Summer Budget 2015 – Landlords Reactions

Hi all. This is something different. This is a letter which I want us to send to as many journalists as possible. If people can do that and then report back here which journalist from which paper they have sent it to that would be great. It doesn't matter if there is duplication - that might even make the journalist more likely to take notice.

.'Hi [insert journalist's name]
You will be aware that the Chancellor in the Summer Budget launched an unexpected attack on private landlords with the so-called 'restriction on finance cost relief' ('Clause 24). Sources close to the Treasury now inform us that the Treasury is panicking over the unintended consequences of the measure.

The Chancellor 'reassured' the sector, when he announced the change, that it would 'only' affect 1 in 5 landlords; this has been exposed as at best a mistake, and at worst a lie.

In any case, the important issue is not how many landlords that will be affected, but how many properties. The Treasury claimed it did not know how many properties are owned by this 1 in 5, but in fact, it is likely to be the vast majority of the 1.6 million properties secured with a buy-to-let mortgage. For example, analysis undertaken in 2010 by the Department for Communities and Local Government (DCLG) found that although 95% of landlords own fewer than five properties, this accounts for just 61% of all privately rented dwellings. This means that 5% of landlords own 39% of properties. The research also found that the 3% of landlords who own more than five properties account for almost a quarter (22%) of privately rented dwellings.

A very conservative estimate is therefore that between 50 and 80% of these properties will be affected. What this means is that the landlords who own these properties will face massive tax bills, based on turnover rather than profit, and will have to take evasive action to avoid bankruptcy. This will include increasing rents and evicting tenants in order to try and sell up. This is starting already.

What's more, going back to the question of how many landlords will be affected, it has become clear that in addition to the so-called '1 in 5' (20%) of landlords who are likely to be higher-rate taxpayers, and with large portfolios (the group that the Chancellor didn't mind 'sacrificing'), landlords with a small number of properties are also going to be severely hit. A survey by the Residential Landlords Association found that 60% of landlords will move from being basic rate taxpayers to being higher rate taxpayers. This is what is worrying the Treasury, presumably because this is a much larger group and one which will be natural Conservative supporters.

This is what needs to be publicised now. The Finance Bill Committee is meeting on the 13th of October and this is when 'Clause 24' will be discussed. It is important that there is sufficient publicity to encourage MPs from all parties to speak out against it.

This is an extract from the Residential Landlords Association's post on this issue:
'RLA policy director, David Smith, said
“The findings of our survey are deeply concerning. Many landlords currently paying the basic rate of income tax face the prospect of a nasty surprise when they meet with their accountants. Having felt that they were not affected by the Budget measures many will seriously consider whether it is worth continuing in the market when faced with this tax bombshell. It cannot be right that many landlords face seeing their income tax increase without an increase in their income.
All the evidence shows that we need more, not less, rented housing. With almost ninety per cent of landlords being individuals renting out just a handful of properties each, it is only by supporting this group that we will boost the supply of homes to rent. The Budget announcements risk undermining the potential for growth. Even at this late stage we are calling on the Government to pause and provide more time to assess the impact on market.”

The link to the post is here:

http://news.rla.org.uk/landlords-face-tax-bombshell/

What has become apparent is that the vast majority of landlords are going to be hit by this measure, which is going to render many landlords' businesses unviable. This is going to have an enormous impact on tenants - but the Government in its impact statement did not even mention the impact on tenants.

The Government's aim to increase home-ownership is blinding them to the consequences of attacking the private rental sector. The Chancellor is scapegoating landlords as an easy target, but this attack will do nothing to increase the number of homes in the UK, it will not magically give tenants the deposit and criteria set by mortgage companies to be able to buy the homes the landlords are forced into selling - indeed many landlords' properties are unsuitable for owner-occupation. This is more than a sledge-hammer to crack a nut. This is a sledge-hammer that will miss the nut but smash everything around it.

I urge you to cover this issue in your newspaper. Landlords and tenants throughout the UK should be warned about what the Government is planning for them.
Yours sincerely.'

The reply to Barry Fitzpatrick’s FOI request on page 469: http://www.property118.com/budget-2015-landlords-reactions/76164/comment-page-469/#comments

says that in 2012/13, 2.1m landlords filled in the full self-assessment form (SA105), and declared 3.7m properties for 2012/13

The English Housing Survey:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/453668/Bulletin_12Aug2015_FINAL.pdf

says that private rented housing in England totalled 4.5 million in 2013.

Does anyone know what the total was in the rest of the UK in 2013?

Well that's now 20 working days passed and no response received to the FOI I sent other than the initial confirmation email that they got the FOI.

Did you get a response to yours yet @ Darlington Landlord?

Not a sausage for me either!

Reply to the comment left by "Darlington Landlord" at "03/10/2015 - 00:08":

Here is a good way to deal with the tax problem-move away from BTL and switch to Bed & breakfast. Not only is it very profitable but it's assessed as a trade so you will get full relief on your loans.

This is a brilliant idea!!!!

Reply to the comment left by "Bill Morgan" at "03/10/2015 - 01:18":

Couldnt agree more, as these BB will be in great demand by the councils

Reply to the comment left by "KATHY MILLER" at "03/10/2015 - 08:43":

It has occurred to me that a lot of traditional B&B's will be converted into refuges for homeless servicemen, young Mum's etc. The Government will pay a fortune for this type of accommodation, especially when they have no choice, and the really daft thing is that the lefties from the Guardian are likely to be far more supportive of the businesses and even insist of the government and charities staffing them ... probably.
.

If the Government wants to do something practical about the housing shortage they should scrap funding to Shelter and use the money to boost the New Homes Bonus.

http://www.conservativehome.com/localgovernment/2011/07/why-is-the-dclg-funding-shelter.html

Shelter is but one of a large number of fake charities whose existence in that form is protected by the failure to reform the Charities Act and to get rid of Suzi Leather at the Charities Commission and replace her with someone who has an understanding of charitable purpose, rather than left wing campaigning with public funds.

Shelter is a registered charity that campaigns to end homelessness and bad housing in England and Scotland. It gives advice, information and advocacy to people in need, and tackles the root causes of bad housing by lobbying government and local authorities for new laws and policies to improve the lives of homeless and badly housed people. It works in partnership with Shelter Cymru in Wales and the Housing Rights Service in Northern Ireland

Shelter helps people in housing need by providing advice and practical assistance, and fights for better investment in housing and for laws and policies to improve the lives of homeless and badly housed people. Approximately two thirds of Shelter's expenditure goes on housing aid and one third on campaigns and education.

Funding for shelter

Financial information[edit]
For the year ended March 2011 (England)[4]

Total incoming resources: £53,026,000
Fundraising costs: £19,203,000
Total cost of charitable activities: £35,310,000
Sources of funding[edit]
Voluntary donations 51%
Statutory grants 21%
Shelter shops 15%
Legal advice contracts 11%
Training courses 3%
Picoring action 1%

Shelter is a registered charity that campaigns to end homelessness and bad housing in England and Scotland. It gives advice, information and advocacy to people in need, and tackles the root causes of bad housing by lobbying government and local authorities for new laws and policies to improve the lives of homeless and badly housed people. It works in partnership with Shelter Cymru in Wales and the Housing Rights Service in Northern Ireland

Shelter helps people in housing need by providing advice and practical assistance, and fights for better investment in housing and for laws and policies to improve the lives of homeless and badly housed people. Approximately two thirds of Shelter's expenditure goes on housing aid and one third on campaigns and education.