Summer Budget 2015 – Landlords Reactions

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

That's one heck of a rant and the points are very well made.

A few extra paragraphs and shorter sentences would make it much easier to read.

Once it is tidied up I think you should submit this to Government.
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Reply to the comment left by "Jon Pipllman" at "09/09/2015 - 09:31":

It will never become an institutional investment in any part of the country other than decent parts of London. Most parts of the country will be deemed poor security and far too labour intensive, as Trento eloquently pointed out earlier. The big players will always seek the path of least resistance.

In poorer quality areas - which I operate in, and deal with lots of social issues as I'm sure many do here, there will always be a requirement for private buy to let landlords to take up the slack from local authorities. Local authority possession neither the will nor resources to build what is required, and private developer will always go where there is most profit.

As an example, in my area of operation there is a massive demand for one bedroom flats. Property developers no longer build them because they are no longer financially viable, and the local authority have demolished what stock they had and built family homes. Up until the Summer Budget I was buying one bedroom flats and housing vulnerable tenants in them - this tax grab has stopped that. I was even in the process of negotiating on a deal to build 15 one bedroom flats - that has been shelved. Who is going to house them now?

There is a housing crisis, and the sooner that the government see that private landlords are part of the solution - not the problem - then the better for everyone.

Reply to the comment left by "Barry Fitzpatrick" at "09/09/2015 - 09:38":

This I am considering. If I am forced to because of this tax change, I will evict families and rent all separate bedrooms to individuals - probably to asylum seekers via Serco. I don't want to, but it may force my hand.

Reply to the comment left by "Manchester Landlord" at "09/09/2015 - 09:52":

Is the Y cube in Mitcham is an example of what is to come from institutions?

http://www.ymcalsw.org/ycube/

Supposedly £30k per unit cost and £148 per week rent...

Not quite as charitable as the provider might have people believe - all rents likely paid by LHA too I suppose

Hi Mark Brown again.

On second thoughts it might be worth a few people sending in the response that BTL wrote to the petition response. Maybe someone can find the link as I'm on my way out?

That would then be sent to the Petitions Committee (and not the Public Committee). That could be the way to go - with people adding personal stories to it maybe?

Reply to the comment left by "ray selley" at "09/09/2015 - 08:49":

@Ray, I wouldn't be too concerned about that aspect.
Institutions, investors and developers have been pouring £m's into the purpose built Student Accommodation 'pods' for many years now.
In my own borough in London alone there has been around 10 of these blocks built in recent years.
Only the very wealthy and foreign Students are taking them.
The reason being is two fold, the price for one of these rooms is between £900-1300 PCM. A room in a 5 bed HMO is £475-£525 PCM.
Of course the former is all inclusive, whilst the latter will attract utility bills of around £35 per month per room.
Over 3/4 years that adds up to a massive difference in debt.
In addition, Students are very tribal and like to rent shared houses with friends.
I think I posted earlier about the new flats built in the former Athletes village in Stratford? More or less the same is happening there.

Reply to the comment left by "Ros ." at "09/09/2015 - 08:13":

I've received and email from David Budworth from "The Times" asking for a bit more info and to talk later today. I will talk about the principles and ramifications rather than my own personal circumstances when we speak.

I've sent him the "All You Need To Know" document and a covering email as follows:

This proposed measure attacks the fundamental business principle that tax is due on profits (and profit is revenue less legitimate expenses). So mortgage interest is a business expenses not tax relief otherwise you could deem any business expense made my ANY business could be deemed not allowable for tax purposes. The supposed “tax relief” of 40/45% is only due to the fact that some private Landlords are being taxed on their profits at this level (incorporated Landlords, and basic rate Landlords are only taxed at 20% and therefore only receive “tax relief” at 20%).

The Chancellor made great play that it makes it fairer for First Time Buyers but this is an obvious crazy comparison (the Institute for Fiscal Studies, IFS, describes this comparison as “plain wrong”). But many Landlords buy properties that a FTB wouldn’t buy (e.g. old hotels, off-plan properties, etc.). The real barriers for FTBs is having sufficient money for the Deposit, and passing the MMR criteria set down by Lenders ( of course BLT Landlords also have to meet Lenders criteria of maximum LTV, & rental coverage which are also these days stress tested for interest rate rises). Landlords do not get CGT when they sell (vs. principal private residence relief that owner occupiers receive), nor are there any Help-to-Buy schemes or Help-to-Buy ISAs. The IFS has publicly stated that private Landlords are more heavily taxed that home owners. By singling out private Landlords does nothing to help FTBs as this measure will not affect very wealthy Landlords who buy without mortgages, or incorporated Landlords (many private Landlords will probably make future purchases under the auspices of a limited company anyway).

The effective rate of tax for Landlords with only a modest number of properties, who are Landlords trying to bolster the meagre returns on pensions or to fund children through university, can be 60%+ or more (more than the 45% that £150,000+ earners have to pay), and in the case of more heavily leveraged Landlords this can be in excess of 100% i.e. the Government takes ALL of the profit and then some more!!

Like any other business that is considered to be a going concern ALL of its costs (including taxes) have to be paid out of the revenues it receives (i.e. rent) if not it will not be viable and eventually go bust. If costs go up then rents will have to rise for the business to be sustainable, therefore Tenants will the ultimate people to foot the bill for this tax grab (or face losing their home if the Landlord goes bust).

If the Government truly want to make the tax system fairer (as they have previously stated) then rental profits (not this proposed inflated/fudged profit) should be taxed in the same way irrespective of the trading style (sole trader, partnership, limited company, etc.) of the business that owns the property – that would be fair.

The Government has spun this (as they would) to play down the ramifications of this measure, and make Landlords look like bad guys receiving massive Government handouts. The reality is very different and potentially 1m Tenants (and their families) could be affected, with knock-on impacts on letting agents, and tradesmen who support the private rental sector.

Reply to the comment left by "Barry Fitzpatrick" at "09/09/2015 - 10:40":

Hi Barry

I suggest the number of potentially affected tenants is far greater than 1 million.

These tax changes hit landlords with the most finance. It stands to reason therefore they are the owners of larger portfolio's.

The 80/20 may well apply, i.e. that 20% of affected landlords may well own 80% of property. HMRC have confirmed they don't have the figures for the numbers of tenanted properties the tax changes will impact. That alone is incredibly dangerous.

By all means volunteer my contact details to David Budworth. He may remember me, we have worked together previously on articles covering the West Brom Mortgage Company case.
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The FT have told me I can use their site free today so I checked that it had really quoted the ING report to the effect that nearly 60% of UK homeowners said it would be good for society if house prices fell. I find that figure hard to believe.

The article is at http://www.ft.com/cms/s/0/cd310978-522d-11e5-8642-453585f2cfcd.html#axzz3lEgeaJS8

The graph indeed shows just under 60%. The number of renters who would consider it a good thing was about 75%.

Alongside the article the FT has its own poll. It does not distinguish between owners and renters. So far the vote is 87% in favour of a price fall.

Reply to the comment left by "Appalled Landlord" at "09/09/2015 - 11:58":

Wow the HPC rabble must have been busy setting up fake email accounts and voting this morning then!
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