Summer Budget 2015 – Landlords Reactions

After David's superb letter, and Ros's to IC, I hesitate to write, but I'll 'ave a go.

Dear Ian,

You write:

"There is plenty of evidence that first-time buyers are being priced out of the market"

What evidence is there of this, is it conjecture, supposition or provable?
Is it significant or de minimis?
Geographically ubiquitous or confined to some major conurbations?

“First-timers celebrate as landlords feel the pain."

"the BTL brigade."

"They face a four-pronged attack from which the Treasury expects to raise £3bn extra tax by the end of this parliament."

These vitriolic statements, worthy of Corbyn or the GMB, belie the fact that many PRS landlords, providing a very genuine service will see a loss come 2020. Being taxed on turnover not profit is counter all conventional logic. However, this does not affect me, but I see trouble ahead.......

It can't be sustainable, nor 'just' for good folk to pay £1.20 tax for every £1.00 they 'earn'. So, like Tesco finding plastic bag use dropped 80% when they charge 5p, I suspect the £3bn might not be actually realised.

So why am I bovvered? This "four-pronged attack" sets alarm bells ringing, rent controls, inability / delays to evict serial debtors and/or trashers, etc. etc. more costs to what are becoming slender margins for the risks and considerable work and encumbrances involved, make me, and from what I hear many others, start exiting from the 'value' end of the market, the Universal Credit recipients all too often failing to make rent payments they have received for rent, over to the landlord ("fraud"?), when young professionals, working eastern Europeans, or company lets are a safer, more respectful and sustainable tenant.

Surely it is inevitable, rents will rise, and the poorest, most vulnerable will have further misery heaped upon them? So I'm not sue I concur with your views.

Is there anything you might say to convince me, and other similar readers, they should continue with tenants receiving housing benefit?

Regards,
Chris Byways

Reply to the comment left by "Chris Byways" at "14/12/2015 - 22:45":

I like the friendly and slightly unconventional style of talking to Ian. It's certainly worthy of a civilised reply.

Reply to the comment left by "Chris Byways" at "14/12/2015 - 22:45":

Great stuff Chris. I liked the long words - I haven't seen 'ubiquitous' for a while. And I liked the question at the end. Let us know if you get a response.

Reply to the comment left by "Worried by Budget " at "14/12/2015 - 21:54":

I regret that this unprecedented and unwarranted financial attack on landlords is gradually eroding my social conscience. I have to survive and that unfortunately means that all my social tenants will be priced out of my accommodation. Since I am the cheapest landlord in the area this will mean that they are all homeless.

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

Hi Ros

I have sent him the following email, entitled "Landlords don't get MIRAS":

Dear Mr Cowie

You say that landlords want to preserve mortgage interest tax relief for landlords 15 years after this was abolished for owner occupiers. This is a false comparison.

Under MIRAS we got a reduction in income tax if we had a mortgage on our principal residence. The interest had no connection with the source of our incomes. This was indeed a tax relief, to help us to buy.

By contrast, BTL interest is intimately connected with the source of our income from letting. It is the essential cost we pay for the mortgage without which we would not have been able to buy the assets which generate taxable income.

Landlords do not get tax relief on mortgage interest any more than they get tax relief on agents’ fees, plumbing, electrical work, repairs, redecorating or any of the other myriad costs of running their businesses. They simply deduct interest along with all other costs from rent received to find the taxable profit, just like every other enterprise in the country

If you originally proposed the levy that is Clause 24 then you know as little about the real world as Natalie Bennett, the tongue-tied leader of the Green Party. Her party was the only one that included this in its 2015 election manifesto. It had a candidate in every constituency in the UK, and every single one was rejected by the electorate except for its single sitting MP, who had previously been ousted by Bennett as its leader.

If you did propose it you will be responsible, along with Bennett, Osborne (and his double-thinking spokesman Gauke), for the disastrous consequences that Clause 24 will have on the poorest members of society.

Maybe you thought that landlords would gladly hand over all of their profit to the state, with a penalty on top, for the privilege of providing decent accommodation to those who need it, as a sort of double contribution to society. If so, you were wrong.

This levy will be like VAT. It will be borne by the consumer, collected by the supplier, and paid over to the government. Except that those tenants who are on capped benefits will not be able to afford it and so will be evicted, to be housed in more expensive “temporary” accommodation, in whichever part of the country it can be found.

There will not only be financial costs – a more important cost to the tenants will be the upheaval that this will bring to their lives.

Osborne says he wants a high wage economy. He is going to increase the cost of housing so higher wages will certainly be needed. A high wage economy will of course make what is left of our manufacturing industries less competitive. Maybe he wants to phase out manufacturing altogether, and get the Chinese to make everything, with the exception perhaps of wallpaper.

You claim that this levy is backed by the Bank of England. I have not seen reports of any such support. What evidence have you seen?

Kind regards

Reply to the comment left by "Ros ." at "14/12/2015 - 23:09":

I'm sure I'll be discombobulated by his superior intellect and bombastic response. 🙂

Reply to the comment left by "Chris Byways" at "14/12/2015 - 22:45":

Nothing. In Plymouth every ab initio benefit tenant I have had has led to a prolonged battle to get the property back before the degradation became permanent. And another month or more to refurbish or redecorate. And, in one case, replace the purloined white goods. Average loss of rent exceeds £1500 and refurb cost probably another £1000.

Inventories now have the serial number and asse number, rather than just 'Hotpoint f/f model XYZ.

Eventually, I have learned my lesson.

My last LHA tenant owed me 2k had the door kicked through by a crazy girlfriend and then sold all my white goods never again

Reply to the comment left by "NW Landlord" at "15/12/2015 - 08:42":

Bad HB tenants are one reason why this crazy "One size fits all" AST and eviction process will never work. But we digress from the thrust of this thread, the evil C24.

Every LHA /UC tenant is within 24hrs of becoming a working tenant. Likewise every working tenant is within 24 hours of becoming LHA / UC. If that happens their personality and attitude towards paying the rent and how they conduct their tenancy does not change over night.

I am about 60% LHA to 40% working tenants at the moment. `Ive made some bad choices in the past with my tenant selection be they working or HB and learned from it. Its the tenant selection process though which is key for me not the actual source of the rent. The government are good payers. They pay me on the nose every 4 weeks providing the paperwork is correct.
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