Summer Budget 2015 – Landlords Reactions

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

Hello Mark,
I like it and it's got my vote! we need to call it something and I think your reasoning is bob on. I don't think we are ever going to get a name that reflects all of the issues caused by this tax but I think we can safely say that if this tax comes in then RENTS WILL DEFINITELY RISE! Even those landlords not affected by the new tax will ride on the back of the general rent increase. Landlords may not get the full increase in rent that they want or NEED, but the fall out will be an overall increase in rent.

Reply to the comment left by "Mark Shine" at "26/09/2015 - 17:34":

Hi Mark

I thought that Mr McPartland’s constituent might like to suggest it to him as a follow-up question, to show Gauke that his non-answer was not acceptable. I haven’t had a reply to my FOI request yet – they allow themselves 20 working days.

Reply to the comment left by "Appalled Landlord" at "26/09/2015 - 21:11":

Appalled - Great points well made and accepted - Thank you.

It was JHB nonetheless ignorantly espousing common nonsense about landlords that is not progressive in anyway. She is the sort of dimwit that blames the doctor for the side effects of lifesaving medicine he prescribes - if there is something dumb and mean to say - she will find it.

GO is not a socialist either but he also thinks independent landlords get generous tax treatment. I just kind of expect someone with a brain and a voice to know which order to use them in JHB falls short at every opportunity.

JHB should either be smarter, be right or shut up! Or... have the guts to call it Tenant Tax as it is and shine that big mouth onto the issue and get the fame she craves for bing the one who burst the Tenat Tax bubble.

I resent her inference as I don't personally take Government Housing Benefit monies as I think to take it is to sell your soul to them in some way or another. I do not decry those that do or those that have to rely on it but I do say be careful who you tango with - cos they will bite you eventually - Mark my words! Even if to is only JHB calling you a subsidised parasite.

Corbyn is a taxer and so I expect him to have a Tenant Tax dressed up and "rich bashing" I just never thought GO would beat him to it and have a huge Tenant Tax..

On Sky News’s Press Preview last night, discussing an article about the Bank of England’s concerns over BTL, Christina Patterson said that, “enormous amounts of housing is sold to the Chinese and it’s never even lived in” and “lots of developments in London are instantly snapped up by Chinese buyers”. She is a freelance journalist who worked at the Independent for 10 years.

I googled foreign purchases of London property today and found that some developers just used to market new London developments in Asia, and not in the UK. Foreign buyers were just “parking their money” in the UK, and didn’t even have to pay CGT when they sold!

Recently David Cameron said in Singapore that he would welcome more purchases of property in London by foreigners.

These empty new-builds have not added to the stock of available dwellings - they are just large safety deposit boxes. Councils gave permission for new stock to be built expecting it to benefit people who live in London, either as owner-occupiers or as tenants, but foreigners have deprived them of it.

This is madness. It is London’s severe shortage of housing that has led the Green Party, George Osborne and Jeremy Corbyn to attack BTL nationwide.

Jeremy Corbyn says on page 6 of: https://d3n8a8pro7vhmx.cloudfront.net/jeremyforlabour/pages/106/attachments/original/1438782182/housing.pdf?1438782182

“Too many new homes that are built for sale end up as buy-to-let investments, or even worse as speculative assets that sit there empty for much of the year”.

Does anyone have any insight into how many such empty properties there are?

Reply to the comment left by "Appalled Landlord" at "26/09/2015 - 22:54":

Appalled it is more common than you'd like to think. It is of course classic hedge fund activity - Everything over the 23rd floor in Manhattan is being snapped up and left empty by hedge funds. They actively do not want tenants and have no interest in running a rental business AT ALL.

I was approached by a UK investor 18 months ago who wanted to buy my HMOs. They had no interest in running it as a business, They saw that part of it was marginal, time intensive and risk fraught. They didn't want the asset ruined by tenants or their weekends disturbed by phone calls. They just wanted a rock solid investment. 4-8% pa & with a maximum 28% CGT it seemed fine to them.

The Russians got caught with their money in Cyprus banks and so they also want a solid safe investment and to them 28% CGT is cheap insurance. Arabs are snapping up property in London like mad. Malaysian money laundering is best done in Mayfair properties and everyone knows it...

Fergus Wilson reportedly had a Chinese buyer lined up and and I wonder what their plans were. (Furgus has 900+ properties in Maidstone)

The UK, in all political parties, and rich bashing circles is clearly hell bent on the race to the bottom and intent making being a tenant or a landlord an exceedingly undesirable thing...

The Tenant Tax has changed me! In just 2 short months my shutters have come down and my "give a damn is busted"... Now, I shall implement the Tenant Tax if the Tenant can't or won't pay it I'll sell the portfolio and find another gig....AND.... I will not care a jot who I sell to!

"God grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference."

But be careful fools, what you wish for, as the most Government can do if you have an empty property is charge you 150% of the council tax for an empty property. Which is in reality chicken feed compared with the safe investment.. CONVERSELY use it as a home for someone and should you rent to the wrong human from the wrong place you'll go to jail or if you rent to a government benefit recipient, even if you don't know they are, then they'll make you sell it to them cheap.And... you need some of the "Ware and Tare" Vaseline for your regular administered tenant reaming when they trash things as say "thats fair"

I am looking for a kindly Chinese or Russian investor who will pay me the value of my property and a little more for the "going concern that is my business". For them is lots of property in one go and the premium is small & worth it. For me, its a linked sale and so i don't have to sell piecemeal and get CGT clobbered....My advise to the buyer of my portfolio...? Leave the houses empty if you can afford it. They will go in value far quicker buy the demand you'll create that way and you'll not go to jail if you make a mistake trying to help someone or if get a snide tenant and you'll not get disturbed by the press the government or tenants.

Oh yes...And you are confused or surprised about what now???

Can everyone with a twitter account use the hashtag #TenantTax.

We have an advantage over previous campaigns to bring down a measure - the Internet, so let's use it.

Include the hashtag in every post you write and then tweet the post.

Extract from the Financial Planning Committee Statement. - September 2015
".......currently for the major six banks, 20% of the stock of mortgages with a current LTV above 90% are BTL loans."

".........[re] possessions and write-off rates remain higher than for conventional mortgages — currently around 25% of total possessions are of BTL properties."

The #TenantTax will make these 20% and a whole lot more of mortgages over 75% LTV into potential bankruptcy territory. GOs tax measure will create the destabilisation that Mark Carney is warning about.

Reply to the comment left by "Barry Fitzpatrick" at "27/09/2015 - 07:13":

Barry love the twitter thing - Thanks you for the suggestion Lets do it! I will get a Twitter account today and lean how to do it!

On the FPC set 15 statement...
I seriously hate to get distracted... but how is it possible for a single 90%+ BTL mortgage? Let alone that being 20% of a the 5 major banks stock of mortgages? This has to be manipulated debt and or doesn't relate to UK borrowing or property? I am sure that even if they closely monitored house prices through Zupla & could contrast against postcodes where they have mortgages they would not know this number to be true. If it were an 85% historic BTL mortgage in a depressed market those prices have bounced back now haven't they? (85% BTL not available for atlas the past 8 years)

If it were true, why would the PFC not be the loudest voice in this Tenant Tax debate? As if the statements that 90% LTV and 20% of stock and repossessions are already dangerous, is true, then "the end is nigh" is it not? If costs go up for those (90% LTV @ 20% of top5) mortgages that is hHUGE HUGE HUGE & they will fold for sure and the banks will suffer another crash and the Uk a certain recession. Should the PFC not be stopping the Tenant tax in its Tracks?

Can you explain how 20% of the top 5 bank stock of mortgages could be 90% LTV BTL mortgages... how is it possible let alone true?

It is noteworthy that the
Thornhill Group, which reported to the interdepartmental
group on the design of a local
property tax, recommended that owners and not
occupiers be liable for property taxes in the
residential investment sector. The Group also
recommended that the LPT charge be deductible
similar to commercial rates for tax purposes. (PQ
4171/13). This is being examined as part of the
Construction 2020 Strategy
http://www.prtb.ie/docs/default-source/pdf-manuals/future-of-the-private-rented-sector.pdf?sfvrsn=0http://www.prtb.ie/docs/default-source/pdf-manuals/future-of-the-private-rented-sector.pdf?sfvrsn=0

7.6 CONCLUSIONS
It is clear that the tax regime for landlords
investing in the residential investment sector is in
the main less favourable than for investors in
commercial investment property.
The main disadvantages arise in relation to
investors in residential investment property who
are seeking to utilise borrowings to assist with the
purchase of such properties. These individuals or
companies are subject to interest deductions of 75
per cent, as against 100 per cent for the
commercial rental sector. This is the main
disadvantage as between the two sectors although
the lack of deduction for local property taxes also
represents a less favourable position for
residential landlords.144
The fiscal changes in the period between 2007 and
2014 have increased substantially the tax burden
on residential landlords, particularly those with
borrowings taken out in relation to the purchase of
investment properties. The restriction on
deductions and increased tax [including USC and
local property taxes] charges could justify
increases in gross rents of approximately 20 per
cent to 24 per cent, depending on the personal
circumstances of a landlord (Table 5.3). Whilst the
market rent will be dictated by a number of
factors, it is clear that the increased fiscal costs

143 See page 12 of the report of December 2011 for a list of the
relevant schemes.
144 Report of the Inter-Departmental Group on the Design of a
Local Property Tax.
http://www.environ.ie/en/PublicationsDocuments/FileDownLo
ad,31669,en.Pdf
may explain some of the operate pressure on
private rental sector rent levels.
Separately, the fiscal amendments, particularly the
restriction of interest deductions, have the
potential to create a barrier to entry into the
private rental sector for individuals and companies
wishing to finance the purchase through
borrowings. Although banks generally speaking
have not been the source of investment into the
private rental sector recently145, increased supply
into the private rental sector will depend on new
investors coming into the market. Without
levelling the investment outcomes for individuals
leveraging such purchases with investment in the
commercial property sector, there is a potential
barrier to entry for investment into the private
rental sector.
Whilst the lack of interest deductibility is not an
issue for REITs or cash buyers, international
evidence would indicate that such buyers will only
represent a relatively small percentage of the
market.146
http://www.prtb.ie/docs/default-source/pdf-manuals/future-of-the-private-rented-sector.pdf?sfvrsn=0