Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Mark Brown" at "25/09/2015 - 23:09":

Mark do you not appreciate an ironic comment? My comment was intended to reflect my opinion of the intellect behind the proposed tax in a humorous manner.

Temporary restriction on interest deductibility for residential premises
(Bacon Report)
Finance (No 2) Act 1998 terminated the deductibility for interest on borrowed
money used on or after 23 April 1998 in the purchase, improvement or repair
of residential premises in the State, and on or after 7 May 1998 in relation to
foreign residential premises. Notwithstanding what the premises was when
acquired or how it was previously utilised, the restriction applied for any tax
year or accounting period during which the premises was, at any time during
that period, a rented residential premises. The restriction also applied where, at
any time after 23 April 1998, a person vacated his or her principle private
residence and turned it into rented accommodation. This restriction applied
from the date of change of use, irrespective of when the borrowed money was
used.
Finance Act 2002 restored interest relief for residential premises where the
interest accrued on or after 1 January 2002, regardless of when the property
was purchased.
It was possible to avoid the temporary interest restriction where certain
transitional conditions were met or where a particular type of residential
premises was exempted. Full details of the transitional arrangements and
exemptions are contained in Tax Briefing 32, page 30

Reply to the comment left by "David Price" at "26/09/2015 - 13:49":

Oh no David i get it and it is funny & appropriate but we need a strap-line that works for itself and resonates.

We seem to have lots of press at the moment but the masses aren't turning or listening yet. I have written to Jeremy Vine and Rebecca Pike thinking this is up their street and they are not biting.That sour piece of work Julia Harley Brewer was plying her trade, bumping her gums and espousing "we have got to stop subsidising Landlords" on Question time this week - unchallenged and unexplained = The government are winning the headlines because we are letting them.

One voice! One message! All day every day and then we will get heard! TENANT TAX

I love irony and when this is all dead and I can feed my family and have a future again, I'll share some jokes with you all, but right now we need to get this thing to the precipice and shove it over TOGETHER.

"The Affordable Healthcare Act" sounds lovely and fair and warm. The american pharmaceutical and medical insurance industries knew that so called it "Obamacare" and got immediate traction " if you aren't Republican then you've got to hate it if you are slightly racist you have got to hate it" 60% of people against in one phrasing.

The community charge???? Anyone??? yes thats right Call it POLL TAX and kill it and its creator in a year!

"Cant Pay! Wont pay! .... yes Poll tax again...

"Go Tenant Tax" needs to be George Osbourn's legacy and this is what will stop the aragant little man in his tracks. His ego will eventually get the better of him and trip him up as he sees himself as mini Gordon waiting in the wings for his chance when Dave touches the wrong pig.

David Gauke and the treasury are not good at much but they are expert is staying on point and saying the same thing over and over until it is believed. We need to start emerying with Go Tenant Tax and meet every justification with Go Tenant Tax or maybe just "Tenant Tax" if we say it often enough and we all say it it will stick and it will work for itself and save the day. We ned RLA and NLA to change their message to Tenant Tax. it is not a lie it is the most truthful thing said in or about the proposed "Restriction of Finance Cost Relief" ever.

I wanted to call it "Fail tax" (F an Individual Landlord)
"Oswoastuan tax" (Osbourne Says Watch out all sole Traders You Are Next)

so TENANT TAX is good then?

Sorry for the rant..

look at Page 146 and 147

Housing Contemporary Ireland: Policy, Society and Shelter
https://books.google.co.uk/books?isbn=1402056745
Michelle Norris, ‎Declan Redmond - 2007 - ‎Science
All such reliefs are currently due to expire in 2006. Tax Relief regarding Interest on Borrowings Relief on the interest on borrowed monies used to ... residential property from which an investor derived a rental income was removed in 1998

I suspect reports like this is why restrictions came in

Housing Crisis in Dublin, Ireland - The landlords are ripping ...
struggle.ws/ws98/ws55_rent.html
It seems that the Irish housing crisis is permanent, becoming more severe from time ... However much of the private apartment building is happening on land that used to .... This article is from Workers Solidarity No 55 published in October 1998.

Reply to the comment left by "David Price" at "26/09/2015 - 13:49":

David, I picked it straightaway that you had been humorous.

I thought this submission by Charles Dowding was absolutely awesome...I copied and pasted as below:

Finance Bill
Written evidence submitted by Charles Dowding (FB 42)

Submission to Public Bill Committee

Restricting finance cost relief for individual landlords

1 I practise as an accountant and show below actual details of the Income tax liability for two taxpayers for 2014/15. The figures have been rounded for presentation: details of the taxpayers will be provided upon request.

2

Taxpayer 1

Taxpayer 2

Aged 61, married

Aged 64, single

Current

Budget

Current

Budget

Gross rents

75,100

75,100

197,500

197,500

Expenses

(26,400)

(26,400)

(61,200)

(61,200)

Finance costs

(25,200)

(75,900)

23,500

48,700

60,400

136,300

Earned income

7,600

7,600

0

0

Taxable income

31,100

56,300

60,400

136,300

Tax payable (rounded):

Personal allowance

10,000

10,000

20%

31,900

4,220

6,380

31,900

6,380

6,380

40%

5,760

7,400

37,760

Tax reduction :

Excess over P/ Allce

(21,100)

(4,220)

(50,400)

(10,080)

4,220

7,920

13,780

34,060

Percentage increase

88%

147%

3 The tax increases caused by the Budget proposals are not fair, reasonable or proportionate.

4 Both taxpayers accept that those who can afford to do so should contribute an increased tax burden to continue the progress of the country towards a stable economy. However, they do not consider increases of 88% and 147% form part of a "fair tax system" (Gvt response to petition 104880.)

5 The net income of Taxpayer 2 will reduce from £46,620 to £26,340, a drop of 44%. This cannot be considered fair under any reasonable definition.

6 Both landlords have bought property to let as their provision for retirement. Unlike contributors to pension schemes, they have not received the benefit of tax relief on the equity used in the purchase and setting up of the properties.

7 The restriction of the basic rate tax deduction to the lowest of finance costs, property business profit and total income that exceeds the personal allowance is particularly harsh. Where a property business makes a loss, the landlord will be paying tax with no income to fund it.

8 The proposal does not take into account capital repayment mortgages. In 2014/15, Taxpayer 1 made capital repayments of £17,200 from taxed income of less than £27,000. The taxpayer had adopted a prudent and cautious approach by taking out repayment mortgages. All such landlords will be unfairly prejudiced by the unreasonable increase in income tax resulting from the budget proposal.

9 The proposal will affect owners of smaller portfolios. Owners of large portfolios (landlords with the largest incomes - Gvt response to petition 104880) can incorporate (without SDLT and CGT) and avoid this tax increase. Owners of smaller numbers of properties cannot afford or justify the expense of doing so. This is another example of the unfairness of the proposal.

10 The Government states that interest "relief is not available for ordinary homebuyers and not available to those investing in other assets such as shares." This view overlooks investment in assets (premises, plant and machinery etc) available to every other unincorporated business in the country which attracts capital allowances and on which those businesses enjoy tax-deductibility of finance costs. It also overlooks the fact that many landlords operate their residential letting as a business to provide income during their working life and in retirement. Further important facts overlooked are that "ordinary homebuyers" do not pay Capital Gains Tax or Inheritance Tax (up to £1m), unlike landlords.

11 It may be that the Government should consider taxing residential lettings as a business under the same rules as holiday lets, with the same capital taxes reliefs. Also, the proposal could be applied fairly to new purchases. Individuals buying property to let would then know the rules applicable and be able to assess their investment accordingly. The proposal should not be amended to apply to all new borrowing because this would include remortgaging which would unfairly affect landlords if they have to remain with older, higher interest rate loans in order to avoid penal tax costs from switching to lower cost borrowings.

12 I would ask that the Committee remind Government of its stated commitment to a fair tax system; explain that this proposal does not advance that aim, will cause significant hardship to many landlords; and recommend that it is abandoned.

Strangely, figures have been omitted and did not pull through fully.

Reply to the comment left by "Appalled Landlord" at "24/09/2015 - 00:22":

Very good question Appalled Landlord. Do you think it should asked as an FOI?

BTW I have not received a response to the FOI that I submitted yet (one of Barry's four questions).

Reply to the comment left by "Mark Brown" at "26/09/2015 - 14:40":

Hi Mark

The subsidy that Julia Hartley-Brewer was referring to (at 29 minutes into the programme) was welfare benefits, not the subsidy that Corbyn refers to which is so-called tax reliefs received by private landlords. The latter was not mentioned at all in the programme.

Ms Hartley-Brewer said “A third of working-age people in Britain – not pensioners – are relying on state benefits for more than half of their income”. And “The welfare state is preventing people from going out and getting jobs and living on their own”.

She said that welfare benefits are a “subsidy to landlords for high rents, a subsidy to employers who don’t pay reasonable wages, and we have to roll back the state and let the market work and we need to make sure that we are not subsidising landlords.”

However, her analysis of who is being subsidised was wrong. It is not the landlords or the employers who are being subsidised, it is the people who are given the welfare money. They are being subsidised for not being able to command an income high enough to support their households. The purpose of the subsidy is to prevent people becoming homeless and having to be housed by councils at greater cost than the private sector rents.

From her remarks above it is clear that Ms Hartley-Brewer is not a socialist. Her error comes from lack of thought, not from left-wing distortion as peddled by Jeremy Corbyn in his paper on Housing Policy:
https://d3n8a8pro7vhmx.cloudfront.net/jeremyforlabour/pages/106/attachments/original/1438782182/housing.pdf?1438782182

Page 4:“By a range of measures, including building more housing overall, restricting subsidies to buy to let landlords, and regulating rental value, we can bring down house prices and make home ownership an affordable option for more people.”

Page 5: “We could re-direct some of the £14 billion of tax reliefs received by private landlords to help struggling private tenants; this would of course include building new council homes and helping private tenants to overcome the deposit problem. We could also investigate whether some of this money could be used to fund a form of right-to-buy shared equity scheme to private tenants in cases when they are renting from large-scale landlords.”