Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Barry Fitzpatrick" at "05/10/2015 - 10:27":

You're quite right Barry as I worded this example badly. Instead of one's tax liability increasing, what I should have said is one's effective tax rate over their personal allowance would increase eg:-
"if your current finance interest is £20K pa on say £666,666 of total borrowing at a 3% interest rate averaged across all properties & the interest rate goes up to 5% = £33,333 pa in interest finance, your effective tax rate will increase too.
Example; currently someone earning £50,000 pa from their properties after all other deductions, can deduct a further £20,000 for the finance cost & assuming no other income from a day job, they currently pay £3880 in tax leaving a net income of £26,120 ie an effective tax rate of 20% over their personal allowance. But by 2021 this will have reduced to £24,597 in net income due to a rise in tax to £5403 giving an effective tax rate of 28%. Then factor in a 2% rise in interest rates over the next 5-6 years, under the current regime this would reduce one's net income to £15,254 giving an effective tax rate of still 20% but by 2021 under the new regime this reduces to a net income of £13,931, giving an effective tax rate of 45%.
Therefore in summary by 2021 under the new regime a 2% rise in interest rates in this example increases the effective tax rate from 28% to 45%.

I originally posted about Ranjan's survival guide a couple of days ago which I have now fully read. The calculator he offers looks exactly like the one recommended by property 118. I am confused. Before I play around with all the what ifs (accountant saying too premature e.t.c.). I encourage all to look at it. But can someone advise which calculator is to be used. I sent the property 118 one to my accountant asking if he could comment on its accuracy. No Reply. It is beyond me to critically appraise such technical wonders.Thanks

Reply to the comment left by "Chris Novice Shark Bait" at "05/10/2015 - 11:23":

They're the same as far as I can tell.

Reply to the comment left by "Chris Novice Shark Bait" at "05/10/2015 - 11:23":

Hi Chris

It is the same spreadsheet, produced by Alex Caravello. His name is at the foot of each page. He generously made it available, free, to several organisations.

I am a retired accountant. Alex’s calculator concerning the proposed tax change is the only one I have seen that always gives the right result.

If your accountant thinks it’s too soon to think about the effect of the change then you need a different accountant, now.

I've written to my MP several times and got nothing of any consequence back other than saying that my letters had been forwarded to David Gauke and like everyone else had his standard response.

I have today attempted to get an appointment with my MP but got stonewalled by his secretary who told me that I had to write in saying what had changed that warranted an appointment. I most definitely think he was trying to trick me into saying I was part of a formal group for which he would most likely respond that I had no right to see him.

The secretary knew exactly who I was so I suspect I am definitely on some sort of list of people that the MP won't speak with. Most disappointing that a publicly elected representative takes this approach.

Reply to the comment left by "Laura Delow" at "05/10/2015 - 11:19":

@Laura,

It is important that every LL understands how this new tax works, if it goes through, and what its dynamics are (i.e. what happens if interest charges increase or indeed what happens if other expenses increase/decrease). Without a proper/full understanding a LL may be well make decisions that could cost them dear.

Reply to the comment left by "John McKay" at "05/10/2015 - 11:59":

John......I feel excluded too from my seeing my local MP the Right Hon. David Jones mp. Waited more than 5 weeks. Perhaps I should never have disclosed why I wanted to see him!

Reply to the comment left by "Lisa Stux" at "05/10/2015 - 08:49":

@ Lisa,

I am sorry I must of either missed your post or forgotten about it (age creeping on).

Regardless I think it was worthwhile bringing it back to the surface again as I think it will have severe consequences for many LLs.

Reply to the comment left by "Appalled Landlord" at "05/10/2015 - 11:40":

Thanks Appalled for that clarification which at least one other person appreciated so far.

Your advice re accountants is well understood.

Chris.

Regarding rent rises, some people think we don't have this option - that if it were possible to raise rents we would have already done so. That's not true at all. Many of us have been happy to not increase rents for up to a decade or more.
I have quite a few houses which rent out for between £300 to £400 per month. I am now planning £10 increases in the main, around February to March. This will get the tenants accustomed in a gradual way to what lies ahead. As GO says about us, he's giving us plenty of time to adjust our affairs... and the same goes for the tenants.
I'll then have to think about what increases I bring in in spring 2017 and from then onwards, each year.
With my student houses I'll also be going for £40 to £80 per month per house increases from next July. Despite what some people say, the 'market' can take that. And obviously, although these are small amounts, they will mean the tenants have less money to spend in the economy at large.
The calculation of this also seems to have been omitted from HMRC's impact statement. Although, of course, it will mean more revenue again for the Exchequer, this will be counter-balanced by the other stuff going on in areas where houses are sold to OOs and the tenants are made homeless and have to be put up in B&Bs.
I still can't believe how simplistic HMRC's and the OBR's 'economic' calculation was.