Summer Budget 2015 – Landlords Reactions

Hi Billy,

if turnover is less than 81K there is no VAT ??

If turnover under £150,000 you can opt for the flat rate scheme which is 10.5 per cent for accommodation businesses.

The VAT is a cost suffered by the consumer so I am not bothered by it.

Basically I have a portfolio of properties and by switching some to short term letting I will hopefully maintain my profit after tax when the tax changes kick in.

Of course rents could go up considerably over 4 years so that could take the sting out of these tax changes as well.

"They proclaim that the government have let their tenants down by forcing rents up, but it is they who have done so by putting themselves in a position where they cannot provide the services they charge for, which is fundamentally a security of tenure free from the risks from the ravages of house prices, interest rates, mortgage regulation and so on.

So an element of rental fees is insurance, and they have failed to provide that insurance by indirectly exposing their tenants to that which they should be sheilding them from.

They take these risks on behalf of the tenants, and a good landlord should themselves either be unexposed to these risks, or be willing to absorb them, and yet I have seen posts proclaiming that their tenants accepted the risks through tenancy, which is rubbish."

Maybe there is life on Mars after all because i can think where else this kind of logic would come from ! Any business will have a product or service offered, it will having product/running costs and it will hopefully have a profit or markup. Generally cost price to provide said business product or service is arrived at, profit or margin added and if competitive enought to survive in the market place will keep running as a business. If cost price is increased then it will get reflected in sale price (Rent) as business needs to maintain a margin so that employees can have income and eat business can grow and things like regulation etc have funds put aside ready to deal. Therefore if government create extra cost for LL then it will get passed to end user sale price. So clearly Government has/will force rents up. Also reducing stock in a market with growing demand will enhance this effect.

"security of tenure free from the risks from the ravages of house prices, interest rates, mortgage regulation and so on"

YES LL do exactly that for the term of the Lease - do these people not understand simple basic AST terms FFS ? In the wider context these are either market effects or government intervention ...over which LL has no control whatsoever - clearly. This is NOT a service offered other than within the fixed term of the AST.

Insurance , yes property will be insured , and rent fixed for term. The tenant is not exposed to the above for the term of AST, The LL is tho, the tenant is exposed to the general market effects of Hprices, interest rates and government meddling at end of lease , just the same as every other person wether they be LL or tenant, OO or whatever. Simples.

Hi Bill, if you go on the flat rate VAT of 10.5 per cent, then you got to pay 10.5 per cent on both your short term lets (holiday lets/B&Bs) PLUS 10.5 percent on your buy to let's ! Normally Buy to let's are VAT exempt- but not with the flat rate VAT! - you could try "artificially separating" the two businesses but check out the new laws on that too. Good luck because I got stung!

BBC Breakfast has an article about rent increases this morning. Just tweeted to BBC breakfast that a further 30% will occur due to the Summer Budget changes.

Hopefully it'll get a mention.

Also sent an email with the ICAEW Report.

Reply to the comment left by "Jon Pipllman" at "15/10/2015 - 16:35":

No I think it must be 20m in total, I couldnt read whole article without paying.

So Jon how much UK tax do you think these big players will pay?
What sweetners have they been given?
Any idea of likely rents they will charge to get the 10% yield?
How many of the companies will be from outside the UK? , already much of UK is owned by other countries, how is this good for Britian?

What will the rental scene be like in 10years?

Reply to the comment left by "Barry Fitzpatrick" at "16/10/2015 - 07:27":

Hi Barry

The government are forcing us to increase the rents to make the UK more attractive to the big boys

They did raise £20m by means of a placement in August. There is nothing newer on their own website about raising more (yet!)

So Jon how much UK tax do you think these big players will pay?

As little as they are required to by law

What sweetners have they been given?

I don't know. I suspect they have preferential access to certain land deals (i.e. can buy land that you and I don't even know is for sale). Beyond that who knows?

Any idea of likely rents they will charge to get the 10% yield?

Yes, 10% of the cost of the asset (not sure if question is serious)

How many of the companies will be from outside the UK? , already much of UK is owned by other countries, how is this good for Britian?

I don't know. I expect the majority will be UK companies. I have no view on whether foreign ownership is good for Britain or not or whether British ownership of foreign property is good for Britain / the host country. It doesn't bother me at all. Should it?

What will the rental scene be like in 10years?

I don't know. Probably different to how anyone is currently imagining it. 10 years is a long time!

Haven't seen this referenced previously, the homelet rental index

http://homelet.co.uk/homelet-rental-index

There are plenty of charts etc. available at the link

The headlines of it for September 2015

Average rental values for new tenancies in the UK were 8.5% higher than the same period last year

The annual growth in average rental (8.5%) was the same as 2014 (8.5%) and higher than 2013 (4.9%)

Average tenant incomes were 2.5% higher than the same period last year

Average rents for new tenancies in London are 6.6% higher than the same period last year

Average rental values for new tenancies in London (£1,555pcm) were £96 more expensive per month when compared to average rental values in the same period in 2014 (£1,459pcm)

When London is excluded, the average UK rental value was £762pcm - this is 4.6% higher than the same period last year (£729pcm)

Average rental values have increased in nine out of twelve regions in the UK

Reply to the comment left by "Jon Pipllman" at "16/10/2015 - 09:25":

Long may it continue if clause 24 goes ahead in its current form.

Its funny because without clause 24 I would be more than happy for rents to stay static for a decade or more, as I believe that I already make a reasonable return at current levels. However, I will be squeezing every property for every pound and penny going forward.

Reply to the comment left by "Barry Fitzpatrick" at "16/10/2015 - 07:27":

Nice one Barry. The thing with Clause 24 is that it relates to so many issues. We could write a few books on it by now. In fact, if anyone wants an easy PhD or Masters, this could now be the subject as many here have become something of experts on a wide range of issues. It has also been people on this site who most quickly understood and analysed the awful significance and consequences of this and we have disseminated it as best we can. We need to keep up the good work.