Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Chris Brown" at "27/11/2015 - 11:42":

Hi Chris. Yes, I listened to details of the case on the radio yesterday. It does seem that it is possible to mount a legal challenge against a Minister and / or a department which introduces unfair legislation. What we need to do, as you suggest, is get legal opinion. I have contacted a lawyer I know, and once I have an opinion, I will post his view.

I would be more than happy to contribute to a legal fund as will many to fight this sabotage

I think it might be worthwhile for landlords to persevere with their MPs despite initial responses, which seem to be similar in nature.

I initially wrote to my (Conservative) MP and challenged the statements and rationale given for restricting the tax relief. I also outlined the likely consequences of introducing a measure which would reduce investment by us in the PRS. I received a similar response (sent to my MP by David Gauke) to the responses which most landlords seem to have received. Despite letters, emails and submissions by landlords - and various independent organisations, it seems that the Government are unwilling to move away from the opinions it has. So, in my third email to my MP, I decided to change my approach and spell out exactly how the new measures would affect me.

I included a spread sheet, prepared by my accountant, which showed a comparison between my income (job and BTL portfolio) in 2013 - 2014 and my projected income once the new measures have been fully introduced - along with comments from my accountant. The figures showed: a 213% increase in income tax. A rise in the tax rate on my rental profits from 29% to 97%. Percentage of total income to live on after tax - 54% down from 75% and a 28% reduction of my take home pay. Additionally, under the new measures my "income" exceeds £100,000, which means I start to lose my Personal Allowance. So, as my rents increase I will lose my entire Personal Allowance over the next £22,000 of increased income - meaning that my effective marginal rate of tax becomes 60%.

I think it was attaching the spread sheet, showing the effects of the new measures in black and white, which made my MP take notice. Up until then I don't think he really understood the devastating impact it would have on me personally - one of his constituents.

My MP responded by saying that he understands my situation and sympathises with my view that the tax changes should not be applied retrospectively. He goes on to say that he understands the reasons for change, which I took to mean he understands the motive - to help solve the housing problems (it won't, as we all know), but that it does not seem fair to impose these changes on constituents who have planned for their future early on and set up businesses under previous tax rules. He has written to the Chancellor again to make these points.

I have no idea whether or not his representations will make a difference, or not. However, I do believe that if we have any chance of persuading the Government to make any amendments at all, it will be because a weight of MPs (crucially) representing, and supporting their own constituents make those representations on our behalf.

Please can I encourage all landlords (if they haven't already) to write to their own MPs, including a spread sheet which shows the impact the new measures will have on their own circumstances?

Following a suggestion from Gareth Wilson, I have just written to Harvey Jones at the Express and Rosie Taylor (but she is out of the office until the 30th) and James Coney, asking them if they can put a link to the petition, if they are writing any articles on BTL in the near future. Although the petition may be of limited utility, it could be good in terms of consciousness-raising and obviously it is better to have 100,000 signatures and a possible parliamentary debate, than the current near 40,000 signatures. If anyone else wants to suggest this to journalists that would be good. We may have a little window of opportunity this week, with the heightened media coverage of BTL and landlords.

https://petition.parliament.uk/petitions/104880

Reply to the comment left by "Chris Cooper" at "27/11/2015 - 12:41":

I've arranged a face to face meeting with my MP (Jeff Smith) and will try to persuade him to write to GO to ask that clause 24 is not introduced retrospectively. Every little helps.

Reply to the comment left by "NW Landlord" at "26/11/2015 - 18:37":

Hello NW Landlord just a thought, If your tenants can get loans why not sell them the flat theyr renting ? I'm sure they'll see the fruitlessness of paying someone else's mortgage, or are they renting courtesy of the taxpayer ? Another thing I noticed holiday lets exempt from changes LLs who have diverse portfolios can split to long term let/holiday/serviced let/ sell/consolidate to mitigate losses long term go ltd but will that take a hit too ? Problem with any legislation is its a blanket policy whereas UK has diverse areas, will be interesting to see where this leads.

Does anyone know, will the new Stamp duty tax also apply to buy to renovate and sell?

If so, does this mean that property will start going for less at auctions as people will have to factor in lower margins?

Reply to the comment left by "Chris Cooper" at "27/11/2015 - 11:57":

Chris

I look forward to it. I am not as badly embarrassed as some, as we carefully live within the 20% tax bracket. But I object to the SDLT being charge on my retirement home as I release my existing house to a family needing 4 beds, 2 baths etc. Maybe I won't do it now.

Reply to the comment left by "Costas Tzanos" at "27/11/2015 - 17:26":

Do you think the details have been thought through: this is all part of his rapid U-turn response. Hence the need for further 'consultation'.

But if you are buying to re-develop and sell, that is a separate business and regard as such by HMRC. remember, renting out property isn't a business, yet. I bet it will be when the Insurance Co's take over.

As it is, he sees a seem of new money: I can only expect that it will widen to others.

I must get back to work and finish this latest re-build. Thankfully we've stopped renting it and have given it to a son.

Reply to the comment left by "Chris Cooper" at "27/11/2015 - 12:41":

Hi Chris.
Yes, MPs are shocked when they see the impact on you, their constituent, in its gory detail. I wrote to my MP 5 times though explaining all of this and it was only when I went to his surgery and just as his eyes were about to glaze over I forced him to look at my spreadsheet that he 'got it.' I would urge anyone who has not been to see their MP to do so. It's got to be worth trying to go for 'stopping it being retrospective.' I know it's received Royal Assent, and I am not au fait with parliamentary processes, but there's bound to be a way that this could be achieved before 2017.