Summer Budget 2015 – Landlords Reactions

Mandatory reporting of landlord details by estate agents to HMRC.
I didnt know estate agents had to do this.

Experienced investors and amateurs[edit]
The new landlord friendly legislation afforded by the 1988 Housing Act, coupled with the introduction of competitive mortgage products, brought new investors into the property market.

They have been attracted by rental incomes, rising capital values and a perception that the risk in housing is lower than for equity based investment. More recently, investors have seen buy-to-let as an alternative to their pensions, especially in light of the negative publicity pensions have received. However, the sector is still dominated by professionals.

The Office of the Deputy Prime Minister's (ODPM) Private Landlords Survey, which appears in their English House Condition Survey, is the most comprehensive study of the private rental market. The survey is published every four years and the last three editions illustrate the changing structure of private rented sector ownership. The ODPM survey does suggest that there has been significant growth in the number of small scale landlords owning up to four properties. However, further analysis of this data reveals that the private rented sector is still dominated by professional landlords with large portfolios of property.

Analysis undertaken in 2010 by the Department for Communities and Local Government (DCLG) found that although 95% of landlords own fewer than five properties, this accounts for just 61% of all privately rented dwellings. At the other end of the scale, the 3% of landlords who own more than five properties account for almost a quarter (22%) of privately rented dwellings.[24]

Buy to Let and negative publicity[edit]
Buy to Let has experienced much poor press over the past few years, with many commentators believing that it has contributed to rampant house price inflation. Such is the popularity of Buy to Let that estimates have recently put one in three new properties in London being bought by investors. Oxford Economics stated in August 2007 that buy to let is "undoubtably contributing to the overvaluation of housing".[9]

The government has also taken steps to reduce perceived tax evasion amongst BTL landlords over recent years, measures include:

Compulsory third party deposit protection schemes which report to HMRC.
Mandatory reporting of landlord details by estate agents to HMRC.
Compulsory licensing of homes in multiple occupation (HMO), HMRC have access to data.
Dedicated HMRC tax taskforces deployed to hunt down tax evading landlords.

Hi All,

It seems that there is a precedent in case law for capital gains roll over relief if property is transferred into a limited company in the Moyne Ramsey Case.

http://www.tribunals.gov.uk/financeandtax/Documents/decisions/Elisabeth_Moyne_Ramsay_v_HMRC.pdf

May not be suitable for myself - but maybe for others.

Richard Lambert, NLA chief executive officer, said: “Local councils are failing to support a growing number of tenants who are most in need of a home and the proportion of landlords willing to let to tenants in receipt of benefits has halved over the last few years. Their perception is that the risk is too great, and it’s easy to see why if payment delays appear to be inherent within the benefits system.

“The pressure on those private landlords who have remained in this part of the market will be seriously increased by the government’s benefits freeze and the devastating changes to mortgage interest relief announced by the Chancellor in July’s Budget.

“Ultimately, the people who suffer will be those who have almost no option other than the private rented sector for a home and yet find that they are unable to rely on their local council for the support to which they are entitled.”

The figures from the NLA also show that:

Around 45% of all tenants in the private rented sector receive some form of benefit payment
One in three (30%) receive local housing allowance (LHA), Universal Credit or Housing Benefit.
A quarter (26%) receive Council Tax benefit
One in ten (11%) receive Disability Living Allowance
3% receive Job Seeker’s Allowance

Reply to the comment left by "KATHY MILLER" at "15/09/2015 - 08:59":

You've found some great stuff there Kathy. We are going to be able to use these statistics. You did better than the Treasury did when the freedom of information requests went in and they were asked about the number of properties that would be affected. I'm going to save some of these statistics for letters to newspapers etc. Thanks very much.

Another article in today's Daily Telegraph by Richard Dyson (pave 25), and online http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11865435/Do-buy-to-let-investors-REALLY-have-a-tax-advantage-over-ordinary-homebuyers.html

It demonstrates that an FTB would end up with £941k compared with £577k that a BLTer would end up with after tax. I am not sure the comparison is 100% accurate but its probably close enough.

Reply to the comment left by "Barry Fitzpatrick" at "15/09/2015 - 12:01":

Hi Barry

I believe that its a smoke screen by GO to say we have an advantage over FTB . I believed its been done to get Joe Public to back his plans with least objections. It also makes it look like he is helping FTB.
Just a very political move hes done to push us out and get more money .
Its good that the paper is showing this is incorrect..

What we need to do is show the effect this could have on all businesses if he manages to get it passed.

Reply to the comment left by "KATHY MILLER" at "15/09/2015 - 09:26":

Well done Kathy. You have done great job.

The Telegraph article is another great resource and one to show our MPs and others. Whenever any of us receives an email or sees anything in the papers which states landlords are at a tax advantage we should all reply and send a link to the article. Let's show the bare-faced lie up for what it is. The figures in his 'now for the maths' section are quite graphic and it is simple to see the massive advantage owner-occupiers enjoy.
Well done to Richard Dyson again.
The actual article itself took a bit of finding in the paper copy because I thought it would be in the separate Money section. I think it was good that it was in the main body of the paper instead as more people may see it.
Richard also mentioned the fact that 'two million small-time landlords also now find they are figures of hate,' because we are blamed for 'pushing up prices.' It would be good if he can also demolish that myth in a subsequent article - as we have found evidence that landlords have very little effect on upward house price inflation.

As an aside, if you click on the link to the article, towards the bottom you can click to receive the Telegraph newsletter on personal finance, which some of you may want to do.

Now, we all know my Maths isn't brilliant, so correct me if I'm wrong, but if in Richard Dyson's example - which is may be as good as any (it is premised on a 1% difference in interest rate paid between OO and LL and I don't know if those are the current differentials on average - but the capital gains tax is the biggest issue), if the FTB/OO PROFITS (yes, makes a profit!) of £941,460 and the LL makes a profit of £577,434, then that means the OO more-or-less has a 40% tax advantage over the LL. That might be an easy way of saying it when we're arguing the case, although I like the actual figures as well because they show the OO makes £364,026 more, just with one £300,000 house.

I wonder what else we can do with this - how we can try and get the Treasury and/or HMRC to respond to these figures... Also maybe if someone is doing another submission the bare facts of this could be stated, with a reference to the article? It would be really good for the Public Committee on the Finance Bill to see this.

For information: A written question asked in Parliament yesterday:

'Ian Murray Shadow Secretary of State for Scotland
To ask Mr Chancellor of the Exchequer, what assessment his Department has made of the potential effects of the measures to restrict finance cost relief for landlords, announced in the Summer Budget 2015, on the level of housing demand in (a) Scotland and (b) the UK.
Hansard source
(Citation: HC Deb, 14 September 2015, cW)

David Gauke The Financial Secretary to the Treasury

HM Treasury expects a minimal impact on the supply of property in the private rented sector in Scotland and the UK from changes to restrict tax relief on finance costs. Fewer than 1 in 5 landlords are expected to pay more tax as a result of this measure and it will be introduced gradually from April 2017 over 4 years to give landlords time to adjust. The Budget also announced increased Rent a Room relief, which can help to increase levels of private rented accommodation.

The Government is taking significant steps to support housing supply with housing starts at a 7 year high. Overall, the OBR believe the impact on the housing market will be small and, taking account of the other measures in the Summer Budget, have not adjusted their forecast for house prices.'

[How depressing that they just keep repeating the same claptrap. I don't know if 'Ian Wilson' is going to pursue this with David Gauke or not, or just accept it.]