Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Bill Morgan" at "14/12/2015 - 03:25":

I'm still waiting for a reply to my letter to Campbell Robb. For anyone who hasn't seen it, I'll put the link. Some of you might like to follow up some points from that in any emails you send.

http://www.property118.com/campbell-robb-ceo-shelter-open-letter/81625/

Reply to the comment left by "Jonathan Clarke" at "14/12/2015 - 09:27":

I have much sympathy with Generation Rent's plight. But by them perpetually kicking out at the decent (most) landlords who are undeniably (a big) part of the solution, not THE problem, is doing themselves a disservice.

Less LL job satisfaction, entrenched attitudes, reduced choice, hence competition and higher, not lower rents, which they obviously want, and legitimately so too.

And being a landlord is an onerous, skilled job, with ever more red tape.

Having worked 50 years, paying into a SIPP, one has say, a £200k pot, so what do you do with it?

# 1 Leave it spread over several banks to get a safe 0.5%? (Or Minus 2% in real terms)
# 2. Buy an Annuity? BUT:- "Depending on how long you live you may get back less than you bought your annuity for. AND No cash-in value. Once you've bought an annuity it cannot be cashed in at any time." - So a one-way street, nothing for nearest, when you go, even if in only 6m, and they'd give under £7k pa of your own money back - that's less than 3.5% of your non returnable capital each year?
# 3. Or perhaps buy forestry WITH MASSIVE TAX SAVINGS, or invest in a Property Fund. Illiquid, but so is PRS?
# 4. Or take enormous risks, fines if you overlook something simple by a couple of days, hassle, and grief from those you thought you were helping (not to mention Shelter, GO, Guardian), by providing decent homes from run down or even derelict properties, or funding new builds?

Ok there are bad landlords (but they won't waste their time on this forum), let's help to eradicate them, but we are being sacrificed for some politician's aspirations. It doesn't look promising for anyone the way it's heading.

Notes: Re #3.
"We offer individuals the opportunity to invest in a privately managed mature forestry investment.
Forestry returned 23.9% last year in the UK. Over the past 21 years Forestry gave a return of 8.5% per year, beating Equities and Commercial property over the same period. All profit from forestry is Tax Free. All of our forests are located in the UK & Ireland." http://www.ardenforestry.co.uk/?gclid=Cj0KEQiA7rmzBRDezri2r6bz1qYBEiQAg-YEtrRYRB5Zv7fApz10LZ5Tg9QoQkfmhGiUh0RxKBeaKfIaAqdY8P8HAQ#!forest-guide/c21w7

Or how about this (which GO & Co, as well as his bed mates - or is that his Mentors, called Gen Rent, don't seem to be concerned about):-

"London Central Portfolio (LCP) has just launched its latest fund ­– London Central Apartments III (LCA III) – and is offering shares in a portfolio of 40 one- and two-bedroom apartments in an area designated by LCP as “Prime Central London”, which are rented out to blue-chip tenants.
Prime Central London covers the boroughs of Kensington and Chelsea, and the City of Westminster. LCP is targeting a £100m fund-raise and will deploy this to buy, renovate and let further flats. It projects returns of 12pc per annum over five years and is currently open for subscriptions.

LCP's latest Fund projects returns of 12pc per annum over five years and is currently open for subscriptions

One big draw of this fund is that it is SIPP and ISA compliant and it has a minimum investment level of £25,000 (subject to eligibility). Also, following the summer Budget, corporation tax on rental income will be reduced while buy-to-let mortgage relief for higher-rate taxpayers is reined in.
As a residential portfolio, let out on a commercial basis, LCA III falls outside the remit of the recently introduced Annual Tax for Enveloped Dwellings. The fund’s “genuine diversity of ownership” means it is also exempt from the capital gains tax and new inheritance tax charges that will be levied on non-resident and non-domiciled private property investors." http://www.telegraph.co.uk/sponsored/property/london-property-investments/11785364/closed-end-versus-open-end-property-funds.html?

And it gets better (but for who?, and all this without bovver)

"These six square miles, comprising just 200,000 households surrounding Hyde Park, are home to some of the world’s most desirable real estate – posting average prices of £1.5m – over five times the national average. With a 63pc price growth since 2007, the pre-credit crunch high, some believe that this is a short-term phenomenon and prices are at tipping point.
What is less well understood, says LCP, is that this is nothing new. This sought-after area has seen consistent growth for decades, at around 9pc a year since the 1960s.
Its resilience is in stark contrast to the wider UK, where the average price of a property (£265,000) has only just returned to 2003 levels."

So..........

12% returns? Tax free in an ISA. Where does that come from? (Clue: not LHA HB rents!). Go figure. If you can't beat them, join them, is that how private landlords should be organising themselves? Some kinda Trust Fund, Closed Ended, or Open Ended, with shares, by a regional co-op of PRS Landords?

Reply to the comment left by "Laura Delow" at "12/12/2015 - 14:17":

That's a very complex set of arrangements even in summary form. I wish you all the best with your further investigations and will be happy to swap ideas if you would like to meet up at some point.
.

Reply to the comment left by "Mark Alexander" at "14/12/2015 - 14:34":

Would love to meet & swap ideas/pick your brains. Am away immediately after New Year for 3 weeks so may be sometime after if that works for you. Are you ever in London or thereabouts?

Reply to the comment left by "Laura Delow" at "14/12/2015 - 15:21":

I'm also away (visiting relatives in Russia) 27th Dec to 18th Jan.

I do go to London occasionally, lets touch base and look to make some arrangements for late January. Please drop me an email with your contact details to mark@property118.com and I will call you.
.

Just got this email from Ian Cowie at the Sunday Times, in response to my open letter to him.

'Dear Dr Beck,
Thank you for your emails, which make the case for preserving mortgage interest tax relief for landlords 15 years after this was abolished for owner occupiers. I am sorry to see you regard my articles, which proposed bringing the tax treatment of landlords into line with owner occupiers, as "very sub-standard".
But I do draw some comfort from the fact that the Chancellor of the Exchequer has recognised the need for reform and said he will put these proposals into effect.
You ask the question: "Is it the politics of envy? Is it because you are one of those who wish you also had invested in property and because you didn't you now want to punish those of us who did (taking considerable risks and incurring massive stress in the process; even more so with this awful, unexpected attack on us as though we are a criminal class)?"
The short answer is "no". Far from being motivated by envy, I am sincerely grateful for my good fortune, including having been a homeowner for more than 30 years now; nor do I regard landlords as "a criminal class".
You point out that I have written positively about mortgage interest tax relief in the past. That is true but, as a great economist once observed, when the facts change I change my mind. The Chancellor is not the only authority to share concerns that buy-to-let might be overheating and not need multi-billion pound subsidies from taxpayers; the Bank of England recently described BTL as presenting a major risk to economic stability.
You say: "Frankly, it is like shepherding people safely into a room, reassuring them that all is well and then getting out the machine gun."
With all due respect, that does seem a somewhat excessive description - especially after recent terrorist outrages - of a fiscal reform proposed by the Chancellor of the Exchequer, backed by the Bank of England and originally proposed by your humble correspondent.
Yours sincerely,
Ian.'

This is the link to our previous exchange:

http://www.property118.com/why-would-the-sunday-times-campaign-against-landlords/82718/

We don't receive a tax payer subsidy and are not a like-for-like comparison with owner occupiers paying lower residential mortgage interest rates and smaller deposits, who are not legally compelled to certify the electrics, gas etc for their homes, are not running their homes as businesses, and not filing manual tax returns like a business in the first place for their mortgage payment to be deducted from.

And of course home-owners don't pay capital gains on their property sales!

Then there is the blatant unfairness opened up between ourselves and sole traders, or ourselves and the big corporate landlords: the entities that we ARE comparable with. If Cowie is so bothered about fairness for owner-occupiers why not pursue some nebulous campaign for equality between them and the richer corporates? That's how much of a toss he really gives about owner-occupiers who will continue to be priced out of London by THESE VERY PARTIES.

And regardless of where things stand from a fairness point of view, the fact remains that Clause 24 (a policy he advocated) is an axe to BTL (an investment he recommended) and a very large number of tenants (people he should show some concern for).

It's simple: most landlords' post 2020 tax liabilities added to their mortgage outgoings, will exceed their current rents. This will put their business into a loss and necessitate rent increases. This so-called levelling of the playing field between landlords and owner-occupiers is not going to deal with that. It's just sidestepping the issue.

Reply to the comment left by "Mark Alexander" at "14/12/2015 - 15:53":

Wilko

Reply to the comment left by "Ros ." at "14/12/2015 - 16:13":

Does Ian Cowie not realise that mortgage interest will now be double taxed, both the landlord and the bank pay tax on the interest? There is however one big difference, the bank is allowed to deduct legitimate business expenses before tax is calculated.

I take my hat off to everyone fighting the tax changes but nothing we say or do seems to make any difference.

The best thing to do is to adjust your business to minimise the tax by switching to short term lets and then watch the Government struggle with the homeless.When this happens public opinion will turn against the Government.It's very fashionable to bash landlords and blame them for everything but when landlord services shrink, only then will the public realise that their lives have actually got much worse without them.

The only thing we all have at the moment is time.It is best to use this wisely to adjust our businesses,.