Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Ros ." at "02/10/2015 - 10:13":

Well done Ros

Reply to the comment left by "Ros ." at "02/10/2015 - 10:13":

Hi Ros

My biggest disappointment was that the blog did not explain to landlords that finance costs will be disallowed so that their taxable income will be artificially inflated, and their tax bills will be higher.

Excellent letter Ros ...

Reply to the comment left by "Ros ." at "02/10/2015 - 10:13":

Hi Ros

Yesterday’s email from the DPS said:

“We'd like to make sure the Government fully understands the impact that these changes will have on our customers. Please take our short survey to share your thoughts about how the changes will affect your plans to continue letting.”

This assumes that their customers are aware of, and understand, the impact. Their email did nothing to improve understanding of it.

The email gave us the choice of reading the “blog post” or watching a video by the DPS’s MD, Julian Foster to “bring us up to speed” on the Government’ new proposals which “if introduced will have a huge effect on the Private Rented Sector”.

Julian Foster did not even mention the proposal to disallow finance costs (or the wear and tear allowance) in his video: https://www.youtube.com/watch?v=8Agv_Tfzqw4

One of the questions in the survey was whether we consider our rental property to be an investment or a business. This struck me as strange, and made me wonder if the government had played a part in setting the questions.

Reply to the comment left by "Appalled Landlord" at "02/10/2015 - 12:12":

Thanks Appalled. I've incorporated all of your excellent points and sent it off.

The Institute of Chartered accountant in England and Wales has sent an email including:

ANALYSIS
Examining the Finance Bill

Looking at some of Osborne's headline tax reforms in the 2015 Summer Budget

This examined Dividend Tax, Corporation Tax, Inheritance Tax, but not Income Tax. I submitted the following comment (only 1,000 characters allowed):

“I am surprised that there is no mention of the plan to disallow mortgage interest from 2017 for landlords who buy in their own name. They will pay tax on turnover rather than on income. Their total income will be artificially inflated by the finance costs. Some will be moved from the basic rate into the higher rate band.

The tax may exceed the real profit. It will be payable even when a real loss is made, making the effective rate infinite. It will have to be paid out of other income, if any, or savings, or else HMRC will bankrupt them.

Some landlords report that their accountants do not realise the effect of this proposal yet.

The effect on landlords and tenants can be seen in submissions to the Public Bill Committee: http://services.parliament.uk/bills/2015-16/finance/documents.html

Rents will go up except for tenants on housing benefit who will be evicted and moved to B&Bs at greater cost. Landlords have already started to increase rents and issue eviction notices.”

My report on my meeting with my MP today is linked below ...
.

Reply to the comment left by "Appalled Landlord" at "02/10/2015 - 12:12":

It says this vid was published on 29 Jun 2015 ie before Summer Budget speech, so that is presumably why there was no comment.

However generally it seems that some large agents and other organisations that generate income from PRS still seem to be trying to play Clause 24 down. I would have thought that it is unlikely that by now they have simply not looked into it or understood the potential implications? More likely is that they don't want to highlight it and scare off their customers, secretly hoping it will all just go away (however illogical that is).

Reply to the comment left by "Mark Shine" at "02/10/2015 - 15:00":

Thanks Mark S

I had not spotted the date. However the email suggested that we could get “up to speed” now on the government’s new proposals by watching it.

Okay all. Here's another one to run by you all, in case you have some suggestions. I've not sent it yet. This one is going to the Jeremy Vine programme:

To whom it may concern

I have just been informed that you covered the issue of 'nightmare landlords' and students today. As a landlord I was pleased to miss it. You can't imagine how upsetting it is to be constantly bashed by the media as though we are evil people. No-one accuses the other home-providers in the UK (Housing Associations and council employees) of being evil people. I'm sure their tenants also have complaints.

What I would like to know is when you are covering the issue of 'nightmare tenants.' Recent research has shown that bad tenants caused landlords a loss of approximately £10 billion last year alone. When you think that these losses occur in our sector every year, it is an astonishing loss that we have to bear. The losses were incurred through non-payment of rent and damage to our properties. This is enormously stressful for landlords and we rarely recoup the money lost. We feel that the law is so much on the tenants' side, but our point of view is invisible in the media. Instead we're just like a punch-bag. It is because of this anti-landlord prejudice that this massive piece of news has gone unreported in the general media. However, if one tenant has a complaint about one landlord (or maybe a handful) this can be turned into a 'news item.' And Shelter are always willing to add a soundbite about the awful landlords (no-one ever questions why Shelter devotes the majority of its time slating those of us who provide actual 'shelter', rather than providing any itself. It should change its name to: 'We hate landlords UK').

Going back to the issue of students and landlords, the on-line advertiser 'spareroom' announced in the last week, that there are something like 20 students chasing each room in some towns. In the future, this is only going to get worse. This is because of the Chancellor's decision in the Summer Budget to no longer allow landlords to offset the finance costs of running our businesses. They are going to treat the BTL mortgage interest that we pay out each month as part of our 'profit' and they are going to tax us on it. The Telegraph financial journalist Richard Dyson is the only journalist in the UK who has been willing to present the point of view of landlords. You can see what he thinks in the articles here. He calls it 'an Alice in Wonderland tax,' 'a bonkers tax,' and something that you would expect in a third world country run by a 'lunatic dictator.'

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

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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

Maybe you can include a piece on this soon? It is going to be disastrous as it makes many landlords' businesses unviable. This is why the shortage of rooms for students and houses for others is going to become far more acute than anything we've seen yet.

At least if you covered this, you would be introducing some balance and be bucking the trend which is to constantly, vehemently and blindly attack landlords, when the majority of us are just decent people providing an essential service to the many people who need to rent. You would also be performing a service to tenants who are going to suffer a great deal once the rents rise and landlords start to give them notice so that they can sell. Both processes have already begun.

If you need any more information on this and/or would like a landlord to talk about it on your programme, please get in touch.

Yours sincerely