Summer Budget 2015 – Landlords Reactions

Homes for Scotland say that reduced levels of home ownership in recent years has been caused by the dramatic decline in house building.

http://www.scottishhousingnews.com/5145/home-ownership-drop-result-of-private-home-building-decline/

'The Observer reports: 'A defiant Tony Blair has dramatically re-entered the debate over Labour’s future with an 11th-hour appeal to party members to come to their senses and reject the “Alice in Wonderland” politics of Jeremy Corbyn.

The former prime minister and winner of three general elections says Corbyn’s supporters are operating in a “parallel reality” which rejects evidence and reason,'

Sound familiar?

These budget changes will hit Blair and his wife who themselves are highly leveraged!

Just a quickie one, something I had not thought about. I've put a picture link of the "Say NO to George" website right in the middle of my homepage on my website with a little write up. I'm expecting 2k or 3k hits on my website come November to January when students start looking for accommodation. Between them and their parents surely some sign up. I only mention it as others may have missed this advertising opportunity as well.

I Have just written this email to all my tenants....

Hi XXXX

You may or may not have noticed the proposed tax changes on landlords in the Summer budget in July, but the gist is as follows…

1. Tax will be levied on rental turnover, not profit any longer which will drive up landlords theoretical ( but not actual) profit, and reduce cash flow
2. Carried through to a higher geared portfolio, the tax levied will actually be more than the profit made - a tax of up to 116% of profit, which is madness and completely unsustainable- creating bankruptcies for many hundreds if not thousands of landlords
3. As a result, vast numbers of landlords will be selling up and leaving the BTL market, depressing house prices, or staying on and raising rents, which is clearly bad news for tenants , landlords, and agents alike.

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.
There was also very good coverage in the Daily Telegraph last Saturday. Here are links to the articles. The Telegraph has agreed to campaign to ‘Axe the buy to let tax grab’ and says that ‘this Alice in Wonderland tax sets a new benchmark in absurdity’.
http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11816726/Buy-to-let-tax-My-five-properties-were-my-pension-now-my-tax-bill-will-jump-38pc.html?fb_ref=Default
http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11816733/Alice-in-Wonderland-buy-to-let-tax-sets-a-new-benchmark-in-absurdity.html?fb_ref=Default
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?fb_ref=Default

Why am I telling you all this? Well, mainly because this will affect tenants too, and massively so. Just to survive and remain standing still, the rent on XXX will have to rise by 22% to £XXX per month, which I am sure you will find unacceptable, and personally, I do not want to raise it to that either, but I may have to, or face bankruptcy or a forced sale, if the government’s proposals become law.
How can you help? Well this measure will, as you can see, affect tenants massively, as well as landlords if it were to go through. It will become law in November so it is not too late to do something about it now. A petition has been started and has already attracted 22,000 signatures in a month. Please consider signing it. This is the link : https://petition.parliament.uk/petitions/104880
You could also write to your MP, expressing your disenchantment with the proposed legislation, and asking him to Lobby on your behalf for a U-Turn on the measure, before it is too late.

Many thanks for your time in reading the email, and I hope is all well with you otherwise

Sincerely

Ian M B Simpson
Landlord

@Ian

Nice letter; though a bit long. Many will not read beyond the first few sentences/paragraphs, and not get to the bit where you ask for them to take action.

I am not sure many Tenants would understand some of your terminology "highly geared portfolio" and know what the acronyms are, and get lost along the way. Will they understand the difference between theoretical profit and actual profit? I suggest saying the Government are proposing to increase the tax to well over 100% which is unsustainable.

I would keep it shorter and put all the references at the end.

Just a couple of posts I have left on the NLA web site re; their briefing paper to the treasury. (Awaiting moderation)

First post:
The NLA briefing paper appears to be a very well written and thought out paper and I applaud the hard work that has gone into producing it. I would make the following comments:
a) I would like to have seen content whereby the NLA CHALLENGE the treasury to provide a much more detailed explanation of exactly why they are introducing this removal of business expense. So far, I am only reading that this is being introduced to “level the playing field with home owners” I would push for a COMPREHENSIVE EXPLANATION of this point as we all know it’s a ridiculous statement, and as they produce their explanation, the stupidity of their suggestions would become even more apparent. If they just want extra tax then force them to say so.
b) I would like to have seen content whereby the NLA challenge the treasury about the revised method of actually calculating taxable profit, this will be changed in future so that ALL FINANCE COSTS WILL BE EXCLUDED IN THE CALCULATION OF PROFIT and any interest expense tax relief ONLY APPLIED AFTER THE CALCULATION OF TAX HAS BEEN CALCULATED. This revised calculation of profit will throw / push ordinary tax payers into becoming higher rate tax payers, higher rate tax payers will be pushed over the £100k tax limit and so lose their personal allowance and higher rate tax payers will be pushed into becoming additional rate tax payers and pay 45% tax.

Second post:
Re: the radical lobbying suggestion as noted above: “However we might not take up some of the more radical suggestions of lobbying tactics, my favourite of which was that the UK’s leading membership organisation for landlords should never speak to the Government again on any issue concerning landlords until they capitulate”. I don’t think that this is such a bad idea. I think the writer meant that the NLA would boycott the government if talks and negotiation failed, this a valid and strategic movement and perhaps you should run it past your members on your next email survey.
I would also like to make a radical suggestion that you can add to your briefing notes that you take to the treasury: As this new tax is primarily being introduced to “level the playing field with homeowners” and APPARENTLY not about creating extra revenue income, then can I suggest that ALL of the income that is collected in the form of this new tax be donated to charities that the NLA and RLA would choose. I would first of all like to see at least 10% of the tax revenue go the NLA and the RLA each! They can use this money to offer free training courses to to their member landlords and for lobbying and fighting legal cases. At least some of the money is going back into the landlord system for the greater good of residential letting. The charities that the NLA and RLA would support should not be housing related ie shelter, as housing is the government problem and they should be addressing the issue under their own merits. The charities that we would support would create a very different image of landlords.

@Ian I agree with @Barry, letter probably a bit long but I agree with the idea of writing to tenants.

We are sending a letter with all s21's we issue, blaming the budget for their eviction because the landlord is forces to sell. The letter also has a link to the petition.

(if you are wondering why we are evicting people, its because we are converting all our single family lets to multi-occupancy hmo's or studios, to increase cashflow to pay the extra tax. So if you are a tenant and want a flat to rent all to yourself, tough-luck, because all you are getting is a room!) ... I am in London, and I predict London Landlords will either sell-up (because their properties aren't suitable for multi-let conversion and yields are too low to afford the tax), or they will convert to multi-let. As a result London tenants will only be able to rent house-shares because this is the only way London landlords can make the returns necessary to pay the turnover tax.)

(BTW, I WAS a life-long Tory who has been shafted by the people I thought I identified with. I was a Tory member but have resigned. When the EU referendum comes, I am voting UKIP)

I have just written to my MP and advised her that she will be getting a stock reply from the treasury committee labouring the Government line of " levelling field "

I have than listed the points that Mark raised without accepting that I wrong so far in not understanding what the government was trying to achieve..

I also did mention that this is not landlords complaining. As we did not complain when
last 36 months was reduced to 18 months for CGT purposes nor did we raise an issue on the with drawl of wear & Tear Allowance. This could cost a landlord 45% more tax ( rental income £100k. 10% wear & tear £10k. 45% of 10k, give extra tax of £4500.

CGT, added onto income to push a gain into 28% CGT tax bracket.

Besides, above no indexation allowance is given despite of high property price inflation, creating a fiscal drag.

Also offered to see her and informed her of the anger among landlords.

Hi. Are there any volunteers to investigate the new peers appointed by Cameron to see if they have links to property companies who would benefit from the tax grab against us? Some names in the paper today, to get the ball rolling, were: Greg Barker (former Energy Minister and friend of Dave), Philip Smith, James O' Shaughnessy, Simone Finn, Kate Fall and Baroness Chisholm. Newspapers like the Mail have been covering the issue of 'cronyism,' so if we can prove a link with cronyism and the tax grab we are more likely to get these newspapers to cover the story.
Thanks in advance.