radical changes without any consultation. What other areas will come under attack?”

Then it goes on to Connie.

I'm also going to thank Professor Philip Booth as he had the idea of pushing for it to be a Saturday Telegraph campaign (I then passed on his idea to Richard Dyson 10 days ago). In small writing at the side of the main article it says: 'Telegraph Campaign: Axe the buy-to-let tax grab.' This means Richard Dyson is going to carry on with this - so the analogy of the MP versus the landlord can hopefully be used by him soon. I also would like him to cover the issue of the portfolio landlord and all the repercussions, so will draw up something on that and send it to Richard Dyson, but there's no rush if he's away for 10 days. Slowly, slowly, catchee monkey. Later today I will email all of the other journalists I have contacted over the last few weeks. I said to many of them that this was their chance of a big story (including Victoria Bischoff, Peter Hitchens, Andrew Pierce etc)) and none of them took me up on it.
Encouragingly, Philip Booth said that these Telegraph campaigns can be very successful. So this is a massive step forward for us.

I am a "Times " reader" due to this excellent coverage by Richard Dyson. I now " Telegraph" . Richard missed out on the exclusion of limited companies & the payment of CGT & Stamp duty. Perhaps when he returns from holidays he could cover this aspect.

Reply to the comment left by "Ros ." at "22/08/2015 - 11:29":

Well done to you as well, Ros.

Brilliant!

Well done everyone, particularly those involved in this particular article, but also to all those who are continuing to lobby. A(n?) holistic approach will hopefully wake up those LLs, MPs, tenants, student bodies, Letting Agents etc etc who are still blissfully unaware.

As Ros said...slowly, slowly catchee monkey