Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "KATHY MILLER" at "29/11/2015 - 11:19":

You are correct the burgeoning population is the problem not the lack of housebuilding

Reply to the comment left by "KATHY MILLER" at "29/11/2015 - 11:06":

Yes, Kathy. Obviously the guy has an agenda as he wants to sell his retirement homes, but this is a central issue that the Government is completely ignoring - how to better use the housing we have. Many of us portfolio landlords are excellent at using space in creative ways, making comfortable homes for our tenants in HMOs, at low cost to them, so they can save up if they like, and environmentally our houses also work really well - lighting and heating a house for 6 people, while next door an owner-occupier may live alone and use a similar amount of energy (certainly not a 6th) and have lots of empty, unused rooms. And we get slagged off and penalised for it! And now we get an attack and attempt to drive us out of business. It's truly pathetic.
And nothing is being done to help older people move out of their large homes if they want to. These 'retirement' homes don't seem like the answer to me though - it looks like they are usually hugely expensive. Who wants to get something much smaller and pay over the odds for it? There needs to be affordable homes for this category of potential seller as well. And we landlords could take over some of these houses and use them far better than owner-occupiers would. Except we won't now, because someone else can sort out the housing shortage. Don't look to us!

Article by Harvey Jones as promised:

http://www.express.co.uk/finance/personalfinance/622851/Chancellor-stamps-down-on-buy-to-let-landlords

Landlord's registration scheme has been launched in Wales, I'm sure this will now move down, South, see link below:

http://www.landlordzone.co.uk/news/landlord-registration-scheme-launched

Reply to the comment left by "Ros ." at "28/11/2015 - 13:58":

Thanks Ros,

Patrick at the "Grauniad" actually took that info from me from a press release I put out.

Sadly he chose to omit my points about the fact that in my view this tax change was partly about allowing pension and overseas property funds onto the buy to let pitch, (they are exempted natch!), something that have been itching to get into for years.

Once I read the usual landlord hate in the comments part under the piece with my quote in, I thought "Ah well, Good luck to Guardian reading tenants in years to come, when they wish to complain to their amorphous corporate landlord about a leaking tap - then see how responsive these guys are to their needs... !

Evidence from the highly respected Rugg Review into the private rented sector showed that big corporate landlords did not make good, responsive landlords.

Hi Ros, I think Ian Cowie deserves one of your well written emails...

I don't know if the following article has been posted on here today yet. The article was written by Ian Cowie, Financial Commentator, the Money supplement of the Sunday Times, today.

In it, he claims credit for "bringing landlords' mortgage interest relief into line with that of owner-occupiers" by "repeatedly calling on the Chancellor to help first time buyers", by doing so.

First-timers celebrate as landlords feel the pain

The tide is finally turning against property in favour of pensions after the chancellor targets the burgeoning buy-to-let market

Ian Cowie, Financial Commentator of the YearPublished: 29 November 2015

There is plenty of evidence that first-time buyers are being priced out of the market, with a typical twentysomething with a full-time job earning just under £22,000 (Alamy)

COUPLES will be able to leave up to £3m tax-free to their children by 2020 thanks to changes announced by the chancellor in his autumn statement last week.

The new figure is nearly 10 times the current nil-rate band for inheritance tax (IHT), which allows individuals to leave up to £325,000 to their heirs before IHT is applied at 40%.

George Osborne will help homeowners and pension savers to place wealth beyond the grasp of the taxman — even beyond the grave. But he aims to squeeze buy-to-let (BTL) landlords and some second-home owners while they are still breathing.

No wonder the chancellor’s fourth “budget” in less than 12 months prompted howls of protest from estate agents and the BTL brigade. Accountants agree that the cumulative effect of the changes will be to tilt the tax system against landlords in favour of owner-occupiers and pension savers.

Mike Fosberry of the accountants Smith & Williamson explained: “The new rules change everything in terms of inheritance planning. For example, it will be possible for individuals to leave up to £1m of pension savings tax-free from April next year. It will also be possible to leave family homes worth up to £1m to children and other direct descendants tax-free from 2020. So the new IHT allowances could be worth as much as £3m for a couple.

“In practical terms, this suggests that it may be better to spend savings outside pensions — such as Isas — before you draw money from a pension.”

However, the rules contain pitfalls. One consideration is that where the pension saver dies after the age of 75, any unused funds that pass to heirs will be subject to tax. That rate could be 20%, or even 0%, depending on a beneficiary’s income, said Fosberry.

If you leave your pension to your 30-year-old child, who does not work, he or she can take the money tax-free up to next year’s personal allowance of £11,000 a year. Tax bills could be delayed if the money were drawn over time, not as a lump sum.

Michael Hooke of accountants Deloitte pointed out that some pension savers may be able to leave even more than £1m tax-free. “If all of their pension assets are already in ‘drawdown’ and the pensioner dies before the age of 75, there is no lifetime allowance test at that point. There is, therefore, no upper limit on the amount that could be passed on tax-free.” Drawdown is when income, or a lump sum, is taken from a pension while the fund remains invested.

The autumn statement contained rather less positive developments for BTL landlords and buyers of second homes. They face a four-pronged attack from which the Treasury expects to raise £3bn extra tax by the end of this parliament.

David Cox of the Association of Residential Letting Agents said: “The increased stamp duty on BTL properties is catastrophic news for the private rental sector, especially following the recent changes to mortgage interest tax relief and the annual wear-and-tear allowance.”

There is plenty of evidence that first-time buyers are being priced out of the market. The average price of a home is £286,000, while a typical twentysomething with a full-time job earns just under £22,000, according to the Office for National Statistics.

The growing gap between income and house prices explains why the average age of first-time buyers has risen to 31. More than half receive help from their parents when putting down the average mortgage deposit of £53,000. This has excluded rising numbers of young adults from home ownership, creating “Generation Rent”.

Money has repeatedly called on the chancellor to help first-timers by bringing landlords’ mortgage interest tax relief into line with that of owner-occupiers, who lost the perk 15 years ago.

Before the July budget, we reported that Sir David Hendry, professor of economics at Nuffield College, Oxford, predicted that landlords’ tax breaks could cost taxpayers £10bn a year if the chancellor failed to act. Since then, the Bank of England has warned that BTL presents one of the “main risks” to financial stability as lending to landlords has risen 40% since the global credit crisis in 2008.

But with the next budget less than four months away and the likelihood of a big change to pensions, who knows what the rules will be this time next year?

Ian first spoke out on buy-to-let in June

Four-pronged raid on landlords
■ First, the July budget set out restrictions on how landlords can cut tax bills by deducting all mortgage interest costs before calculating their taxable profits. With effect from April 2017, this deduction will be reduced over four years to the basic rate of income tax. For example, a higher-rate taxpayer who has rental income of £10,000 and mortgage interest costs of £6,000 would pay £1,600 tax now, but £2,800 under the new rules. Tina Riches of the accountants Smith & Williamson said: “Higher-rate landlords whose interest costs are 75% or more of rental income will see their profits wiped out.”
■ Second, landlords can currently reduce their taxable profits by claiming a wear-and-tear allowance equal to 10% of rental income. The chancellor plans to restrict this relief to expenditure actually incurred.
■ Third, stamp duty will rise by three percentage pointsfor landlords and second-home buyers next April. Buying a £250,000 home could cost £7,500 more as a result, according to Deloitte.
■ Fourth, capital gains tax – levied on profits from property other than the main residence – will have to be paid within 30 days of completion from 2019.

Own a holiday let? Then you are spared
Second homes that qualify as “furnished holiday lettings” will escape some of the chancellor’s clampdown on tax breaks, a leading accountant has discovered.

George Osborne told the Commons: “People buying a home to let should not be squeezing out families who can’t afford a home to buy.” He will use some of the tax raised to help “communities in places like Cornwall which are being priced out of home ownership”. Cornwall is a favourite holiday destination of the prime minister.

But owners of holiday homes will still be able to claim mortgage costs to cut tax on rental income, according to George Bull, senior tax partner at RSM. HM Revenue & Customs confirmed that owners of furnished holiday lets will not be affected by the restrictions on offsetting interest costs to be introduced in 2017. However, the Treasury said they are likely to be hit by the new stamp duty surcharge and capital gains tax rules.

A furnished holiday let is defined by the taxman as a property that must be offered for rent for a minimum of 210 days a year and actually let for at least 105 days a year, but no more than 155 days. Don’t ask why.

Bull told me: “These owners are unaffected by the interest relief changes, even though it could be argued that they distort the housing market by pushing up prices in rural areas more than most BTL landlords or second-home owners.” It’s hard to believe Osborne planned this. It is more likely to be a loophole. Bull said: “It sticks out like a rock on the beach when the tide’s out.”

Reply to the comment left by "David Lawrenson" at "29/11/2015 - 17:36":

Couldnt agree more about the build to rent .

He will continue to hit on the PRS as he wants our 18% share.
I wonder what he has in store for us next year?
If BTL bale out the market will be propped up my all the FTB with
all the government schemes.

GO said that the social sector will get the same housing benefit rate as the private sector.

Can somebody let me know

In the social sector can under 35s currently have a one bedroomed flat? If they can this will now change to the room rate which in my area is 69pw.
So what happen here?

Reply to the comment left by "Chris Cooper" at "29/11/2015 - 17:44":

Hi Chris. Yes, I will get onto it. Unfortunately my kids have all available computers at the moment so I have to wait. I can't believe the nerve and stupidity of the guy to actually want to claim credit for the 'bonkers tax.' And to have won a prize for financial journalism... well it beggars belief.

Reply to the comment left by "KATHY MILLER" at "29/11/2015 - 18:32":

If they are to receive the same rate, presumably they have to pay tax back to the Government with the bonkers tax on top - we must have a level playing field (level playing field, my arse). Sorry, don't know the answer to your question!