Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Gary Mason" at "14/07/2015 - 11:44":

@ Gary ... this is near Slough area

Reply to the comment left by "unahb1 " at "14/07/2015 - 11:27":

Is it in RG30 postcode?

Reply to the comment left by "unahb1 " at "14/07/2015 - 11:47":

Unahb1, strong demand from tenants and buyers should keep this area going, as long as you can afford to pay extra 20% on your all interest payments, you should be okay.

However nobody knows, when and how much interest rates will rise in future and when market goes down, you won't be able to sell it either and that's IF market goes down.

The way government is interfering with Private Rented Sector nothing surprises me. They could going forward strip you off all interest payment relief and if labour came in power going forward in 2020 then that"s sure to be the case.

Reply to the comment left by "Gary Mason" at "14/07/2015 - 11:52":

Yes Gary, that's my feeling as well. I would rather get all the houses in order lets say to some 50% LTV and get ready for all tax relief removals as well....
As long as I can hold the existing 3 without losses I am happy...... but on the other end I have been spending each and every day for past 2 years in understanding area, following property, calls, viewings, mortgages, re-mortgages, equity release and what not... if I take a step back now ... I might take ages to regain trust from real estate agents, self confidence to get back on again to purchase again.

Reply to the comment left by "Mark Alexander" at "14/07/2015 - 11:41":

I would add the fact that this landlord would pay £32,000 in tax, although he had no income whatsoever, just because he owned the properties in his own name, not through a company.

My accountant advise me that, going forward if you can afford 1.5 times your mortgage payments, for example if your total mortgage payment on monthly basis is £10k and you can afford to pay £15k to sustain increase in interest rates.

Plus

If you can pay 20% of your mortgage interest payments, for example if your mortgage payments are £100k a year over and above £43k basic rate then you have to pay additional £20k to taxman.

If you can afford both 20% additional tax on your whole interest which is fairly easy to calculate and time your existing all mortgages payments by 1.5 if answer is you break even or making some surplus...then happy days.

If not then get the f*** out.

Reply to the comment left by "Appalled Landlord" at "14/07/2015 - 12:16":

if it looks like a business, smeels like a business, tastes like a business and is run as a business indentical in every way ...except for how it is owned it then maybe it is a business ?

Reply to the comment left by "Michael Barnes" at "14/07/2015 - 09:12":

Hi Michael

You are correct, it is not a blanket ban on relief mortgage interest. But it is a restriction to 20%. That is the problem.

Nowhere in HMRC’s document does it say “Calculate profit/loss as now (i.e. deduct finance charges [interest and arrangement fees] from income).”

On the contrary, it says that by 2020/21 no finance costs will be deducted from property income.

You are correct, it is unfair.

Mortgage Interest: £62000 plus £2000 = £64000 taxed at 40% = £25600.

Therefore £25600 – £12400 = £13200.

Where does this or any other legislation say mortgage interest must be declared?

Reply to the comment left by "Gary Mason" at "14/07/2015 - 09:50":

Hi Gary

You forgot to add the tax on the first £8,000 of rental surplus at 20% (£1,600, not £4,000) to the amount of tax calculated at 40%. Adding £1,600 to the £13,200 gives the total tax from letting of £14,800, on a profit of £10,000.

In addition he would have paid about £4,800 through PAYE.

This is a complicated way of working out tax. To make sure nothing gets forgotten, we need to start with total income and work our way through the tax bands as per the examples at: http://www.mortgagesforbusiness.co.uk/news-insight/2015/july/how-the-restriction-of-relief-on-btl-mortgage-interest-will-affect-landlords/