Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "David Gill" at "01/10/2015 - 21:29":

Hi David and Stephen.
If you email Mark and ask him to pass your email addresses to me (or post them here, depending on what you prefer) I can send you an email with some suggestions about what I advise.
If anyone else has any suggestions, in the meantime, they can post them here.
The main thing is a face-to-face meeting. It can be preceded and followed by an email with information, but the actual meeting is essential.
Two things that especially worked for me, was showing my MP exactly what ludicrous financial impact it would have on me - with a print-out of the calculations done on the tax calculator ('spreadsheet' mentioned above) - with a projected 3% interest rate rise. You have to show calculations with interest rate rises as that is when the shit will hit the fan.
The other thing was showing him the article by Richard Dyson with him calling it the 'Alice in Wonderland tax' and something that would be expected from a Third World Country with a lunatic dictator. That got his attention and he pledged his support there and then.

Mark Brown, another name you might want to use is something we all think GO is, "RAT" Rental added Tax.

Reply to the comment left by "Ros ." at "01/10/2015 - 21:37":

Hi Ros,
Isn't your MP Mark Lancaster? Every time I tried to get an appointment there was excuse after excuse for moving the meeting to the point it was clashing too much with other appointments and had to give up the chase.

Interesting read on the crowd funding scheme, I have seen these before and that is certainly not the answer, the return on investment is very poor and the risk is high. I do have a friend / landlord and his accountant working on a better option for landlords although he is being very tight lipped at the moment until the final draft of the bill has been approved.

Reply to the comment left by "Ed Duncan" at "29/09/2015 - 09:19":

>Ed Duncan

Care is to be taken when leaning on FTT Tribunal decisions that (like the one you cite) pre date the General Anti Abuse Rules (GAAR), that came into being July 2013 and March 2014

Not that previous decisions are rendered wholly useless by the new rules, but that these new rules are specifcally aimed to counter schemes & structures that apply the 'Ramsay' principles

I haven't seen any FTT tribunals referring specifically to GAAR yet, but they will be come even if they aren't out there yet.

Reply to the comment left by "David Price" at "29/09/2015 - 15:03":

Forgive me Dave for wearing my nosey curtain twitching hat on. But if you make 500 profit per profit for an income of 25000, that would suggest a portfolio of 50 properties? Assume a low value of say 60k per profit (do those prices still exist)....that would suggest net assets of 3 million. 25k on three million is 0.0085 % return. That really is a dreadful return. Why would you go through the hassle of running such a large portfolio when yoy could buy a basket of tracker funds/ETF's which could easily yield you 5 times thar amount at say 4.5% return. That would give you an income of circa 110k for doing nothing?

Hi Darren.
No, my MP is Wayne David, Labour MP. Why don't you write a shirty email saying it is not acceptable for you not to be seen? And that the Government's move against your business is catastrophic (or whatever word seems suitable to your circumstances) and that it is your right as a constituent to see him and for him to listen to what the Government intends to do to you and your business. I have a fairly concise letter (still a bit long) that sums things up, which I can let you have, if you give me your email address.
Don't give up boyo! (that's just a joke - I don't call people that, generally)

Reply to the comment left by "Costas Tzanos" at "02/10/2015 - 08:39":

My portfolio is much larger than 50 properties but I based my comments on 50 for the sake of simplicity. Your calculations on percentage are in error by a factor of 100 and should read 0.85%, but in any case my 50 properties are not worth as much as you suggest and certainly did not cost me anywhere near that amount.
I bought my first property (other than my own house) in 1993 for £3k and although the price has increased somewhat my last property cost £23k a few months ago. Most of my rental income goes on enhancing the property for the sometimes ungrateful tenants but that is another side to the story. An average £500 per annum net profit after tax and expenses is a pretty fair return and I am not complaining.
Yes there are properties still available in the affluent South East for such a price and no I am not going to reveal where for I wish to buy more. For the record first time buyers are not interested, only me the wicked BTL landlord who sponges on DSS housing benefit payments. I house the unhousable, those who every other landlord spurns, I employ, directly and indirectly, four people to run my 'investment' and it seems I am one of those getting blamed for all the ills of the government's inadequate housing policies.
There is much more to being a landlord than simply making a profit, in mathematical terms profit is 'Necessary but not sufficient'. And this is why I support the current campaign even although I am not affected (yet). It is necessary to make a profit AFTER TAX and the government proposals will make this impossible for many.
I wonder if GO has factored in the cost of Social Security payments to bankrupt landlords? In my case four people would go from being taxpayers to claiming benefits, a sobering thought for Mr Osborne.

Reply to the comment left by "Ros ." at "02/10/2015 - 09:41":

The most effective way to get to see your representative is to go to the Palace of Westminster and 'Lobby' your MP. It is considered extremely bad manners for an MP not to see a constituent who is waiting in the Lobby. Be aware that security can involve a lengthy wait so allow plenty of time.
Whilst you are in the Palace take a look at the privileges that MP's enjoy, subsidised three course meals and alcohol, whilst the public are charged and arm and leg for a simple hamburger.

Reply to the comment left by "David Price" at "02/10/2015 - 09:47":

David, you're a champ!
if landlords charge low rents and take on the difficult 'social housing' type tenants, we're accused on not being savvy enough and it's our own fault when they don't pay and/or trash the house. If we charge high rents we're 'greedy landlords.' As we know, at the moment, the mood is against us whatever we do.

The challenge is to change this.

I think Kathy had an excellent - could be a groundbreaking idea - yesterday, which was to start referring to ourselves as 'home-providers.' 'Landlords' is the wrong word - we don't lord it over our 'land.' We should think about this re-branding. That could be a helpful little word.

Hi all.
I am going to send an email to the DPS later today. This is my draft - if you want to suggest any improvements/changes go ahead. I usually get some of the terminology wrong (mixing up income and profit usually) so you can put me straight on that.

Hi Kate.
You may remember that I wrote to you several times during July and August about the Chancellor's decision to disallow finance costs as a legitimate cost of landlords' businesses. I urged you to send out to your landlords information on this major issue, which will ruin many portfolio landlords and also wreck the plans of many landlords with just a few properties; indeed it will throw the private rented sector into disarray. I have now received the 'Open House newsletter, after eagerly anticipating it for more than two months.
Firstly, I can't tell you how disappointed I am that no link to the petition was posted. The TDS also sent out an email to their landlords today and they did put the link on. If you had also done this, it could have had a great effect and meant it was more likely that we would get a Commons debate on this. It is not too late, and I am hoping you can send out something with the link separately. In addition to this omission, the piece was inaccurate and didn't explain to landlords how devastating this is going to be. It would be useful if you linked landlords to a tax calculator so that they could see what it means for them. I can give you the link to an accurate one, as there are several on-line which are not accurate. It is an awful fact that because of the way George Osborne explained it, most people have still not understood how bad it is.

This is the text from the Open House publication:
'In his recent budget, the Chancellor announced a shake-up of the tax relief rules landlords can currently take advantage of. The capping of buy-to-let mortgage tax relief to the basic 20% tax rate has divided opinion, with many people suggesting it will price landlords out of the market and ultimately drive rents up.
Others, however, have suggested that it levels the field of landlord taxation with homeowners who can’t claim tax relief on their mortgage repayments, making it fairer for everybody.
Then there are some who claim that landlords should treat the renting of their property as a business rather than simply as an investment, and should, therefore, be taxed accordingly.
Much of the discussion rests on whether landlords view buying a property to let as a way to get more money coming in every month, or whether they see it as a long-term investment, relying on the house to increase in value over time.'

Firstly, the language is derogatory towards landlords. We do not 'take advantage' of 'tax relief.' We offset the normal costs of running our businesses just like any other business. It is ludicrous for the Government to tax us on our profits, but not allow us to offset the costs of creating that profit. It is a tax on turnover, as we will have to include our finance costs (which we pay out to the building societies) as part of our 'profit.' It has been called absurd, 'an Alice in Wonderland tax' and a 'bonkers tax.' - all of this by a respected Telegraph journalist, Richard Dyson. Here are links to some of his articles:

This Alice in Wonderland tax sets a new benchmark in absurdity

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This Alice in Wonderland tax sets a new benchmark in abs...
Comment: George Osborne has killed off buy-to-let for all but the very rich
View on http://www.telegraph.co.uk
Preview by Yahoo

Death of buy-to-let: landlords wake up to Osborne's 150pc tax

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Death of buy-to-let: landlords wake up to Osborne's 150p...
Buy-to-let investors paying more than 100pc of their profits in tax are already selling up
View on http://www.telegraph.co.uk
Preview by Yahoo

I would have thought that if the Telegraph, which is under no onus to represent the viewpoint of landlords, can cover this issue and show how absurd and unfair it is, that the DPS could at least show some loyalty towards landlords and tenants as this is a decision, which if it is not reversed will hit all people within the private rented sector. Attacking landlords in this way will have no benefit for tenants. I believe this is why Shelter has gone really quiet on it, after campaigning for it. They now realise they have made a big mistake as It is going to lead to rent rises, evictions, and homelessness. Landlords will be selling up or going bankrupt - indeed some have already started issuing notices and upping rents.

Also, the argument about leveling the playing field with owner-occupiers is completely erroneous and just political rhetoric. The IFS have called this idea 'plain wrong' and the Institute for Economic Affairs has said it 'doesn't make sense.' Both of these organisations have stated how the tax system vastly favours owner-occupiers over landlords - for example because landlords are taxed on rental profit and also pay capital gains tax. Many reports confirm this incontrovertible fact.

I found the sentence about business versus investment confusing - rental businesses are both business and investments just as many other kinds of businesses are. We don't have to be defined as one or the other. It is certainly not a hands-off operation as you will know, from the work your organisation does settling disputes - that will give you an idea of some of the hard work landlords do. I also didn't understand what point was trying to be made in the last sentence.

This has been a missed opportunity. The Finance Bill Committee is meeting on the 13th of October. and many landlords, myself included have sent in very detailed submissions about why this decision is so wrong and must be reversed. Failing that, we are pressing for an amendment so that the absurd new tax regime only applies to property purchases in the future. That way, those of us who have built up our businesses over many years will not be forced into bankruptcy.
We have a wealth of information and arguments about this at our finger-tips, but instead of being asked so that I could help with the 'Open House' publication, something has been published which doesn't give landlords anything like the information they need, in order to campaign against this and also to mitigate its effects if we fail to get it reversed. Instead, many landlords are completely in the dark about it and believe it won't affect them. There is now evidence that 60% of landlords who are currently basic rate taxpayers will become higher-rate taxpayers, with no increase in their actual income at all. When George Osborne said it would affect '1 in 5' landlords (still a huge number, still an unfair policy and also taking no account of the number of rental properties it would affect - a huge amount, because the portfolio landlords will be in the '1 in 5' category) - he either lied or he was wrong.
I would appreciate it if you could get back to me as a matter of urgency so that we can get something out to the landlords on your books which will help them.
Yours sincerely