Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Roger Rabbit" at "21/09/2015 - 23:01":

Roger. I think the national picture is more relevant as a basis for national policy than the picture in Newham (I don't even know where that is).
Your statement about highly-leverage landlords not owning many properties is also completely wrong. And anyway, even if it were true, it would never make the 'bonkers tax' fair. Anyone with more than one brain cell can see it is completely outrageous to tax people on a fictitious income. It's absurd and ridiculous and anyone who defends it, once they understand it, is out of their mind (or bad).
As Richard Dyson said, it is the kind of thing you would expect in a third world country run by a lunatic dictator. I suggest those who think it is good go and move to one of these countries; the policy has no place in the UK.

Reply to the comment left by "BTL INVESTOR SCOTLAND" at "21/09/2015 - 22:11":

Hi BTL I S

I agree, this is a very good submission.

For those who are interested in his workings, he should not have restricted the relief. The deemed profit plus earned income minus the personal allowance in 2020/21 will exceed the finance costs, so relief on the latter will not be restricted.

This error does not undermine his points though. The tax in 2020/21 for the married person would be £7,100 and for the single person £32,960.

Reply to the comment left by "Manchester Landlord" at "21/09/2015 - 22:58":

Hi Manchester Landlord.

Its a good point you make about flats being built for landlords to buy to let.

However I still don't see bankrupsy or mass defaults. Most people even in negative equity tend to keep up payments. And if landlords that will be double true as they have their own assets at risk too.

I think the fact that most rentals are owned out right or that most of the rest are landlords with just one property means that there will be no mass Exodus

Are any landlords here actually selling up who would not have sold up over the next 5 years anyway?

Reply to the comment left by "Ros ." at "21/09/2015 - 23:21":

Hi ros. We both agree that the turnover tax is wrong.

I'm just not convinced its going to have a big impact in landlords selling up to avoid it.

Newham is a London borough. Yes it would be good to have national figures but I haven't seen any but in Newham's case its clear most landlords have just one property and they hold the majority of the stock.

Most people seem to think this is more or less the case nationally

Reply to the comment left by "Roger Rabbit" at "21/09/2015 - 23:47":

roger see my post at bottom this page

http://www.property118.com/budget-2015-landlords-reactions/76164/comment-page-439/#comments

Reply to the comment left by "Trendo " at "21/09/2015 - 23:19":

Trendo my apologies but try to keep things shorter than a book I lost the will to continue half way through. I think you examples are not at all typical

Especially the 5% interest on a 78.5% mortgage

If you take IMO a more real world example you would have a 75% mortgage on a 3% deal. And a more realistic example is where the mortgage is less than half the rent. So just to keep the numbers round £5k fiannce for a £10k rental. Currently post tax you might keep £2.5k after all costs and this will fall to about £1.5k after costs.

The figure is less but its still positive cash flow. Of course if you take on a 85% LTV mortgage and pay 6% you could argue its neg cashflow but that's not at all typical

And finally I think even if the amateur landlord with one buy to let has to pay out of his pocket for a while they will do it in the belief/hope of capital gains and rental increases. They main job will give them the funds to continue.

Also another reason to continue for them will be the very real cost of thousands of pounds (maybe tens of thousands in London where stamp duty is a lot higher) if they ever wanted to get back into the market

Oh and finally a lot of one property landlords simply wouldn't go through the trouble of selling to save a few pounds a week in negative cashflow

The way I see it is that a 1% increase in interest rates would be a bigger hit to the majority of BTL Landlords.

Would a 1% increase in interests rates really cripple your investments/business? In the vast majority of cases I think that's a no

Of course I'm not arguing the changes are good, they stink, but I simply don't think there will be many sales due to these changes that wouldn't have happened anyway

Reply to the comment left by "Appalled Landlord" at "21/09/2015 - 22:54":

Appalled Landlord I agree the recommendations are weak and not what we want. A number of good points are however made in the submission by the Association of Taxation Technicians.

- has potential to result in a dramatic increase in the effective rate of tax when measured against actual profit

- could create tax liabilities that exceed the amount of the actual profit

- creates collateral tax liabilities because of the interaction with higher income child benefit charge

- the point about the retrospective nature of the tax is also well made.

Reply to the comment left by "Roger Rabbit" at "22/09/2015 - 00:01":

Hi Roger, not my example it was direct from HMRC !

There are plenty of porfolios running at closer to 85% LTV , many locked into 5- 10 year fixed rates.

"And finally I think even if the amateur landlord with one buy to let has to pay out of his pocket for a while they will do it in the belief/hope of capital gains and rental increases. They main job will give them the funds to continue."

Why would a BTL pay out of his salary to subsidise a tenant living in his property ?

..whilst also waiting for the enevitable interst rate rise that you also mention NOT instead of but AS WELL AS the tax hike ..why would anyone want to do that ?

...for a while you say ..unttil what the interest rate goes down ? or this tax proposal is removed ..or did you mean he has saved up some cash from his profits to pay down borrowings ? How does that work when in negative cashflow ?

"..to continue" .to what bancrupty -

There are people who will go bancrupt if they dont react , there are people who will go bancrupt regardless, but the really sad thing is that most LL wont understand what happened to them until it is far too late. This will be due to listening to the vast majority of other Landlords who also dont "get it" and accountants that havent delved past "dont worry, you will just have to pay a bit more tax" or " dont worry you are a standard rate taxpayer - this wont affect you"

There are lots of people on this forum who will be very seriously affected. The trivialisations you make are a huge problem

@mark "Your comment is awaiting moderation"

& no edit feature for me !!!