Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Barry Fitzpatrick" at "08/09/2015 - 22:09":

I've got it too.

Hopefully 10,000 landlords will not email me their copy this time! LOL
.

I’ve just read part of the Finance Bill, link provided by the Petitions Team: http://www.publications.parliament.uk/pa/bills/cbill/2015-2016/0057/16057.pdf

Clause 24 starts on page 36, with the heading “Relief for finance costs related to residential property businesses.”

It covers 3 pages. It refers to “property business” 16 times. It acknowledges that we run businesses.

Reply to the comment left by "Appalled Landlord" at "08/09/2015 - 22:18":

Page 36 says:

“272A Restricting deductions for finance costs related to residential property
(1) Where a deduction is allowed for costs of a dwelling-related loan in
calculating the profits of a property business for the tax year 2017-18,
the amount allowed to be deducted in respect of those costs in
calculating those profits for income tax purposes is 75% of what would
be allowed apart from this section.
(2) Where a deduction is allowed for costs of a dwelling-related loan in
calculating the profits of a property business for the tax year 2018-19,
the amount allowed to be deducted in respect of those costs in
calculating those profits for income tax purposes is 50% of what would
be allowed apart from this section.
(3) Where a deduction is allowed for costs of a dwelling-related loan in
calculating the profits of a property business for the tax year 2019-20,
the amount allowed to be deducted in respect of those costs in
calculating those profits for income tax purposes is 25% of what would
be allowed apart from this section.
(4) In calculating the profits of a property business for income tax purposes
for the tax year 2020-21 or any subsequent tax year, no deduction is
allowed for costs of a dwelling-related loan.
(5) Subsections (1) to (4) do not apply in relation to a property business
carried on by a company otherwise than in a fiduciary or representative
capacity.
(6) For the meaning of “costs of a dwelling-related loan” see section 272B.

No 4 2020-2021 says 'no deduction'.....or am I reading it wrongly?

Just received this email from Anne Ashworth, Assistant Editor Property and Personal Finance at The Times. Here's the link to the article: http://www.thetimes.co.uk/tto/money/article4547782.ece

Barry,

Thank you for your letter. You may have noticed that my deputy David Budworth wrote about this last Saturday. We are returning to the subject this Saturday. Would it, perhaps, be possible for him to talk to you?

Anne

Anne Ashworth
Assistant Editor (Property & Personal Finance)
The Times
t: 020-7782 5083
@anneashworth

Editor of Bricks & Mortar and Money

Reply to the comment left by "Lisa Stux" at "08/09/2015 - 22:24":

Hi Lisa

You are reading it correctly. 2020/21 is when finance costs will be disallowed 100%.

Reply to the comment left by "Appalled Landlord" at "08/09/2015 - 22:58":

Sorry............I'm obviously too tired!....It's the wording that confused me......

When 100% is disallowed, they kindly let us reduce our tax by the 20% back.....I'm assuming they are not saying that the 20% won't be allowed on 2020....I probably didn't read far enough.....typically me!

Reply to the comment left by "Barry Fitzpatrick" at "08/09/2015 - 22:33":

That sounds really promising Barry. I wonder what tack they might take... you might want to think about what tack you/we want them to take - to be prepared like a politician to say what you want to say, rather than answer actual questions

Journalists like to have examples and case studies, so maybe you could let them know about how it would affect you personally, or if you don't want to do that, find someone for them who will? Just trying to think a bit about it. This could be very important.

(I tried to link to the article but ended up going to an article about broadband.)

Lisa/Appalled: yes, I spotted that and thought it was weird how GO has announced it as 'reduction to 20%' when it is a reduction to 0%. Yet another annoying thing - something that should be clarified though - maybe with Megan Shaw? The thing stopping me is that I want to focus always on the whole thing being reversed rather than focus on the crumbs after they wreck our businesses.

Very interesting point, Appalled, about the number of times they say 'business.' The whole thing is one big contradictory mess.

Reply to the comment left by "Jon Pipllman" at "08/09/2015 - 21:01":

Very Blurred indeed.

Here is a quiz for you:

a) I know of an individual LL who works 7 days a week, employs 2 full time staff and has a rent role in excess of £1000 a day. He is a sole trader, he holds HMO licences in his own name, does advertising , viewings, referencing, inventories, bond protection, all admin, checkins, check out , manages properties, maintenance, accounts, handles bad debt, is an upaid social worker to many tenants, deals with HB admin, bond disputes, repairs , damages, improvements, decorating, refits, furniture and white goods replacements, cleaning, epcs, gas certs, periodic lecky certs, emergency light cers, smoke /fire alarm certs, property inspections, he is also on call 24/7 for tenants who arrive from around the world to move in at stupid oclock, drunk tenants who lose their keys at 3 in the morning. He has also learnt how to deal with alcoholism, drug addicts, a lot of people who dont speak english very well, who actually think gas electric water and internet access are a divine right, show foreign tenants how to open and lock a simple double glazed door and window (many times) educate the masses on exactly what condensation is and what causes it, also to educate some people from various parts of the world that a camp fire in the middle of the lounge tiled floor is actually very dangerous, that a UK toilet is a permanant feature of a bath room and not just a awkward cover to the hole some tenants would like to squat over to perform their ablutions, that no matter what, he will have to show some compassion and write off small amounts of rent ocassionally as it is far more efficient than engaging in the uk legal system designed to prolong and further push a tenant into debt before helping them to sort themselves out financially & re-home them, to work with the home office, private companies and local coucils on the interior spec of houses with reinforced studding to withstand regular border agency door kickings when they come to "collect" their "failed" clients. He also has to deal with the police as key holder for more than 40 properties and 120 head count, he has had 2 deaths, 3 attempted sucicides, 1 hostage situation, 3 cannabis factories ( and the police suggesting he was possibly running them), 1x attempted murder, several small tenant fires and the aftermath, he has had ex husbands terrorising him in an attempt to get to beat their wives some more, 1 tenant who broke their leg in a drunken stupor & got him in court to sue him for tripping over a dangerous drain cover at the rented property (actually fell off a wall they were climbing drunk elsewhere), he has had roofs blown off, fences down and leaks on bad storms, he has petty theft/damage of furniture and hosuehold items on a regular basis, which no tenant ever knows anything about, he has to play Dad to many youngsters who have no idea how to keep a kitchen or bathroom at a safe hygenic level, he also has to manage mortage deals and lending and carry risks of tax, law & regulation changes (there are some crazy ideas and notions flappig around out there !) He contributes in excess of 100K pa returned to gvmt in tax and helps the local economy by spending several £000 per month fed into local tradesmen and services, clearly he is supprting the Uk economy and feeds in rather thean bleeds out as he is not milking the economy for any handouts . A prime example of the backbone that keeps the uk in a position where it can help its needy (andf of course any incoming migrant needied as well) He recognises that there are people who have less income than he does, and that they cannot contribute to society at the level he is forced to do , he also recognises that there are people/co's that make far greater profits who wine & dine gvmt and pay pretty much zilch into the system, as their smart arse accountants are in cahoots with the very same gvmt to move all ther money offshore and not pay their way, but he also realises that unlike the EU , karma has no "out of date " stamp, & that the individuals who allowed this travesty to occur will certainly be brought to justice at some point, and more importsntly the "people " will get to understand that the government not only allowed, but engineered this crazy scenario.
He owns 42 properties in total ranging from 1 bed flats thru to 8 bed HMOs.

b) I know of another LL who has a ltd company & is a 100& armchair investor, using a letting agent to find tenants, collect rents, manage properties and maintenance, EVEN find and process purchase of further properties and let as above. He actually has 2 houses that he has never seen let alone entered. He lives more than 100 miles form said properties. He owns 4 student properties in total.

So the quiz :
Who is the investor & who is running a business, select a or b.

Answers on a postcard to :
George Braingone
11 Derranged St
Enchanted forest
Karma - will - bite
RU4 Real, No Sense

It is clear to see that the the individual LL/ptnshp (non incorp ) BTL LL has been singled out, picked on , discriminated against or targetted for 1 simple reason : they are indiviuals with no lobbying voice , an easy target for the government to attempt to score the most points possible: £616milion worth with the least resistance . ...exept that we found a voice and we will shout rather more loudly than most thougt. If we accept that BTL may need "cooling" somewhat or the brakes applying a little ( i actually agree that this is the case!) then why retrospectively attack just 20% of the "identified problem" (your figs george not mine) , with the raft of over-regulation that will be phased in over the next few years , Landlord lisencing, epc renting regs ,armchair LL investors (to become unpaid immigration officersfacing £'ooos in fines) and the simplified 30 page "occupation contract" (with a 50 page explanatory booklet to go with it ) to replace the AST in Wales, subletting rights and the associated chaos to accompany it, along with right to buy from housing asociatons (maybe LL too) , LL "investors forced to be regularly trained in the new fairytale rules or face yet more threats of crazy fines and penalties, It is worth noting at this point that there is mor ethan sufficient regulation in place to sort out all ..plus some eventualities..but local govermant is somewhat inefficient and inept at doing so)...ALL to be paid for by the end user THE TENANT ...not to mention imminent interest rates rises let me assure you the BTL market will almost certainly sort itself out. i actually think that as more CON voters get to understand the implications of the TENANT TAX GRAB. if they are actually implemented (this idea is mores ridiculous than the proposal itself) then the CON party can look forward to many hours of documentary TV programmes ensuring that they will not be re- elected within their natural lifetime.

i am no genius, but i am a member of Mensa (officially tested and certified) This arguement is simple:

Owning & letting a residential property is either a business or it is an investment, an identical model cannot be both. To differentiate the activity and operation of such on the basis of ownership doesnt register on any IQ scale that i know of, and is no more plausible the the emperors clothes. The BoE , economists, Fiscal orgs all disagree or at best dint agree with you george , you need to step back now and re -install the simple universal fundamental precedent : Profit = Income - expenses

There has been no vaguely plausible or intelligent reason or arguement put forward by any party or source to justify this differentiation at any point so far that i have seen. There is no logic, rhyme or reason as to why uk government see fit to just deal with 20% of the problem (1 in 5 as they see it) other than scoring political points with a very small minority and just plain simply believing they can get away with it. GREAT DAMAGE had already been done to the confidence in the goverment and its twisted spinning servants over the past few years .... the trend is unchanged i note.

Reply to the comment left by "Trendo " at "09/09/2015 - 03:02":

Okay , as we have already had a quiz , lets have a spot the difference challenge:

a) George's BTL tax rules:
Non incorpated LL= Taxed very heavily
Incorporated = Dont get taxed very heavily (no change)

b)George's BTL tax rules:
LL with black socks on= Taxed very heavily
LL with white socks on= Dont get taxed very heavily (no change)

Come on George you are killing us all waiting to understand your riddle, they say everyone is connected in 4 or is it 6 people jumps ...someone get this to George to show us how this monumental change is even vaguely justified ....please !

Reply to the comment left by "Ros ." at "08/09/2015 - 23:05":

@Ros

The article is about broadband , the piece about this tax change is tacked on to the end of the article. It's very poor positioning, if you weren't interesting in the broadband you'd probably miss it.
I am not the best example of how it'll affect a LL as I can avoid the tax increase by splitting the income with my wife.

But doing any equity withdrawal will be out of the question.