Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Saeef Khan" at "26/08/2015 - 21:20":

Sorry Saeef. But I don't understand what the accountant means and on what basis he thinks it won't go ahead. I see that as a mixture of denial and having his head in the sand. We have so far had no indication of any kind of u-turn and this is why we must continue to actively campaign against it in every way we can.

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "26/08/2015 - 19:59":

Hi BTL I S

Patrick Collinson is a very slow learner. He admits that his theory about our “tax breaks” was shown to be wrong in 2007, and he even provides a link to the article with rebuttals by Bradford & Bingley and the Council of Mortgage Lenders. He confused the deduction of BTL interest from rental income with the MIRAS deduction of interest from an owner-occupier’s salary before tax. And he was horrified that a landlord should get Principal Private Residence relief on a property he used to live in. His ignorance was very broad indeed.

This time he is repeating his ignorance about BTL “tax breaks” but combining it with his disapproval of tenants’ right-to-buy. He claims that "buy-to-let has sent home ownership in Britain careering into reverse, down to 65% in 2012/13 – its lowest level in 25 years. Make no mistake, that figure will fall further as right-to-buy is extended again." Thus the sale of properties to home-owners will reduce home ownership! He bases this paradox on the claim that after 5 years the new owners will sell to landlords. He provides no evidence except his “complete confidence”.

Clicking on the link in the article about the drop to 65% takes you to:

“Home ownership fell to its lowest level in 25 years in 2012/13, while the number of private tenants overtook the number in social housing for the first time, according to official figures that show how tenure has shifted over three decades.
The latest English housing survey showed that the proportion of homes lived in by owner-occupiers had dropped to 65.2%, down from 71% in 2003 and its lowest level since 1987.”

He writes this as if it were a Bad Thing. But it is because landlords have massively increased the supply of accommodation over this period, which is a Good Thing. This increased BTL’s share –but the pie got bigger.

City A M http://www.cityam.com/220861/bashing-buy-let-landlords-will-push-rents-and-hit-uk-economy-hard quotes the chairman of the RLA saying:

“Between 1986 and 2012, 57 per cent of all new dwellings created were private homes to rent, the majority of which were by individual landlords providing vital houses for those requiring accommodation, especially those needing to move for work or study. These homes were not “taken” from those who wished to buy.”

It was the commitment of BTL landlords who bought off-plan who enabled developers to build many of the hundreds of thousands of new flats and houses on brownfield sites since the millennium.

We did not take existing properties away from first-time buyers (FTB’s). On the contrary, we facilitated the construction of new homes, some of which were bought by owner occupiers who thereby freed up properties in purchasing chains which ultimately allowed FTB’s to get a foot on the property ladder.

In addition, the developers had to build affordable housing on the same sites, for housing associations, in return for being given planning permission..

If BTL landlords had not made this commitment, developers would not have sold so many properties, or so quickly. Therefore they would not have been able to start their next projects so soon. There would have been fewer homes today, and rents would be higher.

BTL landlords also bought properties after they were finished which owner-occupiers could have bought but did not want to.

The fact is there would have been fewer new-builds between 1986 and 2012 without landlords. It is thanks to landlords that these properties exist today. They facilitated an expansion in the supply of dwellings. Some of these have since been sold to owner-occupiers, including FTB’s.

At the other end of the spectrum were old properties which owner-occupiers did not want to buy.

Sometimes this was because of the bad condition they had been allowed to fall into by their owner-occupiers. Landlords bought them and restored them, thus improving the stock of habitable housing.

Other old properties were unattractive to home owners because of their great size. Some landlords bought them and turned them into HMO’s which provide accommodation for several people, thus increasing housing capacity.

To sum up, landlords increased the quantity of habitable dwellings. That is a permanent effect, never mind the beneficial effect on the economy while we were doing it.

We contribute in other ways. Some landlords provide accommodation for the poorest members of society, those who are on housing benefit. Where would they go instead?

Other landlords provide very long-term accommodation to people who are not on benefits, but who either cannot afford to buy a property, or simply do not wish to.

Others provide accommodation which enables mobility. These tenants include students, people who relocate to learn their profession, people who move to another part of the country to start a new job, and people who come from abroad to work in the NHS, for example, or who come to work in the UK branches of multi-nationals.

Yet to the anti-landlord brigade, would-be buyers have more right to this accommodation than the current occupiers.

It is a fallacy that for every rented dwelling there is a buyer who is ready, willing and able to purchase it.

And BTL was not responsible for the rise in prices.

Only 7% of the 150% rise in property prices between 1996 and 2007 was due to increased lending to landlords, according to a report published in 2007 by the National Housing and Planning Advice Unit, a British quango:
http://webarchive.nationalarchives.gov.uk/20120919132719/http://www.communities.gov.uk/documents/507390/pdf/684943.pdf

On page 18 there is a graph showing rise in prices between 1996 and the summer of 2007, when the market peaked. It shows the actual rise compared to what they estimate would have happened if there were no BTL mortgage lending. The gap at the peak was 7.4%.

On page 20 it states “For instance, since 1996Q3 house prices increased in real terms by 150 per cent [up to 2007Q2]”.

The rise in prices was presumably caused by increased demand for housing of all kinds coupled with a chronic under-supply of new builds, which would have been greater without BTL. What would prices and rents have been without BTL?.

More coverage in the Telegraph today.

http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11824058/Buy-to-let-boom-as-banks-profit-from-savers-cashing-in-pensions.html

Blog from NLA published today.

https://nlauk.wordpress.com/2015/08/26/may-you-live-in-interesting-times/

Guardian article published just before the election on the growing number of MPs who are landlords

http://www.theguardian.com/politics/2015/may/06/number-of-mps-who-earn-from-renting-out-property-rises-by-a-third

More from The Guardian on Generation Rent with reference to the budget tax change for landlords.

http://www.theguardian.com/global/2015/aug/22/renters-fight-rogue-landlords-rhiannon-lucy-cosslett?CMP=share_btn_fb

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "26/08/2015 - 23:42":

This is still a transition stage - so we have the juxtaposition of the idea of a thriving and booming BTL lenders' landscape with the first inklings feeding through of the 'doom' ahead....(if this thing goes ahead - which I don't believe it will - but I believe it will only stop because we make it stop). The article clearly wasn't part of the 'campaign' but it was getting there.

And, Appalled, an excellent summary. I particularly liked:

'Yet to the anti-landlord brigade, would-be buyers have more right to this accommodation than the current occupiers.

It is a fallacy that for every rented dwelling there is a buyer who is ready, willing and able to purchase it.'

We should use those sentences somewhere as they are powerful.

Reply to the comment left by "Ros ." at "25/08/2015 - 17:35":

A notre on Judicial Reviews.

The application has to be made withni 3 months of the original decision.

No - I don't know which date would apply to this - it could be anytime between the original speech and when the proposals are cast in stone.

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "27/08/2015 - 00:12":

Can we get a list of these MPs?

I wrote my MP to highlight to him the potential impact on him personally if GOs proposal's go through. I think many MPs who are also Landlords are ignorant of how this will affect them personally. Hopefully then these turkeys won't then vote for Christmas.

Hi ,

i just found this on the subject of judicial review . On the face of it There is a possibility of challenging unreasonable government decisions but note the caveat about winning the public debate first. And the need for quick action . The will of parliament would not be overturned by Judicial Review so would need to be done before the parliamentary vote .

One of the remedies is further consultation before implementation

http://www.hoganlovells.com/files/Publication/a8ffdcb9-80ec-4c53-af03-44cfe21e1fc2/Presentation/PublicationAttachment/3fa900dd-e9ac-4772-a90d-4cf92b45e7b8/Challenging_government_decisions_in_the_UK.pdf