Summer Budget 2015 – Landlords Reactions

My Letter to my MP, James Brokenshire (Old Bexley and Sidcup)

Thanks James for your prompt reply.

I think you have missed my main point, which is this.

Never mind the first time buyer issue, there is now an unfair playing field between big and small landlords that has been created by the Conservative government.

Big institutional investors – pension funds, big overseas property companies and the like – are exempted from the effect of both sets of taxes. Only the “Mum and Dad” buy to let landlords must bear SDLT hikes and the removal of the ability to deduct interest at their at higher rate of tax. This means that many will pay tax even though they may have significant net losses on their rental business.

It seems to me that this change is really all about the big pension funds being terrified that following earlier changes, that people coming up to take their pensions would take advantage of the new rules and spend pension cash on buy to let investments, instead of buying an annuity from the pensions funds companies.

Being fearful of the loss of fee income, the pension funds have nimbly persuaded your government to clobber small buy to let investors. This is a double win for them…

1.The Mum and Dad landlords are now scared off buy to let, so will take out an annuity instead.
2.The way is also open for the pension funds to invest in property to rent themselves

It looks to me that, the Conservatives have shown that, once again, they are really the party who looks out for big businesses and the City and not the small player.

Unless this is overhauled, your party has no chance of securing my vote, irrespective of what Labour propose for the private rented sector.

See my blog post on this:

http://www.lettingfocus.com/blogs/2015/11/stamp-duty-land-tax-and-landlords/

Looking forward to your reply.

Yours sincerely,

David Lawrenson
Founder
LettingFocus.com

Reply to the comment left by "David Lawrenson" at "02/12/2015 - 16:22":

Brilliant letter. It had just the right amount of sharpness, particularly at the end.

Reply to the comment left by "Gareth Wilson" at "02/12/2015 - 16:55":

Thanks

Well done for those of you who have picked up on where all the extra cash suddenly came from in the budget. (The Office of Budget Responsibility revised their figures for tax receipts up because they revised up forecasts for net inward migration massively. Migration is, of course, another area of failed promises from this government).

Of course, Osborne, like many other governments would like more of us to be homeowners and pension annuity holders in old age because there will no cash left to pay for folks in their old age. Many of us will have to sell our houses to pay for our care in care homes (which for some reason appears to be about six times the cost of a night in an IBIS or Travelodge), though at least the Care Homes will be partly staffed by new migrants, bless ’em).

Private Eye’s comments on George Osborne’s family business posted by someone here and its tax arrangements also makes for interesting reading -well done.

..and by a quirk of fate, my dear MP here in NW Kent is also the immigration minister...!
He is having a busy day explaining the figures just out on that ... so it seems the OBR was right..!

It is now possible that lenders shut down on BTL, leaving existing borrowers stuck with current lenders and having to pay SVR rates - typically 5pc today.

Say someone's got 60pc LTV on a fixed rate today of 3.5pc. When fixed period ends they go on to 5pc SVR. they will not get any new loans because in a few months we think all lenders will push up their criteria to, say, 135pc rental income / mortgage ratio calculated at a rate of 5.8pc (Woolwich introduced this already 3 days ago).
.
Because these loans are commercial there'll be no mercy from lenders. Even the mutuals will pursue defaults hard.

Small landlords with LTVs of 60pc or more cd be forced sellers unless they can find equity elsewhere to pour into their buy-to-let.
We are going to see some people in extreme difficulty, I think.

Also, I fully expect other lenders to copy West Bromwich and try to renege on lifetime trackers using small print wherever they can.

Sorry to be so pessimistic.

David Lawrenson
LettingFocus.com

Sell up where you can the parties over, even though it wasn't much of one before hand

This government are going to turn the screw further come March I have a plan to sell my larger family homes and keep my smaller high yielding stock the problem you have got is how many landlords are thinking the same ? This axxehole has completely pulled the rug on so many hard working people the fall out with be huge

Reply to the comment left by "David Lawrenson" at "02/12/2015 - 17:17":

I foretold lenders tightening criteria somewhere back in the early pages of this dialogue. My suggestion to everyone is to review their mortgages with urgency, especially if sitting on the lenders SVR eg if your rental valuation isn't covering your existing borrowing, firstly don't panic as the likes of Woolwich will still allow as I type product transfers to good rates even if the rent doesn't fit their current rental calculation of 135% at 5.79%. BMids & TMW are the same as are many lenders - at present anyway. There's also another lender who's offering up to 75% loan to value a 3.99% 5 year fixed with a 1% Arrangement Fee based on a rental calculation of 125% of 4.1%. If in a fixed rate now that is due to end sometime next year, if really concerned over whether lenders will continue to offer product transfers where your rent doesn't fit their rental calculation, then your only alternative is to weigh up the early redemption charge vs switching now. Meanwhile I can confirm that the likes of BMids now use a rental calculation of 125% of 5.49% but if below 65% loan to value or even if at 75% but want a 5 year fix, they'll still work on a rental calculation of 125% of 4.99%.

Reply to the comment left by "David Lawrenson" at "02/12/2015 - 16:59":

Yes he definitely needs people to have money to fund their old age.
Its the first time that there will be more older people than workers 2050

Poor old George, seems to be a little unpopular with our readers and posters, so to redress the balance I have nominated him for an award, the "Make a Difference Award" under The 200/2011 UK landlord Accreditation Partnership & the London Landlord Accreditation
Scheme Awards (http://www.londonlandlords.org.uk/conference/nominations/13/your-investment-and-the-law-conference-and-award-ceremony)

Third Party Full Name
George Osborne, MP for Tatton

Company Name
Tatton Conseniative Office
Manchester Road
Knutsford
WA160LT

Thlrd Party Email
public.enquiries@hm-treasury.gov.uk

Please tell us the work you do within the private rented sector (min 50 words, max 200 words)*
I (George Osborne) dream up new ways to constantly harass private Landlords to make them more efficient. I impose greater costs so that it will sharpen up their attitude and make them more responsive to tenants needs. I give landlords a surprise with every budget I make, I do not move the goal posts I change the game from soccer to cricket although I freely admit that my Latest announcements are most certainly "not cricket".

Please explain why you should be considered for this award e.g. what makes you/and or your organisation stand out fmm the competition? What do you do to ensure you go that extra mile to deliver a high level of service to the private rented sector? (min 150 words, max 200 words) *
I, George Osborne, should be considered for this award because I have levelled the playing field between landlords and owner occupiers and in so doing ensured that rents will increase, rented property will become scarce, wicked landlords will be made bankrupt, some will even become DSS claimants because of the infinite tax rate I have proudly imposed. I have gone that extra kilometre (we are a metric country now) to ensure compliance with Increasingly complex legal
requirements and Increasing taxes to Improve the prlvate rented sector.

Please use this space to supply any additional Information that you h!el will support your awards entry- (min 50 words, max 100 words) plus no more than 2 page attached evtdence and no more
than 5MB In size
I, George Osborne, can do no more than direct you to http://www.property118.com/budget-2015-landlords-reactions/76164/ where there is a wealth of information concerning the effects
of my fiscal decisions, decisions which will penalise the poorest members of our society but leave the wealthy (me) unaffected. I am proud to hilVI! made a greater difference to the PRS than any other chancellor In the history of British democracy.

He should win as there is no one who comes close to making as big a difference as George Osborne.

Reply to the comment left by "David Lawrenson" at "02/12/2015 - 17:17":

I foretold lenders tightening criteria somewhere back in the early pages of this dialogue. My suggestion to everyone is to review their mortgages with urgency, especially if sitting on the lenders SVR eg if your rental valuation isn't covering your existing borrowing, firstly don't panic as the likes of Woolwich will still allow as I type product transfers to good rates even if the rent doesn't fit their current rental calculation of 135% at 5.79%. BMids & TMW are the same as are many lenders - at present anyway. There's also another lender who's offering up to 75% loan to value a 3.99% 5 year fixed with a 1% Arrangement Fee based on a rental calculation of 125% of 4.1%. If in a fixed rate now that is due to end sometime next year, if really concerned over whether lenders will continue to offer product transfers where your rent doesn't fit their rental calculation, then your only alternative is to weigh up the early redemption charge vs switching now. Meanwhile I can confirm that the likes of BMids now use a rental calculation of 125% of 5.49% but if below 65% loan to value or even if at 75% but want a 5 year fix, they'll still work on a rental calculation of 125% of 4.99%.