Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "David Price" at "06/09/2015 - 16:18":

@ David Price, in the post that I am replying to, regarding a NPR levy you said:

‘A non principle residence annual tax (Which incidentally has already been partially introduced as the ‘Envelope’ tax) might work in London but in rural and semi rural areas it would be disastrous.’

Are you able to shed some light as to why you believe this?

The reason I ask is because I have not yet responded to the treasury by suggesting a moderate NPR tax as an ALTERNATIVE , so am trying to understand why an NPR levy (for ALL landlords whether they be sole traders, ltd companies, institutions, UK tax domiciled or overseas etc) may be a bad alternative option?

Whilst it is true that Clause 24 is an attack on a financial model and will force highly leveraged non incorporated LLs out of business all over the UK, it will also cripple encumbered non incorporated LLs who have <50% LTV in high demand / low yield areas such as London.

PS As to the highly leveraged / risk to financial stability issue that the BOE are concerned about, this could be dealt with as a separate matter by forcing LLs on to repayment. If http://www.mortgagesforbusiness.co.uk/products/limited-company-rates/ are genuine products offering interest only mortgages for LTDs, then surely LTDs/ incorporated LLs should also be targets too?

Reply to the comment left by "Ros ." at "14/09/2015 - 18:20":

@Ros

I don't think you email is correct.

If interest rates rise and rent and other costs remain the same the HMRC deemed profit will NOT change, in fact the amount tax due will actually decrease.

Eg if gross rent is £100k, non finance costs £10k, finance costs £40k then currently the profit is £50k. Under new rules the deemed profit is £90k (£100k - £10k) and a tax relief of £40k x 20% = £8k is given.

If your finance cost increase to, say, £60k then HMRC will still deem your profit to be £90k but will give tax relief of #60k x 20% = £12k.But of course your actaul gross profit before tax is now only £30k, but your tax bill will be £4k lower.

Reply to the comment left by "Barry Fitzpatrick" at "14/09/2015 - 19:57":

Hi Barry.
I'm afraid I'm a lost cause in terms of explaining the technical side of it - Mark has tried as have others. All I know is I'll be screwed!

It reminds me of when I have told a tenant they owe my £420, even if they only owe £400 - I don't care, because at least then they might answer me to say 'I only owe £400,' and then I can say 'Well pay it then!' Similarly with the RLA they always ignore me, so if they write to tell me I've made a mistake, good. They can explain to me how I'll be living on far less money, even on a minus with interest rate rises - and that's fine by me.

Reply to the comment left by "Ros ." at "14/09/2015 - 20:10":

@ Ros

We all have our strengths and weaknesses. The fact you have a property portfolio puts you streets ahead of average person.

You have done precisely what the Tories have said they want you to do i.e. done the right thing and made yourself independent and not dependent upon the state. You've done this using the rules that the Government have put in place over centuries, and now they want to sc**w us.

Reply to the comment left by "Saeef Khan" at "13/09/2015 - 13:26":

Hi Saeef, just to confirm I do not know James Tallis nor am I about to ''Frame Roger Rabbit'' and pretend I know him either. My only other suggestion is that it is possible there is more than one person in the world who is a LL and holds a slightly contra view to you.

Didn't want to be drawn in but wanted to clarify what appears to you to be (as you say) BS. So my radical idea was:

1) moderate comparisons on the forum which may be seen by media, MPs and others and then come under serious scrutiny and undermine any argument being made, Radical I know.

2) prepare and expect for further change to minimise your risk - not a crystal ball saying another change will definitely happen - but expect and plan as though it will.

3) understand the political argument (at the moment) is directed very much against mortgage interest relief issue. So the types of suggestions like a levy on all LLs (by the Rabbit) won't address the point I believe the government is targeting - the finance model.

The uplift in BTL over the past few years politically is not where any UK governments want to be. OO has always been on all parties agenda and I am not going to list the long history that brings us to that political (not my) agenda. This is to actively cool the market and encourage OO and encourage those currently renting to buy. And the government can throw a bit of anti LL sentiment in too for votes and tabloid readers.

Main point was I guess was to confirm there is more than one person who does not entirely agree with all the views or tone on the thread. Thx

Reply to the comment left by "adam prospect" at "14/09/2015 - 22:11":

@ Adam, I agree with you that a discussion forum is unlikely to be very enlightening, thoughtful, useful or move any particular discussion area on, pointless if everyone just agrees with each other on absolutely everything - if you want that ie a single minded forum where any contrary views are quickly ridiculed if it doesn't match 'groupthink' and any contrary views ridiculed and then members guilty of holding alternative views banned, just go the HPC forums for that.

Adam what are your views on a possible NPR levy for ALL residential landlords mentioned above?

Hi the e mail address for James Brokenshire MP is

contact@jamesbrokenshire.com

please can as many you as possible get in touch with him as he does seem to be seeking genuine answers from David Gauke and has not simply accepted Mr Gauke's standard mail out.

Reply to the comment left by "Mark Shine" at "14/09/2015 - 19:30":

Reply to the comment left by “David Price” at “06/09/2015 – 16:18“:

@ David Price, in the post that I am replying to, regarding a NPR levy you said:

‘A non principle residence annual tax (Which incidentally has already been partially introduced as the ‘Envelope’ tax) might work in London but in rural and semi rural areas it would be disastrous.’

Are you able to shed some light as to why you believe this?

I provide low cost self contained accommodation for some 60 families in the allegedly affluent South East. £500 is my annual net profit per property, 1% return on investment of £50,000. Even a modest NPR levy (£250 has been suggested) would seriously erode my margins especially as there is also the threat of fixed price licensing schemes. These schemes are doomed to fail leaving some landlords bankrupt and many tenants homeless. My tenants struggle to pay the rent as it is, any increase to cover NPR and or licensing costs is beyond their means. I had a ten year programme of major improvements but this now has to go on hold because of the continuing financial attacks by government, both national and local, on landlords.

For the record I have no mortgage and am not affected by the proposed Alice tax.

This post was on
http://www.accountingweb.co.uk/article/osborne-s-reforms-send-property-spin/584698

I think that probably typifies the problem with the general public's perception these days, and I believe it's as much to do with the media (most of which is tabloid and headline grabbing) as anything.

Someone who is successful and good at their job, takes risks and works hard, and as a result earns a lot of money, is not congratulated and looked up to, instead the public want to kick them and make them out to be bad people. It's not too dissimilar to bullying the clever kid at school, and then stealing 45% of his lunch, plus another say 100% effective (tax) amount if they happen to own a KitKat, if you're following the analogy!

Thought below was interesting could we challenge the government on this angle?

Example 2 is indicative of the problem. That sort of scenario should be reclassified as a business as opposed to a BTL as the individuals concerned have established themselves in the business of buy to let and occupy their daily life in working in that framework no different then any other businessman running his own self employed entity. Consequently HMRC should have exempted them from the new provisions

Another view

What I am more concerned about here is contagion into the commercial property sector at a later date. Leasing commercial property good, leasing residential property bad ( to paraphrase Orwell) and possibly at a later date into other business activities.Pandora's box is well and truly opened.