Summer Budget 2015 – Landlords Reactions

Reply to the comment left by "Jonathan Clarke" at "08/01/2016 - 23:07":

"This model though has now been suddenly attacked without warning with an unprecedented tax hike putting 25 year business plans in jeopardy. Cash buyers have not faced the same kind of cull."

Precisely and in my view it is in that vein that response should be made.

C24 is NOT a tax increase but an asymetric levy on debt, destructive of only those unincorporated businesses with debt and therefore, in my legally untutored and on first and cursory reading, discriminatory and contrary to The European Conventionon Human Rights and Property Rights (property here has it's broad meaning) see

The European Conventionon Human Rights and Property Rights -DG2-EN-HRFILES-11(1998).pdf (ISBN 92-871-3721-8) and/or

http://www.echr.coe.int/LibraryDocs/DG2/HRHAND/DG2-EN-HRHAND-04%282003%29.pdf

1 Article 1 of Protocol No. 1 to the European Convention on Human Rights guarantees the right to property.

2. It provides:
“Every natural or legal person is entitled to the peaceful
enjoyment of his possessions. No one shall be deprived
of his possessions except in the public interest and sub-
ject to the conditions provided for by law and by the
general principles of international law.
The preceding provisions shall not, however, in any way
impair the right of a state to enforce such laws at it
deems necessary to control the use of property in ac-
cordance with the general interest or to secure the pay-
ment of taxes or other contributions or penalties.”

By brief and unlawyerly interpretation is that while the state has the right to tax it cannot do so ina way that amounts to sequestration (without justification) which is what C24. If Osbourne needs more money, which he almost certainly does, he should take steps to adjust the tax rates and bands accordingly which C24 patently does not do.

Thanks guys. Appreciate responses, still the odd "too good to be true" jibe about any contra views but some positives too.

Jonathan
I have not raised subject re social acceptability but appreciate the sentiment. For example, my council protects HB tenants completely, ensuring they make lawful evictions very difficult for landlords and ensuring the process takes as long as possible. But all that has happened is no LLs take housing benefit now so it has made things worse.

The point we disagree is this disproportionately impacting Individuals. I think if the leveraging and combined use of individual tax regime is disproportionate therefore so is the impact - rather than the other way round. Also with political pressure and some BoE concerns this model they believed this model needed to be stopped. The car dealer can take out a loan but it has a term and is based on an income multiple (not a monthly calculator seen in BTL). Clause 24 is targeted against BTL but that is because the % debt leveraging and interest only strategy being adopted under BTL was disproportionately different to other businesses.

I think the comparison to incorporated is understandable. The tax regime under corporates is different though - not necessarily advantageous. I believe if that point is pushed in 5 years time no one will get any relief for loans on residential property.

I do like your last sentence. Good summary - thx.

Monty B
No, not a good egg, my experience is if rents are too high property stays empty. One months rent takes along time to make up....and if the tenant is paying a full high market rate they stay only 12 months with another void. I prefer 20% less, less hassle, no void, grateful tenant, happy landlord.

My point was rather - IF I needed to increase rents not sure I would announce it with the tone used by some on an open forum encouraging this as a threat for others to engage with the government. If it's a consequence then that should be highlighted as a factor....rather than a weapon.

Too good to be true - it's all true. No trolling here. Real LL whose friends are mostly none LLs and I know they judge the debt decisions quite critically.

Chris
Key point I agree with for those who are 'trapped' some earlier changes by the government would have helped. I see why it is being done....but not why this was not signposted a few years ago.

Dr Monty
Dwindling stock of PSR is a bit like the 'crash' in China. It is only going back to where it was a few years ago. There is a dwindling stock for owner occupiers too. I think disruption will occur rather than a net loss.

Agree completely re your comments re public sympathy re leveraged or unleveraged LLs. It's all bad. Infact I have seen some really bitter notes and comments on private professional forums ie not tenant or LL forums. Those are the ones which have made me consider that sentiment. I am happy to reduce risk, take cash and keep my head down.

It looks like they are waiving the stamp duty charge for purchases of 15 or more properties at once is Alice is allowing his rich mates to buy bulk and not get hit it just gets worse it's a scandal to be honest how these rich jokers are getting away with it

Reply to the comment left by "NW Landlord" at "10/01/2016 - 11:16":

Naturally that will level the playing field with first time buyers. What a joke.

This is a sabotage of the middle class entepreurial landlord so his rich donors lobbyists etc can move in and take advantage of a growing market it is beyond belief and makes me more determined as all of us are to fight this it's like being ruled by s crazy power hungry dictatorship it makes my blood boil

http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/12087337/Mapped-how-buy-to-let-will-lose-money-in-91pc-of-regions-by-2021.html

Hey everybody,
I emailed today John McDonnell (yes Labour Shadow chancellor of all people) questioning his rhetoric about certain things and he has got back in touch(within hours), saying he found my points interesting and would bear them in mind. So If all of us give him the low down and point out the for rich corporations being possibly exempt! He may prove curiously receptive and crucially there is nothing to loose!.

Reply to the comment left by "NW Landlord" at "10/01/2016 - 11:55":

Hi NW L

Thanks for the link.

Contrary to what the article states, the CML did not say that 80% of landlords will absorb the tax rise without needing to increase rents.

If you click on the link that is inserted to the CML website you will see that the CML expects rent increases as a result of Clause 24: http://www.cml.org.uk/news/news-and-views/buy-to-let-a-happy-new-year-for-landlords/

This shows two charts. The first chart shows how around 1,000 landlords surveyed said they would deal with an increase of 1.5% in the rate of interest over the next three years. This shows that only 10% said they would increase their rents.

The second chart shows how they said Clause 24 would impact the growth of their rental businesses. The options all related to the size of the portfolio – increase, decrease or keep the same. Increasing the rent was not one of the questions.

Directly below this chart CML state: “Landlords should be able to mitigate the direct financial impact in a number of ways. Indeed, the latest YouGov research corroborates our view that the overall impact will be to lift rents higher and to narrow the availability of homes in the private rented sector.”

The journalist seems to have combined the two charts and come up with the wrong conclusion.

Reply to the comment left by "H B" at "09/01/2016 - 17:23":

Your comment 'in an ideal world I would double rents' - Good luck with that. Not the greatest vision for an ideal world.

Think I am out again. See you at page 1000.

Reply to the comment left by "Sam B" at "10/01/2016 - 12:19":

Hi Sam.
Would you be able cut and paste here what you wrote to him and his reply, as I would be very interested? Or, failing that, could you send a copy of the emails to Mark Alexander for him to forward to me? I can keep them confidential if you think that is necessary (personally I copy lots of emails here as once a politician, journalist or economist has sent them to me I consider them to be in the public domain unless they ask me to keep them confidential).

It would be particularly interesting as so far, most Labour politicians, including ones on the shadow Front Bench have been pretty unsupportive.