Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Lun Bun" at "27/12/2015 - 11:38":

Tried several packages from free to very expensive and eventually went back to my home brew spreadsheet. None do what I want and most are totally inflexible.

That said with all the new tax schemes that the government are keen to introduce (quarterly reporting for instance) it may be necessary to suffer the deficiencies of a commercial package in order to conform to HMRC's requirements.

Reply to the comment left by "Laura Delow" at "27/12/2015 - 10:58":

The standard model DCLG TA suggests options for rent increases such as #3 - in line with RPI. Isn't it now time to have a standard clause, rent increase may be based on RPI + statutory levies?

This 'may' allows for a fair mathematical evaluation of changes, but that are in fact, based on market conditions.

Reply to the comment left by "David Price" at "27/12/2015 - 11:48":

Thanks David. You seem to be abreast with all changes. Do you recommend any particular system other than spreadsheets?

Reply to the comment left by "Lun Bun" at "27/12/2015 - 12:14":

Sorry no, I have not evaluated any software for several years. When I do and I anticipate that will be soon, I will post my findings. Spreadsheets are incredibly powerful and easy to construct, database based systems, eg Access, are somewhat more difficult to write but even more powerful. I have tried both but always come back to a simple spreadsheet. I can update 70 properties in ten minutes, show me a commercial system which allows that and I will use it.

Reply to the comment left by "Chris Byways" at "27/12/2015 - 11:56":

I hear what you say but using an example of a £200,000 property growing at eg 2% pa with 75% loan to value borrowing, then a 1% Property Value Tax = £2,000 pa extra tax in year 1 & by year 10 extra tax of £2,438. This will be on top of any other taxes eg Net Asset Wealth Tax estimated could be between 0.3-1% which worst way at 1% = £500 extra tax in year 1 & £938 by year 10, plus possibly a Land Value Tax on top (detail of whether this would include land beneath residential investment properties yet tbc)
Therefore assuming for ease of maths a gross rental yield of 5% pa = £10K pa in rent, increasing by say an average 2% pa = extra rent of £200 in year 1 but by year 10 extra rent of £2,190 which a Landlord would have may be increased the rent by anyway in order to cope with the increase in repair, furnishing & insurance costs & an ever increasing need of a higher rental income to fight the ravages of inflation.
Vs
Property Value Tax of say 1% = year 1 of £2,000 & £2438 year 10
Net Asset Value Tax of say 1% = yr 1 £500 & £938 year 10
Plus possibly Land Value Tax on top.
From year 1 you'd be out of pocket but by year 10 the difference is reduced substantially but in reality all this is doing is wiping out the rent increases you may have brought in anyway, plus is dependent on whether this "option" of auto rent increases within a tenancy agreement would become a commonplace clause & not be disallowed by whichever party is in power if they are intent on looking at rent capping/controls.
It is still best to fight a raise in taxes of all kinds from outset.

Reply to the comment left by "Laura Delow" at "27/12/2015 - 12:28":

Naturally, Laura, you are free to start a campaign against any taxes or potential taxes you wish. Our aim here, however, is to fight Clause 24.

Reply to the comment left by "David Price" at "27/12/2015 - 12:26":

I Gotcha David.

Nearly 50% of required amount already raised! This is well thought out plan! Hats off once again to Steve and Chris!

Reply to the comment left by "Ros ." at "27/12/2015 - 12:39":

I appreciate your sentiment Ros but I feel this is very short sighted. As stated in the Judicial Review thread; "as a consequence of the tax change, major changes in the private sector will take place. Some landlords will pass on their increased tax by increasing rents. Others will be forced to sell, as they will not be in a position to pay the extra tax demanded by HMRC. Homelessness will increase as some tenants will not be able to afford higher rents and many will be evicted by landlords forced to sell”.
The position will be far worse if other property & wealth taxes are introduced & therefore our legal councel must ensure they play this very, very cleverly because if they only focus on Clause 24 "to the exclusion of the effects on rented sector if any/all of the other property taxes are introduced", we (and the UK's housing/property sector) could end up in a far, far worse position.
I still believe Clause 24 is likely a red herring being used to camouflage the real property taxes that the government really want to introduce & by our not being more cunning, we are playing right in to their hands.

Reply to the comment left by "Laura Delow" at "27/12/2015 - 14:38":

As I said, if you wish to start a campaign against possible future taxes not yet announced then that is your prerogative. We are fighting a tax change which has received Royal Assent. How would you take legal action against tax changes not announced or passed?