Summer Budget 2015 – Landlords Reactions

This is the comment, I have read at money morning with a cross-comment (response) very interesting. (These were comments made under an article)

The Government should introduce a Right-to-Buy your rented house from private landlords, with the government contributing 11%, the landlord contributing 11%, and the mortgage company contributing 11%, enabling a 33% reduction in the price. --- This would be an extension of 'Right to Buy' conservative Party Policy. --- The Housing Benefit Bill in a year is the second biggest cost for the taxpayer, totaling £23.8billion almost 30% of the entire welfare bill, this is taxpayers money going to private landlords. -- The accumulation of Rent is a dangerous anomaly in a democratic society, it furthers social tension and is an extremely bad use of capital, this capital cost the tax payer twice; once in tax relief and once in housing benefit, it is an inefficient use of money, your money. --- Over the course of a Parliament the saving of say one third would be £39.6billion. --- This would further a property owning democracy creating a more stable society.

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paulgbar666, Bishops Stortford, 3 months ago
You are an idiot!! What right have you to tell me what I might do with my assets such as properties I might rent out!!?? I have a car If you haven't do you think you should have a right to buy my car from me at a reduced cost!! People like you are just deluded idiots thinking you should have any say over somebody else's private asset just cos you might happen to live in it Why should you be allowed to steal my private capital just because you happen to be a tenant!!! Communism failed as a philosophy We aren't returning to such a ridiculous concept Why don't you raise a deposit and buy your own property That is what your LL had to do to be able to rent it to you! You really are a complete and utter plonker!!

As I said, property owners wannabes will say or do anything to harm landlords.

I found these comments under this article.

http://www.thisismoney.co.uk/money/buytolet/article-3109853/Watch-landlord-tax-traps-buy-let-property.html

I wonder how it work with some of my houses:
Eg. I bought a house for £50,000 in 2007. It's still worth £50,000. I put £7,500 deposit down on it when I bought it. I've kind of broken even over the years with various tenants - some good, some bad, some voids etc. Jane Smith comes along in 2022, when Corby is in power. I have to let her buy it for say £45,000. I get back only £2,500 of my deposit and someone gets given £5,000 off me - even if she only just moved in (depending on the proposed rules) and maybe even if she's moved in and is a bad payer.
Or: another scenario:
I bought a large house in 2002 for £100,000. I put down a deposit of £25,000 (which I raised from equity from the first home I owned). It's now worth £200,000 and I let it out to students each year. One of the students wants the right to buy after moving in, so I have to let her. I effectively give her £22,000. I have a mortgage of £150,000 (because I raised equity to buy other houses - and tenants in these houses also have the same rights to buy). I have a capital gains tax bill (round figures) of £28,000. So some person who is maybe too young to have even thought about saving, or maybe even has money (maybe her parents have more than I have), gets the equivalent more or less of the deposit I put into it all those years ago...
I've got no idea whether this is the kind of scenario that would be proposed under Corbyn. All I know is that I will be well out of it before that happens. And I would take a hit on the price before I'd let that happen.

On the other hand, would he ever be elected as Prime Minister? Is he even going to be able to form a shadow cabinet? Maybe the Labour lot are just as worried as we are, if not more. I also wonder how his election is going to affect the economy as a whole. But as landlords we can't really risk waiting to see - this may be yet another push to get out of the business altogether.

Reply to the comment left by "Saeef Khan" at "12/09/2015 - 18:16":

Good article, but dated in June 2015, so before the Proposed Budget changes....if someone was reading that now they would be misled.

Further to my letters and meeting, today I received a reply in the post from my MP on HMT headed paper.

It included the usual stuff:
- ‘The Government wants a fair tax system’
- ‘The wealthiest landlords shouldn’t receive the most generous tax relief’
- ‘It is also worth noting that finance costs are not deductible for other forms of investment such as trading shares’
- ‘There are 1.6m buy to let mortgages outstanding in the UK overall, out of a total private rented sector of 4.4m’
- ‘The Government does not expect this change to have a large impact on either house prices or rent levels due to the small overall proportion of the housing market affected’
- ‘As with all aspects of the tax system, the Government will keep this area under constant review’

As (1) the govt have decided they want to target residential landlords, (2) are unlikely to do a full U-turn for fear of political embarrassment, so may be more willing to hear alternative suggestions and (3) assuming this is not just a tax grab on who they deem the easiest target in PRS (4) despite the rhetoric in their levelling the playing field between home owners and landlord, in reality the wealthiest landlords and incorporated ones will be largely unaffected by this budget move..

…I am thinking of replying (and possibly also doing a submission for the Finance Bill) suggesting that instead (NOT in addition to) an infinitely fairer and more logical proposal would be to put a small annual charge on ALL residential property that is not used by the owner as their private principal residence. Regardless of whether the owner is a sole trader or a ‘company’ or institution or Tory party sponsor etc.

Fairest way to do it would be as a % of annual rental income or sales market value or size or geographical location?

What do others think?

I imagine that some or many members of this forum are ‘companies’ so may not appreciate the above suggestion, but surely it would be a fairer way of achieving the same goal by GO?

*BTW I am a director of some property ‘companies’ where leaseholders managed to oust some very dodgy freeholders (incorporated ‘companies’). The only reason I mention this is that I have some experience of how easy and cheap it is to set up and run accounts for residential property ‘companies’.

I know contra views remain unpopular on this thread but just a few points:

1) This is not an attack on residential landlords - it is an attack on a financial model. Interest Only (IO) mortgages makes BTL feel like an investment rather than a business. No other business uses them in this way - that why it is being targeted.
IO mortgages maximize tax benefits and keep payments low which is impacts positively on an ability to buy. Expect - I repeat - absolutely expect the Mortgage Review to completely stop IO loans and that could be retrospective too.
Many LLs have a sensible level of debt on repayment mortgages and whilst they will be impacted upon - they can adjust.

2) Comparisons to 1930s Germany, 1917 Russia and Zimbabwe under Mugabe are not helpful. They show an unparalleled level of this sense of 'victimisation' which isolate this thread and any empathy from many other LLs. The lack of challenge on this thread when comparisons are made is more shocking than the person making the statement.

3) I am a LL but understand that there are many out there who cannot buy there own homes due to price and very genuine reasons. I have the decency to be grateful for what I have, to expect tax, regulation and economics to go against me - and not to moan about it.

3) Good work on the petition - focus on that rather than the screeching and the wailing.

I may chip in again when you get to page 800. In the meantime I will carry on repaying the relatively small mortgages I do have.

Reply to the comment left by "Mark Shine" at "12/09/2015 - 19:31":

Tenant tax , that would certainly get the petition moving !

Reply to the comment left by "adam prospect" at "12/09/2015 - 19:52":

It is normal to feel 'victimised' when you are singled out for no legitimate reason and the Government proposes a policy to run your business into the ground and tax you on a fictitious income. If you don't like us talking about the devastation many of us feel to be unjustly targeted in this way I suggest you don't look at this thread. You clearly have no empathy.
And please cut out the inflammatory language - i.e. 'screeching and wailing' It's offensive, it shows the animosity you feel for us and it is clearly an attempt to whip up some kind of bullying against me. I detest bullying and bullies.
Also: don't give us claptrap about it being a move against a concept. You wouldn't say that if you were in the same position as some of us. Again, you show your complete lack of empathy. Personally I don't have to experience the exact same thing as someone else in order for me to feel sorry for them.
It's also nonsense to deify repayment mortgages - we've had no trouble paying our interest only mortgages - some of us for decades - and it is these which have enabled us to increase very necessary housing provision in this country. Had they not been available only a fraction of the houses we now have would exist.
If you and others feel that FTBs are thereby placed at a disadvantage and the Government agrees, then they need to talk to the mortgage lenders about this and stop any new ones from being issued. Of course, much building will then come to a standstill, just as it will with the tax grab.
And if this thread is 'isolated' as you claim, how come it has run to 400 pages? If by 'isolated' you mean that people like you who feel an intense hatred towards landlords with interest-only mortgages (a very specific target for your hatred) don't feel welcome to post on here, attacking us, then I think it would be a splendid isolation indeed.

Reply to the comment left by "Mark Shine" at "12/09/2015 - 19:31":

Hi Mark.
I wouldn't be against you suggesting that. It is also good that you are an individual and not an organisation - because you can basically suggest whatever you like without having to take it through a committee. That's your right.
Of course I can see no logical reason why we should have a levy like that when businesses across the board don't - but at least with your suggestion it would spread the load. It's a kind of damage-limitation. I can't see them taking it up as it would affect their cronies, but it kind of shows we are willing to put our hands in our pockets, as long as we're not completely singled-out (well, still singled-out, but a bit less!) and it's the sort of alternative we can publicise and it wouldn't do us any harm. That's my initial response - although I may change my mind if someone else comes up with a convincing argument against or it may lead on to yet another idea. So it's good that you're starting this debate about alternatives here.