Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Ros ." at "18/10/2015 - 10:01":

Agree Ros, after many years of recession and low housebuilding completions market needs stability, this reminds me of the sdtl changes and how ltd's were exempt until recently, seems Govt are looking everywhere for tax revenues

Reply to the comment left by "Simon " at "19/10/2015 - 06:38":

And the important point is that they are looking for revenue NOW with no thought for the future. I recall something about a goose and golden eggs . . . . They care not that there will be insufficient rental property in the future as long as they get their income now, more specifically during the next four years.

Reply to the comment left by "David Price" at "19/10/2015 - 07:24":

Well said David. They couldn't give a damn whether or not first time buyers got onto property ladder, as long as they could fill their coffers.

Reply to the comment left by "David Price" at "19/10/2015 - 07:24":

David, my understanding of the traditional buy to let model is that the real gain is to be had from the capital gain on the rise of the property value and the loan should cover the interest payments, surely this model will not now work, i mean for investors who are moderately or highly geared ? I would imagine a property investment to be for 5 - 20 years but with such proposed changes as in the budget who will consider such an investment ?

I have a theory hat GO (and HMRC) do not like the fact that a BTL LL can refinance to extract cash tax-free (which decreases profits, and therefore decreases the tax on those profits). Which is a double whammy for the Exchequer.

If this is the case then this tax change is very accurately targetted on stopping this, Tenants are an unfortunate bit of collateral damage.

I think you are right Barry - the tax liability of the BTL model could make the Starbucks CFO blush and GO doesn't like that.

The next angle of attack that I foresee is to ensure that where money has been released by remortgaging, that the interest is being treated correctly from a tax perspective on the self assessment form.

Reply to the comment left by "Barry Fitzpatrick" at "19/10/2015 - 09:12":

It also means that basic rate taxpayer LLs who don't get caught by this measure (and have mortgages) may well be in the Chancellor crosshairs in the future.

If I am correct it explains the exemption of Ltd Co's from this measure as extracting cash from a Ltd Co would incur either income tax or now dividend tax. So it could mean converting to a Ltd co may be a reasonable long term bet. BUT only if my theory is right.

The rightmove october house price index is out - it has some commentary that GO and his ilk could pounce on

http://www.rightmove.co.uk/news/house-price-index/october-2015

Headlines are

Highest ever national average price of property coming to market, up by 0.6% (+£1,715) this month to £296,549 - and 5.6% more expensive than a year ago

New record fuelled by high demand for first-time-buyer properties, with prices up 4.9% on last month and 9.6% (+£16,105) over the past 12 months

Vicious circle as high tenant demand leads buy-to-let investors to go head-to-head with first-time buyers:

Many letting agents report ‘same-day’ rentals and little or no property to rent

Number of first-time-buyer properties (two bedrooms or fewer) coming to market down by 8% on same period a year ago, exacerbated by first-time sellers struggling with second-step price gap

Rightmove advises first-time buyers how to get on a level playing field versus landlords by winning over the hearts, minds and pockets of sellers

Reply to the comment left by "Jon Pipllman" at "19/10/2015 - 09:43":

So Rightmove is encouraging people to offer over the odds to get a property and so pushing up prices even further - well, it's in an estate agent's interest to have high prices as they get a better percentage. Haven't noticed any real rises here - still way below the prices of 8-10 years ago, although one neighbour is trying it on. Can't see them getting the 150,000 they are asking when there are similar houses for 50,000 (or even 75,000) less

Even commenters on Accounting web seem to want to have a go at landlords:

http://www.accountingweb.co.uk/article/huge-tax-bills-ahead-landlords/591330