Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Phil Ashford" at "02/09/2015 - 16:22":

Hi Phil

Congratulations, you have clearly put a terrific amount of work into your article: http://www.comfortlettings.co.uk/blog/2015/08/29/budget-2015-buy-to-let-mortgage-interest-tax-consequences

Unfortunately, the spreadsheet that you link to is inaccurate when a rental loss is made. Firstly, the loss is deducted from other income which, as you know, is not allowed. Secondly, “relief” is given on the full amount of finance costs, but should be restricted to the deemed rental income, which is lower

Also, using different amounts for personal allowances in the two years distorts the comparison whose purpose is to show the effect of disallowing finance costs.

The spreadsheet that Alex Caravello developed (available from the top of the introduction above) deals with losses correctly.

Reply to the comment left by "Ros ." at "03/09/2015 - 17:09":

I agree Ros, I have never been aware that I was competing with FTBs....maybe it's a new phenomenon. I was stunned by what my daughter said, especially as she knows how I buy houses. It does just show how bitter FTBs are, and I really don't think it's all down to us as BTLers.
It's a really complicated thing, young people not saving, the Mortgage Market report, zero hours contracts,etc etc. My partner was saying that when he bought his first property , percentage wise it correlated with his wages much the same then as now.
FTbs get lower interest rates on their mortgages, but can't get interest only ones.

Reply to the comment left by "Roger Rabbit" at "03/09/2015 - 17:13":

I think they are just making it more and more difficult for BTlers, in order to appease the anti-landlord lobby....and my daughter, who is not normally stupid, is being won over by them.

It makes me so cross.

I suspect nothing would change because we all know the real problem is that not enough properties are being built to accommodate an ever rising population. Net migration of over 300,000 this year alone, and that's not even including all of the younger generation leaving home/university to find accommodation.

The only useful thing would be that first time buyers could stop blaming landlords for all of their woes.

Not one of my tenants is in the position to buy or wants to buy a property. People actually do want to rent. The workforce is much more transient than it used to be. We need to get away from this obsession of home ownership. They seem to manage perfectly well on the continent.

If this tax proposal does go ahead is going to make the problem much worst. However, the only saving grace for us will be much higher rents due to lack of supply.

Shame high density developments such as high rises are so unpopular outside of London. With a good design I think they could be build as proper communities rather than having a ghetto stigma. Less land usage, nice spacious accommodation yet benefiting from economies of scale. Just my solution to the housing crisis. I'll shut up now...

Reply to the comment left by "Manchester Landlord" at "03/09/2015 - 17:40":

Agreed. I have tenants who earn more than enough to buy their own property - even in my part of SW London. I'll give you a couple of examples. 1) An NHS Registrar who has been my tenant for three years now. He doesn't want to buy as he's not sure whether to retrain as a GP which may entail a move to another part of London.
2)A Slovakian national who has lived in the UK for the past 5 years. He works as a Risk Analyst in the City. He also has been my tenant for about four year years. Since moving into my 2 bed flat, he and his partner now have two children. They are now considering buying their own property.

If I was to take a guess at the single most important obstacle to people buying their own house, I'd say it's the deposit. In South Wales it is easy to get a pretty good house for under £100,000. But I think it is the £20,000 deposit that is stopping them, if indeed they want to settle in the area where they currently are (many aren't sure). There are also £50,000 houses to be had and again, the £10,000 deposit is the obstacle.
The way I saved the deposit for my first house was by moving back in with my Dad when I was about 25 and saving up. I was on a low wage but good with money. If I had decided I needed a house for myself at that stage then I would have rented and spent so much on rent and bills that it would have taken me a lot longer.
The idea that I would somehow blame landlords if I didn't save would not have occurred to me.

Reply to the comment left by "Appalled Landlord" at "03/09/2015 - 17:17":

Thank you.

I've passed on your message to the website owner.

Reply to the comment left by "Appalled Landlord" at "03/09/2015 - 14:43":

Hello Appalled,
I read the letter and the point number 1, and I did not interpret it the same as yourself. The point number 1, was that the RLA were asking that the chancellor does not change the methodology of how our taxable profit is derived at ie so that we do not get taxed on turnover. They were asking that what ever amount of interest we can claim (for both 20% and 40% tax payers) is deducted from our gross profit so that only tax is paid on the net profit rather than a tax allowance that is knocked off our final tax bill. Thus 20% tax payers not getting pushed into becoming 40% tax payers etc.
I thought it was a great letter and the government do not deserve the respect that it shows.

" most houses that she had tried to view have already been snapped up by ‘investors’'.

Agents, know the investors are experienced & do half the work for them i.e. know all the ropes. FTB are on a leaning curve & Agents realise this, a lot of them are on zero hour contracts, minimum salary etc.

The new MMR rules also make it difficult for the own occupier to obtain a mortgage. Buy to let is unregulated and lenders have a better margin.

" come on Rightmove that morning, and the Estate Agents said they had already been sold to an investor "

I understand it takes about ten days to prepare, get approved load up on the net.

Besides in my experience the estate agents never tell you who the property is sold to & for how much.

Her partner also said that he had acquaintances who are Estate Agents who directly call ‘investors’ when a new property comes on, without even listing them on the web.

Again, for a quick & hassle free sale & dare I say kick backs.

" To be fair, we have all been told that the best way to buy properties at a reasonable price is to get to know the EAs."

The best way to buy is to know the agent have some chemistry, show him you are serious, have a offer letter, proof of deposit name of solicitors, besides make a pain off yourself, a nice way of course & don't make silly offers while the market is buoyant.

If the property needs work the agent knows that it will get stuck with the lenders & if there a retention the buyers may not be able to stretch.

Last year I sold two flats one to first timers & the other to a couple who were going to down size upon their retirement. In the mean time they would rent the flat. So are they investors ?.

I have recently exchanged contract on a property for which I made an offer in December 14. Yes, December 14. There were some complexities with the property.I had never done any business with this agent, The agent could see that I knew what I was doing. I had everything lined up and between myself & my solicitors we saw the deal through in nine months.

"So we may not even realise that we are competing with FTB (if in fact we are) "

Indeed, life is all about competition it maybe for jobs, first prize in the school, getting the ticket to gigs, catching a crowded train or the promotion at work which could help us to get a higher multiple or put us into 40% tax bracket.

"imho changing the tax system is not the way forward. There must be another way"

Yes, bring back "Miras" for first time buyers and not the spin of ISA with a limit of
£15,240 on average interest of 1%, build more, a clear and honest distinction
between affordable or otherwise.. In London there is no such property that is affordable.