Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Rhys Jones" at "20/12/2015 - 16:13":

"Perceived " income we have been referring to as exactly what it is "artificially inflated income". If you are are at 118k with rent alone , then another 32k of taxable income will put you on 45% . I have spent many hard years trying to provide for my family for the present and the future, without looking to the government for handouts. now my aim is to rearrange my affairs so that my "regular " income is limited to around 40 k. What really grips my sh1t is that ; institutional LL, housing association LL, council LL, encumbered LL, corporate LL (in encumbered or not) are all acceptable and not publicly abused in the media and pubs as they are "proper" LL . But sole trader or partnership LL are apparently the scum of the earth. This whole attack is discriminatory, unbalanced and wrong period. I know incorporated LL who hold 2 or 3 props in LTD status , are these supposed to be more more prof than a sole trader who has 30 to 40 and has a team to run them ...... As well as managing the "prof" LL portfolio ? ......fooking jokers.

Reply to the comment left by "Chris Byways" at "20/12/2015 - 18:09":

Chris, that's interesting. Now they are holding us over barrel, so if house, benefit claimants, then we will be looked upon more favourably.

We might as well, house all our tenants who are in receipt of housing benefit...the only exception to the rule is that housing benefit claimant's are never receptive to rent rise, should we feel the need to raise rents.

This has been introduced, but in Ireland.

Here the rents are below LHA rates, so I don't think they will object to them going up.

The last tenancy was to the Dclg example, and option 3 was to base it on RPI, but that does not cater for the Osborne Increase.

So new TAs will be RPI + budget changes.

Their October 2015 TA is biased towards 1, 2, or 3 year contracts.

Reply to the comment left by "Saeef Khan" at "20/12/2015 - 12:45":

We expect the guardian to have biased, highly selective reporting to appeal to their audience of lefties, but to include blatant lies wrapped up as "young buyers argue....." Is a tad far even for them.

"It’s just not fair, argue young buyers, that landlords are able to enjoy much cheaper mortgages, which give them the financial firepower to elbow aside other buyers."

http://www.bankofengland.co.uk/publications/Documents/fsr/2015/dec.pdf
What the BoE actually say on p30 is:-
"despite owner-occupier mortgage rates tending to be around 0.7 percentage points lower."

Latest rumour:

http://www.martinco.com/news/2015/12/16/government-poised-to-launch-farcical-buy-to-let-mortgage-consultation/?utm_campaign=mac-news-section&utm_source=hs_email&utm_medium=email&utm_content=24728736&_hsenc=p2ANqtz-9FnSLFVIUXBN9riW1kh8-weYfNUVc9_FWKmImVU0JmenennHFe4h6NcfO9eajO9e5femeZpyQKGIADoAJQbWbR_yXJ2Q&_hsmi=24728736#.VncmZuKB568

I wonder if they understand the irony of saying they are worried about the affordability of BTL when interest rates rise while introducing a tax that will substantially exacerbate any rate rise...

Reply to the comment left by "Chris Byways" at "20/12/2015 - 21:17":

Interest rates may be lower for owner occupiers but monthly costs are much higher because they are only able to obtain repayment mortgages rather than interest only. The statement therefore has some validity.

"There are now 13.8 tenants chasing each new rental property across the country, up 9.4 from January, according to a new report by Martin & Co, .......

The last 12 months have seen a revival of the lettings market with a 21 per cent increase in tenant demand and rental values rising by 5.4 per cent over Q3 2015 as it becomes considered more acceptable to rent a home. Rents are now 2.2 per cent higher than the same period last year with the rate of increase predicted to be 4.5 per cent over the next five years."

They seem very positive about the future - of course.

Yet even if 1/3 of existing BTL premises were sold, (very doubtful as 11% are owned by just 0.2% of landlords) what impact would that have on house price affordability........ We need 300,000 pa not 400,000 over 4 years, and to take control of our borders. If it takes 24 years to save a deposit, where are those buyers coming from, forthwith, to buy all those ex BTL properties. You couldn't make it up. Kick LLs is just a smokescreen to hide Gov policy abject failure.

(Point taken on repayment, so not direct comparison)

Reply to the comment left by "Chris Byways" at "20/12/2015 - 23:56":

Prices may dip in localised small pockets due to the difficulties for both Investors and OO to get mortgages & high concentrations of LL restructuring in a short space of time. This "gap" will soon be filled with cash investors on the basis that ROI will be high, as prices go down yields by default will go up, anything above the paltry few % banks offer will keep investors firmly in the game ....highly leveraged LL will be replaced with cash buyers working within Ltd co status. joint ventures and LL clubs (ltd) will emerge, with LL joining forces to bring together skillsets and cash to consolidate and restructure exisitng portfolios as well as developing new portfolios. ...... pie in the sky ..nope, its already happening !....not to mention all the pension cash floating about, LL are generally entreprenuers, resourceful, flexible ...and just love a challenge ..my, have we got one !

People are already having pub chat and beer mat scribblings on parents investing their cash thru their already experienced LL children who are about to form "xyz rentals" ltd companies.

There is a huge amount of investment cash sloshing around out there ready to pile in.

Prof LL will restructure, dumping unprofitable stock to incorporate and re create a far more profitable & more stable (than now) portfoilio taxed @18% instead of 40/45%

With the amatuers out of the market, Providing quality rental accommodation to quality professional tenants will morph into a far stronger opportunity within PRS.

What a lot of people seem to be overlooking is that the demand for rental props is high and growing. We also have a housing shortage which CANNOT be addressed in the short term without fairies & wizards. You would have to be very blond inside to not factor this in.

No amount of meddling will stop LL phones from ringing everyday from people NEEDING accom, for the forseeable future there will be more demand than supply can service. Those that can pay, can stay, those that cant, due to GO having it away with a large chunk of Tenants rent money (collected on behalf of HMRC by LL) will struggle to find somewhere to live - i hope GO next announcement will demonstrate how he intends to deal with this.

Over the next 12-24 mths this utter sham of a tax will be made clear to the masses via TV documentaries & the media and will probably hurt GO more than poll tax hurt Maggie .When Tenants get to understand that their rent was hiked by GO to collect as tax - i wonder what their feelings will be then ?

I am explaining to my tenants as i put my rents up:
(The proportion of rent paid over as tax to HMRC will obv vary from LL to LL and prop to prop depending on LL tot income, LTV, INT rate, prop ownership staus and anything else GO decides to meddle with. )

"you pay £600 rent, it is going up to £700, GO will now take £400 of that £700 in tax, this is stop houses like the one you live in be available to you and allow FTB to buy it instead , but what will actually happen, has already happened, and will keep happening is that big institutuions and cash rich people will but them and put the rents up higher as they are looking for much greater returns on their investments. Dont believe it ? ...have a look at this then, this is just the beginning, Britain's biggest buy-to-let tycoons Fergus and Judith Wilson strike £250m deal with Arab investors to sell 900-property Kent empire.

http://www.thisismoney.co.uk/money/buytolet/article-3352735/Britain-s-biggest-buy-let-tycoons-strike-deal-sell-900-strong-property-empire-Kent-Arab-investors-250m.html

I do wonder what the national security implications maybe, if such a large concentration of properties is owned /controlled by "a large concern" based in a troubled part of the world.Maybe like the USA, they will put a fence around the whole estate and make it a secure compound, God knows !

If I could give that more than 1 like, I would. Good points.

Rhys says we must stop the tax on BTL funding (what others call ending a tax break - sic). I doubt GO will make that massive U-turn, but it will be for us to Adapt, to find ways round it legally, morally, equitably. Entrepreneurs should be rewarded fairly for risk and effort, and providing decent homes. Not as well as the Wilsons, but neither forced into a dire loss making as Rhys shows so well. You have excellent ideas Trendo.

An interesting comment to the Wilson link, pointing out why house prices / rent is so high, we don't often hear:-
"Yes and it used used to happen in the stock marking leading up to the 1929 crash...it was called trading on margin..a euphemism for borrowing to speculate....and as Davinho points out "99% of homes are purchased on borrowed money, its called a mortgage (i.e. a large loan)" So next time ANYONE tells you house prices are going up and up because a shortage of supply (which may be a myth) tell them the One key component behind rises is Credit Supply...and watch their eyes glaze over ! Once again it was allowing the banks to expand the credit that caused the rises and the speculation...and this s what the Wilsons smartly took advantage of...I don't like them because it's immoral..but they took the opportunity and thats when the credit crunch happened they nearly lost everything...because they would have slipped into negative equity territory and unable to re-finance the lowering of rates and house price inflation policies saved them..they now want out ask yourself why ?"